I’ve been wondering this question for a while. Ignoring current events, why is a little bit of inflation desirable?
I do understand that it’s done to “stimulate” the economy so people don’t let their cash rot in a checking account, but isn’t it a zero-sum game? Everybody says that money is not meant to stay where it is, rather, should flow through the economy. But if the economy always needs injections of liquidity because otherwise it fails, isn’t the economy broken?
I feel like there’s something I can’t comprehend about that.
The relative amount of spending that rich people do to their net worth or whatever is much much smaller than the amount of spending middle class and poor people do.
If you think of a minimum wage worker who rents, nearly every dollar they make is back into the economy nearly immediately.
I on the other hand have maybe a third of my yearly income sitting in a high yield savings account.
Someone calculated that the amount that musk spent on the elections was the equivalent of a minimum wage worker spending like $30. He’s not doing that daily so he’s not using the equivalent amounts of money.
That is not what I asked about, though. The claim was that they’re hoarding money/wealth. This makes it sound like they have a lair full of chash somewhere like Scrooge McDuck.
Musk owns multiple succesful companies. His “wealth” is the value of these companies. You can’t buy a house by stating you own SpaceX, they want cash.
Actually, you can say that SpaceX is worth x million dollars and offer it as collateral for a loan and because its an extremely large amount of collateral you’ll get an amazingly low interest rate and never have to use cash for anything. This is pretty much exactly how the Twitter purchase went down.
Not sure about the hoarding wealth thing, but
You basically can, since the bank will give you a loan at almost no interest with your shares as collateral.