Godlike Productions - Conspiracy Forum
Users Online Now: 2,521 (Who's On?)Visitors Today: 2,092,077
Pageviews Today: 2,943,937Threads Today: 614Posts Today: 14,308
10:40 PM


Rate this Thread

Absolute BS Crap Reasonable Nice Amazing
 

If You Want to Help the Poor and the Middle Class, Encourage Deflation

 
waht

User ID: 23915474
United States
09/18/2012 11:05 AM
Report Abusive Post
Report Copyright Violation
If You Want to Help the Poor and the Middle Class, Encourage Deflation
If You Want to Help the Poor and the Middle Class, Encourage Deflation

If we step out of the conventional brainwashing about how bad deflation is, we discover it’s actually good and it’s inflation that’s bad.

We have been brainwashed into believing that inflation is good and deflation is bad. The truth is that inflation is good for banks and bad for households, while deflation is bad for banks and good for households.

Since ours is a bank credit system enforced by the Central State, what’s bad for the banks is presumed to be bad for everyone.

This is simply not true. Inflation is “good” for borrowers, but only if their income rises while their debts remain fixed. For everyone with stagnant income–and that’s 90% of the nation’s households–inflation is just officially sanctioned theft.

The conventional view can be illustrated with this example. Let’s say a household earns $50,000 a year and they have a fixed-rate mortgage of $100,000. If they set aside 40% of their income to pay the mortgage, that’s $20,000 a year. This means they can pay off their mortgage in five years. (To keep things simple, let’s ignore interest.) Let’s say the household’s annual grocery bill is $5,000—10% of the annual income.

If inflation causes all prices and incomes to double, the household income rises to $100,000 and groceries cost $10,000–still 10% of the annual income. In this sense, inflation hasn’t changed anything: it still takes the same number of hours of work to buy the household’s groceries.

We can say that the purchasing power of an hour of labor hasn’t changed; whether the hour is converted into $1 or $1 million, that money buys the same quantity of goods and services as it did before the inflation.

But inflation does something magical when incomes rise and debts remain fixed: now 40% of the household income is $40,000, and so the household can pay off the fixed-rate mortgage in only two-and-a-half years.

Why is inflation good for the banks? After all, the mortgage is paid with depreciated money that no longer buys what it used to. Inflation benefits the banks for the simple reason that it enables the household to make its debt payments and borrow more.

Remember that banks don’t just earn profits on interest, they make money on transaction fees: issuing loans and processing payments. The more loans they originate and manage, the more money they make. The more debt and leverage increase, the more money the banks make....

[link to investmentwatchblog.com]

News