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I would argue the opposite. If you compare US dollar to every other currency the value of their currency has decreased a lot compares to US dollar. This would b

I would argue the opposite. If you compare US dollar to every other currency the value of their currency has decreased a lot compares to US dollar. This would be a plus to hold US dollar as their own currency has depreciated and holding more dollars has helped them reduce their losses. But it has one down side is that if you hold too much US dollar the country exposes itself to US monetary policy.

trts 2y ago
not sure there is a country on earth that you could save your money in the national currency and not watch inflation rip away the value of your earnings. The purchasing power of USD has declined 95% over the past century. Prettiest horse in the glue factory
- RandomLensman 2y ago
  Is that with or without interest on holding the USD?
- feoren 2y ago
  My hot take: currency is not meant to be held, it's meant to be spent. I know, I know: "store of value" is one of its definitions, but it's OK to have short-term and long-term stores of value. Money velocity is a healthy thing for the economy. Hoarding wealth isn't, and besides, everyone with significant wealth is already storing most of it in assets anyway. There's really no reason to want a particular currency to retain its value over 100 years; 1% to 2% inflation is quite healthy. It doesn't rip away the value of your earnings as long as salaries keep up with inflation -- which they don't, but that's the real problem.
  - tsunamifury 2y ago
    That’s not a hot take it’s literally the agreed upon monetary policy of the planet. Only on HN would a bunch of self righteous engineers argue with you about how you are wrong based on some localized wish fulfillment of how a perfect system works in their head.
  - jrk 2y ago
    Your main point is the well-established modern consensus among economists, and nicely put. But what makes you think salaries don't keep up with inflation? In the postwar US, they absolutely have kept up over the long term. There are ups and downs depending on the strength of the labor market, and they don't always react instantly to short-term bursts of inflation (as in 2021-22), but over the long term they are steadily up even in the "great stagnation" period of the past 50 years: https://fred.stlouisfed.org/series/MEPAINUSA672N https://fred.stlouisfed.org/series/MEPAINUSA672N (individual) https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N (household)
    - photonthug 2y ago
      Economics is a weird kind of physics that only requires some critical mass of people to believe or act like they believe and then it’s true, so arguing against the 2% ideal for inflation is a bit like debating gravity. From most people’s perspective it just is and understanding much less changing it is an impossible dream. Whether salaries track inflation is also irrelevant as long as there are markets (like housing/education) that you are basically required to enter, and which have different dynamics. Would it matter if wages and inflation were in lock step if the toilet paper market was wildly out of control? Could people work around this issue by wisely waiting for a better time to use the toilet?
      - jrk 2y ago
        My first point was not that economics as a discipline is infallible, just that this was the opposite of a “hot take.” Regarding some costs (especially housing) growing faster than the overall rate of inflation: of course they do, just as some grow more slowly or even deflate. The index here is computed based on the average amount people spend on these different categories (the consumer price index), so the need to spend a large share on housing (or toilet paper) *is already included* in the inflation measure.
  - trts 2y ago
