Debunking wild conspiricies

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the only people who want inflation are those in debt, or the gov't. And the gov't only wants it to "grease the skids" a bit.

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What I'm still not getting is why the Fed Reserve would so willingly soak the lenders with inflation?

I guess if we're talking about banks or other businesses being bailed out by the fed... there's obviously reasons the beneficiaries want that inflation. They wouldn't want it just for the sake of inflation, but for the freshly printed money.

inflation makes it easier to repay debts because you're actually paying back less (in real value) than you would be otherwise. Banks don't want that.

A bank could make it easier to pay back a loan at any point they want. They don't need inflation for that. Just lower the amount owed.

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A bank could make it easier to pay back a loan at any point they want. They don't need inflation for that. Just lower the amount owed

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and take a loss? i hope you mean to lower the interest rate or something

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Because wouldn't they want the money to deflate to increase the value of their savings?

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Banks do not want to save, they want *you* to save so they can lend the money out at a higher rate and profit off the difference. For the most part banks don't care all that much about the rate of inflation provided it is reasonably constant. They care about the difference between what they have to pay out to savers vs. what they can earn by charging borrowers.

Deflation hurts an economy because people can just hoard cash, there's less incentive to spend it on anything. This is bad for banks.

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I just can't get over why the Banks would want inflation at all.

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What conspiracy theories have you heard regarding this?

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Is there more explanation to this available at all? Because wouldn't they want the money to deflate to increase the value of their savings?

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The Fed, banks, businesses, and economic activity as a whole will benefit with a slow, steady rate of inflation. The basic concept is if you know a TV is going to be worth more next week than it is now, you'll buy it now. If you think a TV is going to be worth less next week, you'll save and not spend. This is the basic idea why deflation is so hurtful to an economy, people don't spend so businesses have to cut prices which creates a deflationary spiral. On the flip side too much inflation will cause prices to rise more than wages, while the mark to market value of lender's assets will plummet and total return will not be overcome by the income component of these assets. Inflation is the ultimate Goldilocks entity, not too hot, not too cold, just right.

I also can assume what some of the conspiracy theories you've heard entail. There are very, very few financial conspiracy theories that I would say are legit. Some exist, but 98% of the time these conspiracy theories are spawned from a lack of understanding on how finance actually works.

Nope, you're good Benny. I don't like the Fed and central bankers as much as you, but you generally see the other side of the argument when it has basis. Others? Not so much.

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How are you so certain?

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Because a slow but steady inflation rate people not to take cash out of circulation, i.e. hoard it. People will either spend it or invest it instead in an effort not to fall behind.

BTW, I'm making a distinction here between saving as in investing vs. saving as in just hoarding cash. Investing savings in a fund or stock is fine, it's when you take cash out of circulation by just letting it sit unused in a checking account that investment and spending activity suffer, and so does the economy.

Deflation is bad because then people have an incentive to just let cash sit idle.