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Comment by sirclueless | Hacker News Reader

Fair enough, but I think most economists would agree that we shouldn't be trying to make savers and fixed-income earners wealthy in the first place. We should make it economically advantageous for the people with money saved up to invest it into the economy.

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I've always been suspicious of this "spending is better than saving" mantra. I'm sure it's better in some situations, but I don't think it's better in general.

The point of an economy is not to spend money, it's to create more wealth for more people by allocating resources efficiently. If someone "hoards" money, and prices are stable, that person is effectively staying out of the resource-allocation business. It doesn't mean that there are fewer resources to allocate, it just means that other people are doing the allocating (even though those people collectively have less money because of "hoarders", prices are lower because of them, too).

You can make an argument that everyone needs to take part in efficiently allocating resources, and that makes a lot of sense. But to say that buying a bunch of consumer junk is a good way to do that is ridiculous (and bad for the environment).

A middle ground is to buy the things you need, a few things you want, and make conservative investments. That allows most individuals to mostly stay out of the resource allocation business, but still enjoy the benefits.

In fact it's not a question of being in the game or out of the game, just a question of time preference. The sole purpose of accumulating money is to eventually spend it. Maybe it will be spent tomorrow, maybe by future generations, but it will eventually contribute to the economy and allocation of resources on whatever schedule and for whatever purpose the owners of the money deem best given their unique situations. The argument in support of inflation is that it's somehow preferable, in the vast general case, for people to spend their money sooner rather than later, and worth using force to accomplish this. It's as presumptuous and arrogant as it is arbitrary, an essentially totalitarian position.

You don't need to take away people's purchasing power to encourage them to invest. If an economy is growing, there will always be higher returns in investment than in holding cash. Monetary expansion encourages unsustainable consumption and debt accumulation. Why is this preferable to saving? When people save, they don't do it with the intention of one day dumping the money in a lake. They are still going to use the money, just on a longer time scale for a better-considered purpose.

I don't want to take away people's purchasing power now, I want to sap away their purchasing power over time. If I do that I encourage them to take their money and invest it into a factory producing widgets instead of squirreling it away into a bank. Inflating the value of money gives an unfair advantage to people who use their money to improve the world by producing things. Being in debt sounds like an OK trade to me so long as it's not pathological.

But inflating the money supply doesn't take away everyone's purchasing power. It redistributes it to the people who get the new money.

yep, butt it still depends on your standpoint - where u stand in the economic ladder matters a lot.

If you are on top, you wouldn't want to make extra effort to stay there!

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