    1-2% inflation is "healthy" is a trope that nobody really justifies. Perhaps its true, and it is often repeated as gospel. the "2% inflation target" was derived just from the comments of economist Roger Douglas in New Zealand who thought that sounded about right. We welcome and celebrate deflation in technological goods (cars, electronics), apparel but are constantly warned about the dangers of deflation and why "some" inflation is good. What is the argument for why 1-2% _deflation_ in housing, education, and healthcare would be bad?
    - kcb 2y ago
      Does nobody really justify it? The argument for inflation is pretty simple I think. It encourages everyone to do something with their money now, invest or spend.
      - trts 2y ago
        I think that is a valid argument and makes some sense. have to toss the hot potato. The argument for the trade offs are pretty simple I think. It encourages more concentration of wealth in assets and increases the amount of malinvestment. The question is to what degree. I am saying there's no analytical argument for 2%. I think most people would agree that 10% or 50% inflation would be bad. But why is 2% better than 1% or 0%?. Why is 1% better than -1%? it depends on the time horizon. higher inflation today will cause more economic activity, higher inflation in the long run encourages debt and misallocation of resources.
    - jallmann 2y ago
      Inflation generally encourages economic activity (spend your money before it depreciates) while deflation discourages it (save your money because it will appreciate) Lower prices are seen as positive for as long as they stimulate higher overall consumption. If prices fall but consumption does not rise, then most economists see that as a problem.
- staticman2 2y ago
  Your expectation is that the money hidden under your couch should never go down in value? And you are upset that the world doesn't work that way?
  - frenchy 2y ago
    This is just the modern version of the parable of the talents.
  - deleted 2y ago
    [deleted]
  - throwawayqqq11 2y ago
    I would expect less feudal outcomes in a world that calls itself free. Capital income does not reflect economic performance, its just a inheritable privilege. Are you upset about seeing those unfortunate suckers, that dont have this privilege maybe coming to your country? Upset, that the world does work this way?
  - bko 2y ago
    > Your expectation is that the money hidden under your couch should never go down in value? Why should it go down? If there were a fixed or slowly growing monetary base (i.e. slower than productivity), the dollar would appreciate and this would be a good thing as we would all benefit from the gains of productivity and living in a prosperous society. I never bought the idea that we need to inflate our monetary base and have inflation. It seems too convenient as the government uses it as a backdoor form of taxation. And every few decades it gets out of control. The argument pro moderate inflation never rang true to me. The biggest one is "people wouldn't spend money if they knew everything will get cheaper", which is on its face wrong because the hottest selling goods in this economy are quickly depreciating. This year's iPhone or car model depreciates very quickly but somehow people keep buying it and the world doesn't fall apart.
    - staticman2 2y ago
      You ask why should it go down? My understanding is we tried other banking policy during the great depression and it didn't work out so well. When the economy collapses and the government lacks gold backed dollars to do counter cyclical spending because there's not enough gold reserves it doesn't go well. So my response would be because great depressions are not desirable. But what I really don't understand is the outrage that the money under the couch should go down- when assets like treasury inflation protected securities are available. (Yes they are not always available at profitable rates- though they currently are- and I don't think the people complaining about inflation are whining when stocks or Treasuries or bank accounts are paying more than inflation.)

