Post
Topic
Board Economics
Re: Stagnant Salaries vs. Inflationary Savings Tax
by
MissNonFall9
on 09/05/2024, 06:43:24 UTC
Which of these economic situations would you prefer to find yourself in?

A- Your salary is stagnant but prices fall. Where this happens, your real purchasing power has increased.  It's called constructive deflation. And even if your salary falls, but prices fall faster, you are still ahead.


B- Having your savings taxed 2%+ a year by inflation.

Drop your thoughts
Of the two options you have given number one is always acceptable. Because there is not a single person in the world who would want to buy any product or service at a price higher than the prevailing market price. Buyers always enjoy and take pride in getting a little less than the prevailing price. However as option number one does not address demand growth it does not seem to be very relevant. Because the demand for everything in the world is increasing day by day gradually to meet this demand, the supply of goods or services has to be continued. So it is very normal for commodity prices to rise which contradicts option A.