Posted on 06/02/2019 8:14:00 AM PDT by Kaslin
Inflation undermines capital formation in five major ways, which can be described under the following heads: reversal of safety, tax effects, prosperity delusion and overconsumption, malinvestment, and the withdrawalof-wealth effect.
Inflation undermines capital formation in five major ways, which can be described under the following heads: reversal of safety, tax effects, prosperity delusion and overconsumption, malinvestment, and the withdrawalof-wealth effect.
The reversal-of-safety, tax, malinvestment, and withdrawal-of-wealth effects also operate to reduce the real rate of return on capital.
The reversal-of-safety effect threatens all who invest in the traditional ways with the loss of their capital and thus with the receipt of no rate of return at all, or, indeed, a negative one.
The tax effect represents the taxing away of the real rate of return.
The malinvestment effect represents the investment of capital in ways that are less efficient and actually loss making.
The withdrawal-of-wealth effect represents the withdrawal of wealth that constitutes part or all of firms real rate of return on capital.
Inflation causes the impoverishment of wage earners.
Inflation is the cause of depressions and deflation. Inflation, especially in the form of credit expansion, sets the stage for financial contractions and deflations i.e., for depressions.
Great catch, I did not notice.
Currency must be fungible in order to qualify as money...
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