trts 2y ago

not sure there is a country on earth that you could save your money in the national currency and not watch inflation rip away the value of your earnings. The purchasing power of USD has declined 95% over the past century. Prettiest horse in the glue factory

RandomLensman 2y ago
Is that with or without interest on holding the USD?
feoren 2y ago
My hot take: currency is not meant to be held, it's meant to be spent. I know, I know: "store of value" is one of its definitions, but it's OK to have short-term and long-term stores of value. Money velocity is a healthy thing for the economy. Hoarding wealth isn't, and besides, everyone with significant wealth is already storing most of it in assets anyway. There's really no reason to want a particular currency to retain its value over 100 years; 1% to 2% inflation is quite healthy. It doesn't rip away the value of your earnings as long as salaries keep up with inflation -- which they don't, but that's the real problem.
- tsunamifury 2y ago
  That’s not a hot take it’s literally the agreed upon monetary policy of the planet. Only on HN would a bunch of self righteous engineers argue with you about how you are wrong based on some localized wish fulfillment of how a perfect system works in their head.
- jrk 2y ago
  Your main point is the well-established modern consensus among economists, and nicely put. But what makes you think salaries don't keep up with inflation? In the postwar US, they absolutely have kept up over the long term. There are ups and downs depending on the strength of the labor market, and they don't always react instantly to short-term bursts of inflation (as in 2021-22), but over the long term they are steadily up even in the "great stagnation" period of the past 50 years: https://fred.stlouisfed.org/series/MEPAINUSA672N https://fred.stlouisfed.org/series/MEPAINUSA672N (individual) https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N (household)
  - photonthug 2y ago
    Economics is a weird kind of physics that only requires some critical mass of people to believe or act like they believe and then it’s true, so arguing against the 2% ideal for inflation is a bit like debating gravity. From most people’s perspective it just is and understanding much less changing it is an impossible dream. Whether salaries track inflation is also irrelevant as long as there are markets (like housing/education) that you are basically required to enter, and which have different dynamics. Would it matter if wages and inflation were in lock step if the toilet paper market was wildly out of control? Could people work around this issue by wisely waiting for a better time to use the toilet?
    - jrk 2y ago
      My first point was not that economics as a discipline is infallible, just that this was the opposite of a “hot take.” Regarding some costs (especially housing) growing faster than the overall rate of inflation: of course they do, just as some grow more slowly or even deflate. The index here is computed based on the average amount people spend on these different categories (the consumer price index), so the need to spend a large share on housing (or toilet paper) *is already included* in the inflation measure.
- trts 2y ago
  1-2% inflation is "healthy" is a trope that nobody really justifies. Perhaps its true, and it is often repeated as gospel. the "2% inflation target" was derived just from the comments of economist Roger Douglas in New Zealand who thought that sounded about right. We welcome and celebrate deflation in technological goods (cars, electronics), apparel but are constantly warned about the dangers of deflation and why "some" inflation is good. What is the argument for why 1-2% _deflation_ in housing, education, and healthcare would be bad?
  - kcb 2y ago
    Does nobody really justify it? The argument for inflation is pretty simple I think. It encourages everyone to do something with their money now, invest or spend.
    - trts 2y ago
      I think that is a valid argument and makes some sense. have to toss the hot potato. The argument for the trade offs are pretty simple I think. It encourages more concentration of wealth in assets and increases the amount of malinvestment. The question is to what degree. I am saying there's no analytical argument for 2%. I think most people would agree that 10% or 50% inflation would be bad. But why is 2% better than 1% or 0%?. Why is 1% better than -1%? it depends on the time horizon. higher inflation today will cause more economic activity, higher inflation in the long run encourages debt and misallocation of resources.
  - jallmann 2y ago
    Inflation generally encourages economic activity (spend your money before it depreciates) while deflation discourages it (save your money because it will appreciate) Lower prices are seen as positive for as long as they stimulate higher overall consumption. If prices fall but consumption does not rise, then most economists see that as a problem.
staticman2 2y ago
Your expectation is that the money hidden under your couch should never go down in value? And you are upset that the world doesn't work that way?
- frenchy 2y ago
  This is just the modern version of the parable of the talents.
- deleted 2y ago
  [deleted]
- throwawayqqq11 2y ago
  I would expect less feudal outcomes in a world that calls itself free. Capital income does not reflect economic performance, its just a inheritable privilege. Are you upset about seeing those unfortunate suckers, that dont have this privilege maybe coming to your country? Upset, that the world does work this way?
- bko 2y ago
  > Your expectation is that the money hidden under your couch should never go down in value? Why should it go down? If there were a fixed or slowly growing monetary base (i.e. slower than productivity), the dollar would appreciate and this would be a good thing as we would all benefit from the gains of productivity and living in a prosperous society. I never bought the idea that we need to inflate our monetary base and have inflation. It seems too convenient as the government uses it as a backdoor form of taxation. And every few decades it gets out of control. The argument pro moderate inflation never rang true to me. The biggest one is "people wouldn't spend money if they knew everything will get cheaper", which is on its face wrong because the hottest selling goods in this economy are quickly depreciating. This year's iPhone or car model depreciates very quickly but somehow people keep buying it and the world doesn't fall apart.
  - staticman2 2y ago
    You ask why should it go down? My understanding is we tried other banking policy during the great depression and it didn't work out so well. When the economy collapses and the government lacks gold backed dollars to do counter cyclical spending because there's not enough gold reserves it doesn't go well. So my response would be because great depressions are not desirable. But what I really don't understand is the outrage that the money under the couch should go down- when assets like treasury inflation protected securities are available. (Yes they are not always available at profitable rates- though they currently are- and I don't think the people complaining about inflation are whining when stocks or Treasuries or bank accounts are paying more than inflation.)