libertarians-and-stoya:

sindromedistendhal:

libertarians-and-stoya:

sindromedistendhal:

libertarians-and-stoya:

andrewfriedle:

flandin:

A woman in the audience asks Krugman if government has some obligation to maintain stable price levels, and Krugman responds that government should manipulate the money supply as it sees fit, with no regard to the impact on those who hold the currency.

Why is he taken seriously by anyone? Why?!

A Euro note does not promise that it will have a fixed purchasing power. That was note the deal. […] So it’s not theft in any legal sense. - Paul Krugman

Maybe Krugman doesn’t see it as theft, but inflation is a hidden tax.

So many economists have said this.  Hell, even Bernanke has.

how is inflation a hidden tax? explain please

So when you inflate currency, and your wages go up you still pay taxes.

However, when you adjust your wage increase into real terms, many people see that they made more money, in real numbers, before the inflation.

So, when you calculate in taxes, you are, in effect, paying more in taxes in real numbers than you did before.

I’ll put it numerically:

I make $15,000 a year.  I pay 10% income tax.  So in effect, I make $13,500 a year.

Inflation occurs and my wages increase to $18,000 a year.  I still pay 10% income tax.  After taxes, I make $16,200 a year.

However, due to the increase in food prices, gas prices, etc etc etc, I pay more, in real numbers for goods than I did at $13,500 a year.  And, the government is taking more out of my paycheck than previously, but everything is more expensive.

So while the % income taxation hasn’t changed, due to increases in the price level, I have less money after-taxes to pay with.

Here’s Milton Friedman explaining it much better than I can using a family who experienced this “hidden tax” back in the 70s.

what do you mean by “So when you inflate currency”?

what is “you”?

In this context, the government.

But inflation can occur naturally for a variety of reasons. 

There is a lot more to inflation than this. 

There is also theft by inflation in the sense that when you earned a dollar and when you spent a dollar, you lost value via inflation.

For example, if you earn and save $1,000 this year and the rate of inflation is 10%, in a year, your money will only be worth 90% of what it was when you earned it, it will have the purchasing power of $900. 

Inflation via printing money is also theft because your money is essentially a representation of value that you hold. If you own 1% of a company and the company creates new stock and you don’t receive an equal portion of those new shares, you lost value. For example if you own 1 share and there are 100 total shares and the company creates 100 new shares and you don’t get any, your value went from 1% to 0.5%. In reality when the Fed prints new money, they should give everyone an equal percentage based on the money they held before the new dollars were printed. Again, using my last example, the company should double your shares if they double the overall shares. 

Inflation is also theft based on the increase in value of goods. Let’s say you earn $5 an hour making X, which sells for $5 each. When the price of that item goes up due to inflation, you don’t instantly get a pay increase to keep up with the increase of prices. There is a delay there. That delay in wage increases is also theft. You are essentially taking a pay cut. 

Inflation is toxic. 

(via libertarians-and-stoya-deactiva)