[StellarKnight]

Black's Law Dictionary defines tax as " a monetary charge imposed by the government on persons, entites, transactions or property to yield public revenues."

Inflation is a wealth transfer, but not necessarily to a government entity. The end result to the consumer may be the same in certain instances, but I wouldn't characterize inflation as a tax.

[yesme]

If the annual inflation rate in the United States is 5%, one dollar will buy $1 worth of goods and services this year, but it would require $1.05 to buy the same goods or services the next year; this has the same effect as a 5% annual tax on cash holdings, ceteris paribus.

[StellarKnight]

Originally Posted by yesme

If the annual inflation rate in the United States is 5%, one dollar will buy $1 worth of goods and services this year, but it would require $1.05 to buy the same goods or services the next year; this has the same effect as a 5% annual tax on cash holdings, ceteris paribus.

Yes I know how to not only click links, but read them as well. What I'm saying is that the word "tax" has a specific connotation; it's not simply a synonym for "price increase." An annual inflation rate of 5% may have the same net effect on the consumer as a 5% sales tax on every dollar spent, but that doesn't render the effect on the consumer a tax. The definition of a tax doesn't seem to hinge on monetary implications to the taxpayer.

[licence2kill]

savers don't care about inflation, they care about deviations away from trend NGDP growth.

[yesme]

WTF? savers don't care about inflation? Are you high?

[licence2kill]

Scott Sumner:

This also applies to the phony tears people shed for the savers hurt by inflation. Let’s assume savers buy long term nominal bonds. Those bonds promise a fixed amount of money, at specified futures dates. The standard argument is that inflation hurts savers by reducing their real return on bonds. But savers don’t care about the nominal interest rate minus the inflation rate, they care about the nominal interest rate minus the per capita NGDP growth rate. I’ll give you an example. Years ago the British government indexed the initial starting point for retirement pensions to the cost of living, not average wages (as we do.) The Thatcher reforms led to real increases in living standards iGn reat Britain, and so over time the living standards of retirees fell further and further behind living standards of the employed (who received nominal wages increases that exceeded inflation.) Eventually the old-timers looked at the flashy lifestyles of their younger neighbors, and revolted. The UK government was forced to change the indexing scheme. People don’t care about real incomes they care about how they’re doing relative to their neighbors. If NGDP rises faster than expected, then a bondholder is paid back a smaller share of national income than he anticipated when he bought the bond. And that hurts.

[barrel roll]

Originally Posted by licence2kill

Scott Sumner:

Tldr: people are stupid?

[licence2kill]

yes, money illusion is extremely powerful.

[yesme]

for one thing, he only addressed bonds and in the end said the exact same thing. when people have less then they expect they get pissed. living and interacting with the largest retirement community in the us, aka the villages. i can assure you that they do care about inflation.

[licence2kill]

s=i