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[–] CanIHazPhD 2 points 3 points (+5|-2) ago 

You guys should really look into inflation/deflation (what the graph depicts) and how it works. You have the right idea, but are looking at the wrong indicator.

To make a long story short, inflation (when controlled, say, less than 5% or so) does mainly two things. It incentivizes investment as opposed to savings and it reduces unemployment. Deflation does the opposite.

What you should really be looking at is the purchasing power of 1 hour of average labor. To put this in a simple example. Say that in 1913 a kilo of bread costed $1 and now it costs $10, from the graph's perspective it would be 10 times more expensive. But if the average salary in 1913 was $1/hr and now it's $10/hr, things actually remain the same.

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[–] observation1 0 points 1 point (+1|-0) ago  (edited ago)

That's like saying because we've become more efficient technologically at making bread, which keeps costs down - that it's okay to steal money through inflation to justify the offset in what would have been savings.

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[–] CanIHazPhD 0 points 1 point (+1|-0) ago 

Sadly economics is a harsh mistress, no system is inflation or deflation proof (no, not even metal based standards or cryptocurrencies) and the alternatives (hyperinflation or deflation) are much worse. Inflation only affects you if you have a lot of currency "under your mattress" (saving accounts or things like that), which is an incredibly bad idea anyway. It does not affect you if you have investments, does not noticeably reduces your salary, etc.

This is why you need to look at the value of actual labor and not at the value of bills.

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[–] ForTheUltimate ago  (edited ago)

better deflation so the investment that is done is the most efficient. by saving, the purchasing power of frugal consumption and investment grows. economic decision making is just more efficient.

For the record, USA had price deflation in its first century.

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[–] CanIHazPhD 1 point -1 points (+0|-1) ago 

Deflation is a bad idea in most cases, because it stunts hiring (especially in the presence of minimum wage laws) and it stunts risky investments (like research and development, prospecting, etc.). Deflation is also particularly bad for people that have debt, like student loans or mortgages, at it increases the real value of debt over time.

Take some time to read this. https://en.wikipedia.org/wiki/Deflation#Effects

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[–] Race_War_Now ago 

What would you recommend for redpilled intros to economics? I'm essentially economically illiterate. I don't really know what inflation and interest rates and all that jazz really mean or represent.

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[–] ForTheUltimate 0 points 3 points (+3|-0) ago 

mises.org

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[–] CanIHazPhD ago 

I recommend you forget about the politics, at least at the beginning and focus on learning just principles from introductory books. I started with "Principles of economics" by Gregory Mankiw (pretty sure you can find it in b-ok (dot) org, but I haven't checked).

You need to know high school algebra to understand some concepts (up to derivatives I would say), after you get a good understanding of supply-demand curves you'll be set to start getting into the politics of economics. This is mostly because taxes/subsidies and who pays what stems from these curves. What I mean from this is you don't need to read the whole book in depth, so don't be daunted by the length of it.