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A flustering conversation with a friend regarding inflation.

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Akhbar Goldberg Posted: Fri, Nov 16 2007 1:14 AM

 Earlier a friend of mine was baiting several 9/11 truthers online, inhis attempt to rile them he took a jab at Ron Paul.  Feeling the need to come to the defense of the good doctor I said something to the effect that he's the only sane alternative compared to the nabobs in the race.  He responded with "I quite frankly don't care which of those idiots becomes president.  It's not like any of them will have any effect over my life.  You actually think Giuliani is going to blow up Iran?"  Ignoring that last little bit of snark I said that I'm sick of the grubby hands of the U.S political elite meddling with the economy and don't find the sad joke that is the U.S dollar very funny and that infaltion seriously frightens me.  I cited the fact that the Canadian dollar is stronger (for the first time in my memory, when, if ever has this happened?) and would prefer ihat the U.S dollar not go the route of the Thai Baht and Turkish Lira.  This was met with a scoff and something along the lines of "You actually care about the international status of the dollar and inflation?  Is inflation really going to make your life all that more difficult?  Is it going to prevent you from renting a movie or drinking a beer."  Protesting that I'd like to eventually own a house was met with a derisive snort (although to be honest my exasperated sighs and groans weren't helpng matters).  So, now that I've regained my composure does anyone have any advice on how I can convince my snarky friend that inflation should be of concern to him?

Gold is the new black.
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Kakugo replied on Fri, Nov 16 2007 4:23 AM
I am not an ecoomics experts (others much better suited at the task than me will surely pop up later) but I'll give you some common sense arguments. Is your friend on a fixed income? Is he a big saver? If so you could easily use the "1000 dollars a month" argument. Let's image an hypothetical scenario where you have 1000 dollars a month. In your current situation, with your current lifestyle, you need 500 to buy groceries and pay the bills, 100 to spend your car (fuel, maintenance etc), 100 to pay for you various insurance policies (health, dental etc), 100 for leisure (books, cinema, vacations etc) and 200 to put into your bank account. Inflation hits hard and now you have the same 1000 dollars a month but to keep up with your previous lifestyle you have different expenses. Groceries now cost 600 dollars, car upkeep 150, insurance 150, leisure 150... you can keep up your old lifestyle but now you'll be saving just 50 dollars a month. Let's say you can put up with that. Inflation keeps growing and now to keep up your lifestyle you'll need 650 for groceries, 200 for car upkeep, 200 for insurance and 200 for leisure. That's 1250 dollars, more than you have available. What do you do? You go to your boss and ask for a raise but the company can only afford to give you an extra 50 dollars. You are still 200 dollars short to keep up your previous lifestyle. You have two choices now: either you dig into your bank account or you'll have to cut on expenses. Generic brand cereals instead of Kellogg's, less night outs drinking beer with friends etc. Is still inflation not a problem?
Together we go unsung... together we go down with our people
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Brett_McS replied on Fri, Nov 16 2007 4:48 AM

I get the impression that your friend may respond to the following:

Inflation doesn't increase the price level of everything evenly. It works its way out from the source (the government). Those nearest the source (government contractors for example) get the immediate benefits of having more money, while prices remain low. Their spending in turn benefits those they buy from, but it bids up prices, so these second tier beneficiaries don't get the full benefit. Down the chain it goes, each tier in succession getting less benefit from the new money, and more cost from the increasing prices, until people are seeing virtually no benefit but the full increase in costs. At the bottom of the heap is of course those on fixed incomes, typically poorer people and the retired.

In other words, inflation is a way of benefitting the well-connected at the expense of the ordinary Joe and the poor.

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Thorgold replied on Wed, Nov 21 2007 9:24 PM

 Well, ask him what does he think about being a Citizen of Bangladesh or India. Typically, people believe that the higher level of life in US is a result of them being better people, smarter, having better economic system, better industry, and so forth. In fact, the higher level of life can only result from producing more economic goods at lesser costs, and having relatively low expences. But, there is a caveat that workd for USA: you can have a higher level of life temporarily without all of the above by writing checks that your account does not support to be cashed. At some time you may even need to force the acceptance of these checks on some by hiring others to deploy the force. But when your checks finally will start to bounce, you will be back to your level of production of economic goods, plus sddled with all the bounced checks you have written in the meantime. There is no such thing as international bancruptcy, unrealistic declarations of socialist comittes nonwithstanding. Therefore, your creditors will now use your need for economic goods to have you surrender the means of production, further reducing your chances of ever getting back into the highlight. The usual escape route? Revolution, civil war. But this is very bloody and unjust, and above all, almost never results in any improovements, i.e., frequently either misdirected or unsuccessful.


There is no magic, and ignorance of this fact still cannot create the magic. 

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Perhaps relay to him the very real fact that what is known as "inflation" is actually nothing more than organized looting of the poor and middle class by politically-connected elites and the state.

Then again, anyone who spends his time "bating 9/11 truthers" is likely someone who has no tolerance for reasoned objective anlysis of facts, particularly if those facts are not something he is explicitly told to care about by the statist media.
"The only idea they have ever manifested as to what is a government of consent, is this–that it is one to which everybody must consent, or be shot."
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