alt Hacker Newsthe affordability crisis is downstream of inflation. governments should stop inflating the money supply, but of course they won't ever do this because they would then need to generate revenue another way, which would be to raise taxes. inflation is really just a hidden tax and it's easier for them to "tax" without pissing off citizens.
and so really the solution is to reduce spending. which, to some extent, is so obvious it kind of hurts.
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Nobody wants to go back to the gold standard.
Inflation is useful (within limits). So is deficit spending in a growing economy.
> Inflation is really just a hidden tax
No it isn't. The idea that the government should fix the value of money -- and that if it does otherwise it is stealing out of your pockets -- is goldbug crank territory.
If inflation was a tax, then deflation would make people richer. It doesn't. Why? Because in a deflating economy, your creditors can't pay you back.
Deflation is very damaging, and avoiding it is more or less the number one goal of macroeconomic policy.
What's wrong with taxing the rich to maintain current spending?
Well, a little bit of inflation is actually good for the economy long term, and we have to balance that with the opportunity of cost of not spending.
Yes, the amount of government spending currently is likely too much, but by not spending the opportunity cost is sometimes greater. As the article contends, the solution to the affordability problem is to raise wages. If you can use the levers of government to induce growth that naturally raises wages, more deficit spending might be worth it.
This is the most impactful economic discovery of the century. You can raise taxes as much as you want if you add a layer of seperation to it and print currency.
The consequences of reducing spending are also obvious, I won’t call it a ‘solution’ given how bad they hurts.