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Polarbear |
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Polarbear Super Spammer
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MilfHunter |
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MilfHunter Scooby Slapper
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Moth |
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Moth Borekit Bruiser
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Polarbear |
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Polarbear Super Spammer
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Nobby the Bastard |
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Nobby the Bastard Harley Gaydar
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Bhud |
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Bhud World Chat Champion
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Posted: 15:29 - 30 Dec 2021 Post subject: |
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Just to answer how it helps the economy:
https://www.investopedia.com/terms/v/velocity.asp
https://en.wikipedia.org/wiki/Velocity_of_money
i.e. you give a beggar £5 and it has an immediate velocity of 1, as he spends it, then Tesco and the off-licence use it to pay suppliers, rent and staff, and so on, etc. So the £5 ends up doing £30-ish worth of work within a matter of weeks, rather than stagnating in the system. All these businesses stay in business and keep borrowing money and repaying loans and paying taxes. It doesn't immediately go back into the banking system that issued it.
It's bad for household wealth and bad for savers, but good for the economy (because you get economic activity) and a way to make govt debt somewhat payable without doing deeply unpopular things like raising taxes or imposing strict austerity measures.
Of course, give £5 to a normal person and they'll stick it in their wallet and forget it's even there. Or add £5 to their bank account and it immediately gets put in the savings vehicle, whether that's a current account, an ISA or whatever. Dead money. Good for that individual but bad for the economy.
Inflation is calculated in a strictly defined and specific way, to exclude the prices of assets, in its calculation (which uses consumer prices and monetary supply).
If we were to include asset prices, then we are in a different ballpark.
I mean, look at Tesla PE ratio: 352.26
That's utterly bonkers, and (arguably) reflects money running into assets (such as tech stocks) for no other reason than to preserve its own purchasing power in the face of some pretty scary things going on in relation to inflation. |
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Fat Angry Scotsman |
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Fat Angry Scotsman World Chat Champion
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Posted: 16:10 - 30 Dec 2021 Post subject: Re: Probably stupid question of the year but.... |
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Polarbear wrote: | Why do we have inflation?
If everybody kept prices the same then wages would remain the same and we wouldn't need strikes or whining wallies going on about only getting a one percent pay rise.
I appreciate it would have to be a world wide agreement but surely it would benefit more counties than it would penalise. I have read googles version but I still don't get how infglation fuels growth.
My financial acumen is of course based on whether I have enough in the bank to keep a roof over my head, fuel my vehicles and cover my rum habit.
Feel free to point and laugh. |
Inflation is the increase in the price level of goods and services over time, normally monitored using the consumer price index (CPI). The CPI is essentially a collection of goods that indicates the consumption habits of urban individuals.
If the goods become more scarce, for example supply chain issues (shipping container shortages, high shipping costs, factories shutting down due to COVID, HGV drivers leaving the UK due to Brexit, etc), then there are less goods to go around in the consumer pool.
As such that means there are people who really want the goods and will accept higher prices to obtain the goods over people who could not accept the higher prices. This is push inflation.
Then you have things like a shortage of labour (due to the benefits of NOT working being almost equal to the benefits of actually working - benefits, furlough schemes, housing benefit, etc) the cost of labour increases as employers increase salaries, etc to get people to work for them. This then means more people have more financial ability to pay the higher prices or purchase goods that were unavailable to them before. In this case even if the level of goods and supply was the same as before, the price still increases as more people are now in the position to pay it. This is pull inflation.
Inflation at a low level (and above the level of bank interest rates) is a good thing as it encourages people to not horde their money and instead spend it - whether it is on goods or investments: it doesn't matter. If inflation was 5.0% annually then your money held in you bank account is worth 5.0% less than it was in the previous year.
This then ties into the post by Bhud on the velocity of money.
Normally inflation is controlled by printing more money, which has the effect of both devaluing the currency but also giving people more money and contributing to pull inflation further down the line. There is no way to stop inflation. None. ____________________ PRESENT: 2018 BMW S1000XR SE Sport.
PAST: 2009 Kawasaki ER-6F. 2021 Zontes ZT-125U. |
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Nobby the Bastard |
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Nobby the Bastard Harley Gaydar
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Moth |
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Moth Borekit Bruiser
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Islander |
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Islander World Chat Champion
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Posted: 17:50 - 30 Dec 2021 Post subject: |
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Capitalism and the worship of money. |
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Moth |
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Moth Borekit Bruiser
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Polarbear |
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Polarbear Super Spammer
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Nobby the Bastard |
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Nobby the Bastard Harley Gaydar
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Polarbear |
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Polarbear Super Spammer
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Wull |
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Wull Crazy Courier
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stinkwheel |
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stinkwheel Bovine Proctologist
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Nobby the Bastard |
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Nobby the Bastard Harley Gaydar
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Fat Angry Scotsman |
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Fat Angry Scotsman World Chat Champion
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hellkat |
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hellkat Super Spammer
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Posted: 01:04 - 31 Dec 2021 Post subject: Re: Probably stupid question of the year but.... |
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FFS.
Who's this, now?
Thanks to this noob/sock, I have Demolition Man going round in my head ____________________ Not nearly as interesting in real life. |
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mentalboy |
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mentalboy World Chat Champion
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Copycat73 |
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Copycat73 World Chat Champion
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Polarbear |
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Polarbear Super Spammer
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Easy-X |
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Easy-X Super Spammer
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Posted: 19:57 - 31 Dec 2021 Post subject: |
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Same thing in Cornwall, loads of housing estates imposed by central government Easier to get away with if you classify the old clay pits as brown field sites. ____________________ Husqvarna Vitpilen 401, Yamaha XSR700, Honda Rebel, Yamaha DT175, Suzuki SV650 (loan) Fazer 600, Keeway Superlight 125, 50cc turd scooter |
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mentalboy |
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mentalboy World Chat Champion
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Easy-X |
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Easy-X Super Spammer
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Old Thread Alert!
The last post was made 2 years, 118 days ago. Instead of replying here, would creating a new thread be more useful? |
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