Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 30 of 36 Money Growth and Inflation Section 26 of 28 … Economists have identified several costs of inflation · shoe leather costs · menu costs · inflation-induced tax distortions · confusion and inconvenience · arbitrary redistribution of wealth All create relative price variability and the misallocation of resources. … Arbitrary Redistributions of Wealth The costs of inflation occur even when inflation is steady and predictable. Inflation has an additional cost when it is not predicted. Unexpected inflation redistributes wealth among the population in a way not connected with either merit or need. Suppose Sam Student, to cover college expenses gets a $20,000 loan from Bigbank at a 7% interest rate. For simplicity all interest is to be paid when the loan is due for payback in 10 years. Sam will owe Bigbank $40,000 after his debt has compounded for 10 years at 7%.
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From The Earth Transformed: An Untold History. Peter Frankopan. 2023. Section 1. From introduction: Global warming is one of the greatest dangers mankind faces today. Even as temperatures increase, sea levels rise, and natural disasters escalate, our current environmental crisis feels difficult to predict and understand. But climate change and its effects on us are not new. In a bold narrative that spans centuries and continents, Peter Frankopan argues NATURE HAS ALWAYS PLAYED A FUNDAMENTAL ROLE IN THE WRITING OF HISTORY. From the fall of the Moche civilization in South America that came about because of the cyclical pressures of El Niño to volcanic eruptions in Iceland that affected Egypt and helped bring the Ottoman empire to its knees, climate change and its influences have always been with us. … Frankopan explains how the Vikings emerged thanks to catastrophic crop failure, why the roots of regime change in eleventh-century Baghdad lay in the collapse of cotton prices resulting f
Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 30 of 36 Money Growth and Inflation Section 25 of 28 … Economists have identified several costs of inflation · shoe leather costs · menu costs · inflation-induced tax distortions · confusion and inconvenience · arbitrary redistribution of wealth All create relative price variability and the misallocation of resources. … Confusion and Inconvenience If we yearly changed how many inches were in a yard, it would cause confusion and inconvenience. Money is the economy's unit of account and is what we use to quote prices, record debts, and measure all transactions. When the Federal Reserve increases the money supply and creates inflation it decreases the real value of the unit of account. This causes substantial costs due to the resulting confusion and inconvenience. The tax code incorrectly measures real incomes because of inflation. Similarly, accountants incorrec
Leo Tolstoy philosophy ChatGPT: Leo Tolstoy, a Russian writer and philosopher, is best known for his novels "War and Peace" and "Anna Karenina." However, he also developed a profound philosophical outlook on life that went through different stages over the course of his lifetime. Some of the key themes in Tolstoy's philosophy include: Christian Anarchism: Tolstoy believed in a form of Christian anarchism, where he rejected the authority of both the state and the church. He argued true Christianity was about living a simple and humble life, guided by the teachings of Jesus Christ, which included principles of nonviolence, compassion, and selflessness. Tolstoy saw the institutionalized forms of religion and government as corrupt and incompatible with these teachings. Nonviolent Resistance: Tolstoy's philosophy emphasized the power of nonviolent resistance to bring about social and political change. He believed people should resist evil and injustice through
Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 30 of 36 Money Growth and Inflation Section 24 of 28 … Because of inflation-created tax increases on capital goods and interest income, higher inflation discourages people from saving. The economy's savings provides the resources for investment which is a key factor of long-run economic growth. When inflation raises the tax burden on saving, saving is discouraged and immediate consumption is encouraged. This tends to depress the economy's long-run growth rate. … One solution to this problem is to index the tax system. Tax laws can be written to adjust for the effects of inflation. In the case of capital gains, the tax code can adjust the purchase price of the asset using a price index to assess the tax only on the real gain. In the case of interest income the government can tax only real interest income by excluding the portion of interest income created b
From article China's economy is sick and could infect the US. Michael Lee. August 21, 2023. China's economic momentum is projected to continue slowing and could create bad news for American companies. "China has been an important trading partner for the U.S., CHINA ACCOUNTS FOR 9% OF AMERICA’S EXPORTS," Erin Walsh, senior research fellow at the Heritage Foundation's Asian Studies Center, told Fox News Digital. "The slowdown hurts large U.S. companies with considerable business in China and, in particular, the construction and manufacturing sectors." … Walsh's comments come as projections show China's economy is likely to miss its 5% growth target this year. CHINA IS ALSO BATTLING A RECORD HIGH YOUTH UNEMPLOYMENT RATE OF OVER 21% and a property market bubble that has already burst, according to a report from Reuters. … The slowdown has prompted Beijing to take action, with China surprising markets last week by cutting interest rates. But economi