Quote:
Originally Posted by Enoch Root
Actually, the opposite is largely true. Additional wealth, in the hands of the poor and the middle class, results in additional spending, or as you described it: more money chasing around goods & services.
Wealth, in the hands of the rich, does not generate spending, it generates investment. We can debate whether this is a net benefit or a net hindrance to the economy, but what it doesn't do is push up the prices of goods and services.
What you may be trying to get at is that more economic activity results in more inflation. This is true, but inflation is well known as the enemy it is, and central banks are very diligent towards keeping it in check.
Yes, if we slowed the economy down, there would be less inflation, but I very much doubt that slowing the economy down would benefit the poor.
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The problem right now is that the central banks (and the government for that matter) aren't being "very diligent" about keeping inflation in check. In fact, the combination of ultra low interest rates and constant payouts are making inflation much much worse.
A slow down in the economy would cause a temporary disadvantage to everyone, but halt the long term damage to the poor that inflation is causing. Inflation benefits those who have lots of capital already, and horribly hinders those trying to acquire it.
The current path is, more or less (a small percentage of people can work their way out of it, but it's a very uphill battle), a class system. If you're born into a family with lots of real estate, investments, etc... you're going to acquire that wealth. Meanwhile everyone else is born into a lifetime of renting and scraping by.
People in Calgary aren't quite experiencing the crunch yet, as the real estate market was already so depressed. But that's quickly changing, as both the cost of acquiring and the cost of renovating/maintaining real estate in Calgary are rising rapidly.
People are demanding higher wages to combat the inflation driven increases in the cost of living, but the fact of the matter is that many small business owners are scrapping by themselves and cannot afford to increase salaries. So we end up with the death of small business and the furtherance of mega corporations like Amazon.