You assume unrestricted access to said global market. Or that said market exists at all.
So it's an ethical claim of how the world ought to be. It's not a universal objective truth of what constitutes good money.
But that's starting from a libertarian frame. Which is a normative atgument. Which was my point all along.
Wages are literally the biggest driver of the PCE. By far. This is not breaking new ground, here.
Yes. The definition of being poor is to have no excess income. Which, by definition, means no capacity to accumulate savings.
Poor people are not getting poorer because the cash under their mattress is losing spending power. This is just a wrong way to think about it.
Moreover, the value of savings is tied to the productive capacity of the economy. If an economy is more productive, each unit of saved currency can command more real goods and services in the future. However, if an economy’s productivity stagnates or declines, the real value of savings may decrease, regardless of whether the nominal amount of money saved grows.
My point is the temporal nature of savings is a social construct. Even with sound money, it's not a perfect proxy for the availability of capital, nor does it account for capital depreciation across time, relative to the production in which the savings were accumulated.
You can do some basic thought experiments here to realize how this concept is purely normative.
Let's say you diligently saved up bitcoin for your whole life, and then suddenly, one day, every factory in the planet shut down. For whatever reason. Alien mind control, whatever. The point is you just have to imagine everyone stopped making "stuff" all at once.
What would your bitcoin be "worth"?
It's a silly example, but it reveals the socially contingent nature of all of this.
People don't climb out of poverty by saving. They climb out of poverty by climbing the income ladder, and then diverting excess income into savings.
Most of the people who are poor -- young people, new immigrants, etc -- do not stay poor as they age. The cohorts are not stable across time, even though people seem to intuitively think it's true. It's not true.
It's a major a fallacy that the poor tend to stay poor. We have longitudinal data on income mobility we can look at to see if this is really true. And it's not.
Based on long-term income mobility data, we can see that about 80% of the people who were poor in 2010, are no longer poor today. About 20% of them have moved into the top two quintiles for income.
So the argument that there's an intractable poverty trap that's been created by fiat currency just isn't true.
There's no such thing as an objective measurement in macroeconomics. You're always measuring from some normative frame. In other words, relative to what you think *ought* to be true about the world.
There's no such thing as objective value. There's no such thing as objective measure of inflation (no, seriously).
Prices emerge from our preferences. Value emerges from our sentiments.
Sound money doesn't change this. Because the whole concept of sound money emerges from a normative foundations, on how money ought to work. Why should money retain its value across time and space? The only reason is because we all want it to! Not because that's objectively more efficient.
Low-skill wages disproportionately rising is a definitely inflationary from a median frame of reference. It's a major form of cost-push inflation.
The middle class were squeezed in a cash flow basis the most, yes. But the top quintile saw their net worth's drop significantly as the wealth effects of ZIRP evaporated. Which explains why so many wealthy people have gone full populist in recent years.
One of the biggest fallacies I see when talking about inflation in terms of savings debasement, and in particular, focusing on how it disproportionately hurts the lowest percentiles of income earners, is the fact that the lowest percentiles have no savings. That's what being poor is. If they had excess income, they'd have savings and assets. But they don't. And the poor never have! So the only meaningful way to judge if the poor are being disproportionately affected by inflation, is to compare their income across time, to prices across time.
When we look at income data from the past few years, it actually turns out, that the poorest Americans saw their incomes grow by over 20% since the pandemic.
The massive rise in wages for low-skilled workers was actually one of the major self-reinforcing drivers of inflation.
The center must hold. Leviathan cannot come off its leash. It is too big, and the stakes are too large. They are, in fact, existential.
Where did I say that inflation is non-existent? Or that the "economy is the strongest it's ever been"?
I'm not *quite* directly disagreeing with Lyn per se. I'm emphasizing an orthogonal point about the importance of stability, and suggesting that if the dollar collapses in a catastrophic way in the near future, then I'm not confident we survive the chaos at all. I don't think we get a chance to reset with Bitcoin. I think it's just potentially game over for our civilization. If people are still living, they'll be living in a dark age.
Yep. 