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Logizyme t1_iznuq72 wrote

Reply to comment by MasterFubar in [OC] Inflation heatmap for 44 European, other DM and EM countries by adebar

This isn't the Victorian era. We have stock markets and centralized banks all over the world.

Low positive inflation incentives people to invest their excess cash in business, which promotes growth. Deflation greatly increases the risk of loss to such investments and means that money you stash under your bed will be worth more in a year than it is now, incentiving not spending or investing your excess cash, retarding the economy.

There are many contributing factors to economic growth, but one of the baselines we have to stabilize it in a predictable manner is inflation. By maintaining a low positive inflation, we maintain stable growth.

This is a widely accepted view from financial professionals and is why the fed manipulates interest rates to steer inflation.

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MasterFubar t1_izos9rl wrote

> This is a widely accepted view from financial professionals

At one time, it was a widely accepted view from scholars that disease was caused by humid air, the word "malaria" means literally "bad airs". Economics is like medicine was before the germ theory, it's still a rather primitive science, it doesn't produce reliable mathematical models.

Think of this, the Federal Reserve system was created in 1913 to prevent financial crises from happening. Less than twenty years later the US would plunge into the worst economic crisis in history. If they know so much, why did they fuck up so badly? How could the Great Depression happen after the creation of the Fed and why didn't it happen before?

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Logizyme t1_izowcce wrote

Doctors used to use electroshock to treat schizophrenia.

Dentists used to use arsenic to treat tooth pain.

I guess we better just ignore the composite opinions of every group of professions in today's world /s.

We understand things better after failures. The fed is 5 times older now than it was during the depression. Everyone learns from their mistakes. 1913 was still very early compared to today's largely digital and very accessible stock market.

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MasterFubar t1_izpxrbh wrote

> Doctors used to use electroshock to treat schizophrenia. > > Dentists used to use arsenic to treat tooth pain. >

And economists still use inflation to treat economic recession.

> I guess we better just ignore the composite opinions of every group of professions in today's world /s.

If the professionals use their expertise to create better and better products, then we should listen to them. However, if almost a hundred years after the creation of the Fed we are still facing major economic crises, then it's pretty much obvious to everyone that those guys are still in the arsenic and electroshock state of ignorance.

They do not understand things better if they commit the same mistakes eighty years later.

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Holy__Funk t1_izp9kis wrote

Ok, you can make the argument that economics is a primitive science. But why should I believe you over the general consensus of thousands of economists? Especially when you have provided no argument except “there used to be no inflation, so there should be no inflation now!”

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MasterFubar t1_izpy59w wrote

> you have provided no argument except “there used to be no inflation, so there should be no inflation now!”

Isn't that a good enough argument? They knew how to manage a stable economy, now they have forgotten how to do it. It's like the Dark Ages, the Romans knew how to build aqueducts, but people then lost that technology.

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