> If you have a bucket of money that isn't doing anything, then what value does it actually bring to the economy? Penalizing static value seems almost reasonable.
So now we should be penalizing unproductive assets? When did we all decide that was ok?
Based on that logic, wouldn't I be justified in draining someone's savings account in order to invest it more productively in stocks? Maybe it's ok to steal land from people if I will grow more crops on it than they will?
You can justify taking pretty much anything if you say you will use it for something more productive. What about property rights? Why should people who have played by the rules and built wealth in our society, which they were encouraged to do, then have to live in fear that their wealth might be taken from them?
> So now we should be penalizing unproductive assets? When did we all decide that was ok?
We already do that---it's called inflation. And the justification used by economists is that the economy will collapse without inflation to incentivize spending money.
Inflation was not intentionally invented as a tax. It is a characteristic of a monetary economy. Economists prefer it to deflation because it deflation is worse, but that doesn't mean that we invented inflation on purpose as some kind of social engineering tool.
> that doesn't mean that we invented inflation on purpose as some kind of social engineering tool.
We didn't invent inflation, but we absolutely do set a target inflation rate as a social engineering tool. And the reason that deflation is considered "worse" is because it lets people keep equity in unproductive assets instead of liquidating it and moving the money into more productive assets.
> And the reason that deflation is considered "worse" is because it lets people keep equity in unproductive assets instead of liquidating it and moving the money into more productive assets.
No, the reason deflation is considered worse is the possibility of a deflationary spiral.
The Fed is primarily interested in preventing a collapse of the banking system. They don't really care if people are spending their money on productive investments or hoarding it -- in fact, if everyone was spending their money on productive investments there wouldn't be any bank reserves, and the Fed would be very unhappy about that.
So now we should be penalizing unproductive assets? When did we all decide that was ok?
Based on that logic, wouldn't I be justified in draining someone's savings account in order to invest it more productively in stocks? Maybe it's ok to steal land from people if I will grow more crops on it than they will?
You can justify taking pretty much anything if you say you will use it for something more productive. What about property rights? Why should people who have played by the rules and built wealth in our society, which they were encouraged to do, then have to live in fear that their wealth might be taken from them?