this post was submitted on 06 Jun 2024
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Citing a sustained fall in inflation, the ECB said its deposit rate would be cut to 3.75% from a record high of 4%, putting it ahead of the US Federal Reserve and the Bank of England, which have yet to cut interest rates.

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[–] GenEcon@lemm.ee 1 points 5 months ago

Thats some really hard BS.

How do you think is hit harder by Inflation: someone working for 50 k a year and negotiating a raise every other year or someone with 500 k on the bank?

Inflation hits the wealthy people the hardest! Not something I despise, but your claim is still complete BS.

So why do we aim for 'close to, but below 2 %' inflation (2nd BS claim: no one aims for 2–3 % inflation). Because it has shown to be the most efficient to reduce unemployment and force rich people and companies to actually invest. Without inflation companies would need to fire people a lot more, since they can't lower their expenses for their workforce in a different way. And sometimes they are struggling with their productivity and can't stay competitive in any other way. Lowering wages is not allowed in most countries.

It also forces rich people to invest. If there's no inflation, I can just get rich and then do nothing. If the value of my money decreases 2 % each year, I need to actively participate in the economy, at least by lending my money to other companies so that they can invest in new things.