Inflation is traditionally a symptom that the economy is running too well: Businesses are making more money, they are accumulating cash and so are their employees.
Capitalism being as relentlessly exploitative as it is, raises prices on everything that Businesses and employees buy, because they know the businesses and employees can afford it. This is price inflation.
But that can trigger an “arms race” or a self perpetuating sprial of rising prices. In the worst cases of this, there was hyperinflation, where you had to spend all your money each day, because the next day, your cash was practically worthless because prices rose much higher every day.
So to try and keep inflation from getting out of hand, central banks raise interest rates whenever they detect higher prices to raise the cost of borrowing for businesses and people, so they have less cash in hand, and can’t spend recklessly, or be charged recklessly higher prices by capitalists because they just don’t have the extra cash to pay higher prices.
Now all of the above is just if things are normal, and no extraordinary disasters happen such as a pandemic, or an orangutang starting wars that cut off 25% of the world’s oil supply, or suddenly deporting a large part of the blue collar labor force.
These things can lead to instability and unpredictable changes as the economy adjusts, and may take some time to find solutions to reach an equilibrium.
or be charged recklessly higher prices by capitalists because they just don’t have the extra cash to pay higher prices
This must be the answer to the question I was asking another commenter. They have to lower prices because people won’t have the cash. I honestly thought people didn’t already have the cash though.
They have to lower prices because people won’t have the cash.
The Fed doesn’t want deflation either, i.e. for prices to decrease rather than increase. Deflation could also set off a bad spiral: why by a toaster today for $30, when you’re confident it will be $25 in a week, or $20 in another week? When people generally expect prices to go down, they refrain from buying things, which forces sellers to offer even lower prices, etc.
So the Fed aims for 2% inflation, where prices will increase each year but only relatively slowly.
so they have less cash in hand, and can’t spend recklessly, or be charged recklessly higher prices by capitalists because they just don’t have the extra cash to pay higher prices.
Get fucked, Sam Altman. Hopefully this finally pops the AI bubble and all the AI CEOs lose everything
Let me try:
Inflation is traditionally a symptom that the economy is running too well: Businesses are making more money, they are accumulating cash and so are their employees.
Capitalism being as relentlessly exploitative as it is, raises prices on everything that Businesses and employees buy, because they know the businesses and employees can afford it. This is price inflation.
But that can trigger an “arms race” or a self perpetuating sprial of rising prices. In the worst cases of this, there was hyperinflation, where you had to spend all your money each day, because the next day, your cash was practically worthless because prices rose much higher every day.
So to try and keep inflation from getting out of hand, central banks raise interest rates whenever they detect higher prices to raise the cost of borrowing for businesses and people, so they have less cash in hand, and can’t spend recklessly, or be charged recklessly higher prices by capitalists because they just don’t have the extra cash to pay higher prices.
Now all of the above is just if things are normal, and no extraordinary disasters happen such as a pandemic, or an orangutang starting wars that cut off 25% of the world’s oil supply, or suddenly deporting a large part of the blue collar labor force.
These things can lead to instability and unpredictable changes as the economy adjusts, and may take some time to find solutions to reach an equilibrium.
This must be the answer to the question I was asking another commenter. They have to lower prices because people won’t have the cash. I honestly thought people didn’t already have the cash though.
The Fed doesn’t want deflation either, i.e. for prices to decrease rather than increase. Deflation could also set off a bad spiral: why by a toaster today for $30, when you’re confident it will be $25 in a week, or $20 in another week? When people generally expect prices to go down, they refrain from buying things, which forces sellers to offer even lower prices, etc.
So the Fed aims for 2% inflation, where prices will increase each year but only relatively slowly.
Get fucked, Sam Altman. Hopefully this finally pops the AI bubble and all the AI CEOs lose everything
Big AI have military contracts.
I’ve never heard of a military contractor going out of business.
Not involuntarily anyway.