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Aaron Okeanos
David Pakman Show
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Comments by "Aaron Okeanos" (@AaronOkeanos) on "ZERO inflation last month, lowest rate in TWO YEARS" video.
Nice. There is just one problem prices do not fall not even with zero inflation. Only higher income can counter inflation.
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What I would want is that all wages, benefits and pensions are bound to the inflation rate. Meaning they have to rise at least by the inflation rate automatically. This would make inflation neutral for people on earned income (working people).
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@americatruecrime If you stick to the logic yes wages would even go down during deflations. For the interest rates nothing would change however since inflation is neutral to working people federal banks can ignore this component and concentrate entirely on investment/growth, the financial markets and the amount/price of money. Inflation would only be a problem for money hoarders. So even inflation rates of 10% would not be problematic but would force money hoarders to invest which in turn leads to more growth.
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@americatruecrime Since mortgage rates are bound to the base interest rate the same rules would apply ... the lower the base interest rate the better for homebuyers and investors because money is cheaper. Extremly high inflation rates should be an exception even if wages are more protected from the results. Which brings me to a final remark. Even if wages are bound by law to inflation rates there are of course still relation between working people and the base interest rate. For example on mortgages but also on unemployment rate which is tighly connected to investment/growth. This policy would only make sure workforce value is not constantly deflated by the value of inflation creating all kinds of other issues for society but it would of course not be completly isolated because everything is connected in one way or another.
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I think you can forget the economic indicators when income inequality in not incorporated.
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