On: The political case for a blanket cryptocurrency ba...

[pydry]

>Target inflation is specifically intended to promote consumption.

No, it's intended to erode debt. Inflation is effectively a transfer of wealth from creditor to debtor.

[api → pydry]

It does do that, but the primary purpose is to push investment. To protect money from inflation you have to put it to work. Wealth is a verb, not a noun.

[isolli → pydry]

It also erodes real salaries, which is a useful way to adjust salaries in a world with sticky prices (where nominal contracts are not easily adjusted).

[nradov → pydry]

No that's not how it works in the typical case. Lenders set their interest rates based on expected future inflation rates over the term of the loan. Debts only really get eroded when interest rates are fixed and actual inflation greatly outpaces expected inflation. Like in the hyper inflation that occurred in Zimbabwe, Venezuela, Serbia, etc.

[pydry → nradov]

Interest rates for most debts are fixed. They are determined by supply and demand, much like any other price.

[nradov → pydry]

And the supply is based on expectation of future inflation.

[pydry → nradov]

Partially, yes.

[murftown → pydry]

Sure, but what debt does the average person own which is eroded? The money in their bank account.

[dnautics → pydry]

No, it's a transfer of wealth from saver to debtor, reminding you that the biggest debtors are also creditors.