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| cds, rap midis, dick cheney, barbara bush, tours, bigotry, makaveli 2, jeremy piven, un cabaret, gang related, khadafi, makaveli script, quotations, evocative names, | Most others use credit cards or checks that occasionally get floated. Inflation distorts relative prices. Is the inflation general or specific? This also leads to menu-costs- the reprinting of prices. But societies have addressed this problem. Lastly, inflation creates ftw some uncertainty in ftw decision-making — investments and retirements. Who benefits from unanticipated inflation (winners)? Borrowers- anyone who owes money, which is the vast majority of Americans, benefits because they are paying off loans in devalued dollars. ftw In other words, earnings increase with inflation, while loan obligations are usually specified in the past. Those with price-setting power- they can alter their prices quicker than other and benefit. Firms- inflation makes it easier for firms to raise their prices and validate their past expenses/debts. Why does the Fed usually raise interest rates? To fight labor costs, even though this only one of many production costs. Why don't be ever hear the Fed complaining that profits are too high? |
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| Inflation is bad for the bond holding classes, but for most everyone else some inflation is a good thing. It reduces debts, it even helps most corporations. Hyperinflation is obviously bad, makaveli script but a little inflation is pretty good a lot makaveli script sometimes. Obviously, inflation that makaveli script is anticipated doesn't affect much, but unanticipated inflation affects certain groups in different ways. Who is penalized by unanticipated inflation (Losers)? Lenders- dollars paid by debtors are worth less after inflation than when they were lent. Investors- pay taxes on returns that may only reflect inflation, but they also pay a privileged rate (the capital gains tax rate is 20 percent; not the 33% top income bracket) Holders of cash (those living on fixed incomes)- inflation erodes the value of a dollar over time. (But who uses cash? The mafia, terrorists, drug dealers, and Republicans but for quite different reasons. |
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