"Controlling inflation is more important than controlling unemployment." Agree or Disagree?

[Still-alive]

Yup you guessed it, its another question from the political compass test.

Strongly Agree

Agree

Disagree

Strongly Disagree

Undecided

[nightdrot]

Voted "agree." This because while the misery and social disruptions of high unemployment should not be underestimated, the truth is that high inflation can lead to high unemployment. This being the so-called "stagflation," of which the United States got a brutal taste in the 1970s.

Beginning in the late 1970s, the rate of inflation peeked at 14.5% in 1979 - the highest ever recorded in peacetime since statistics began to be kept. In 1980, it hit 13.1%, the first time the US had back-to-back years of double digit inflation in peacetime.

At the same time, the rate of unemployment continued to rise. Hitting 7.8% in 1980. This producing an ocean of misery that was only going to get worse. It being the only way to wring the inflation out of the system was to hit double digit interest rates - the prime rate would hit an eye bulging 21.5% - and unemployment would peek at 10.8%. The highest - and not counting the pandemic recession it still is - unemployment rate since the Great Depression.

The point being that the only way, in the end, to combat high inflation is to raise interest rates and thus the unemployment rate. In the overlapping period, this resulting in both high inflation and high unemployment.

By contrast, while unemployment can rise, it need not be fought with inflation. Money can be pumped into the economy that can offset, and over time lower, unemployment, without inflation rising.

Thus it becomes a cost/benefit trade off. High unemployment is not be sought, but when it happens, it need not be combatted with high inflation. By contrast, there are few tools - fiscal and monetary - to hand where high inflation can be combatted without first raising, sometimes significantly, unemployment.

Thus - and there is really more to it, but for purposes of this answer we will leave it here, high unemployment should be seen by policymakers as the lesser of two evils. Evil to be sure, but at least not bringing with it the inflation that makes unemployment all the harder to take.

[MrOracle]

We currently have staggering unemployment numbers, and we also now have a virtual open-border policy, which is insane. Biden has already borrowed 4 trillion dollars for his last go-round, and now wants to borrow another 6 trillion. He's spending like a drunken spoiled 19-year-old debutant with daddy's Black Card, never caring that we're going to have to pay that bill.

And all the people on fixed incomes (retirees, people on pensions, etc.) are going to have their lives destroyed by hyper-inflation - what would have been enough for a modest standard of living will soon not be enough for a very poor one.

I know that construction is seeing a fall-off as the price of building materials has gone up 3-5 times the price of 6 months ago. Food is going up in price. Gas is up and will continue to go up.

We're going to have the late 1970s all over again, but worse. But the super-rich don't care what happens to you - they just want the power. They were happy to have tens of thousands of small businesses be destroyed so that the huge corporations they own can take all the business for themselves. It's insane, and a lot of people are going to be taken by surprise at how fast it all goes bad - mostly the people who voted for it.

[tartaarsaus]

By far the biggest determinant of inflation is monetary policy, not the spending pattern in fiscal policy.

And it just so happens to be that with the current monetary policy, inflation is very limited.

[MasterOfReality]

@tartaarsaus come back in a year and let’s talk. It’s on the way bud. All the indicators for hyperinflation and economic recession are there.

[crazyish]

I strongly agree. We need to work on the cost of life first and then maybe unemployment wouldn't be such a problem. Some people need better paying jobs than what's out there just to be able to afford things in life. Certain jobs are just not going to cut it. We should also work on minimum wage and then not inflate the cost of everything else because of it being higher. It's ridiculous and makes no sense. It gives a false sense of hey I can finally actually make a living but in reality it's just a way to justify making everything more costly. Honestly we need to work on the underlining causes of issues rather than taking on the issues head on, that always ends up just being a temporary solution otherwise.

[BlacklightShade]

If working class people can buy things they will spend more and stimulate the economy. Rich people generally hoard what they have into investments and don't reinvest into the working class. So lowering unemployment will control inflation.

[Still-alive]

beautiful. i love it.

[jshm2]

You're confused.

You cannot "control" inflation in a free market capitalist system. Even in a socialist influenced system, you can only mitigate some of it's effects.

The main reason is that prices will always increase over time. But cheaper labour or costs savings can sometimes mitigate the costs.

Unemployment on the other hand is a sticky problem as it has direct, and indirect issues. Direct being the obvious like less spending, more debt etc. but indirect can be anything from higher crime, to lower foreign investment.

Hence why unemployment gets tackled more than inflation.

[tartaarsaus]

Meh, inflation and unemployment are targeted both a lot but by different institutions.

Governments cannot target inflation because they let the central bank control inflation. Meanwhile, central banks are supposed not to control unemployment (though they actually easily can)

[HawkPerception]

Inflation is more important to control for sure in my opinion. If the value of currency goes down, that means employers can only afford to hire less employees and/or lay them less. The economy is based purely on how high the value of a regions currency is. It doesn't matter if a country's employment rate is great. If they pay their employees shit, that makes it a 3rd world country. Here in North America (Canada and US specifically) we get paid pretty decently and if we go to a 3rd world country our currency is worth much more and we can do a lot more with what we make than them.

[TheSpaceGnome]

How would you control inflation?

Inflation happens from population increase resulting in a need to print more money, which in unavoidable because even if you shut out immigration, people still make babies, also trade is international.

Inflation happens from supply and demand increasing a product's perceived value or availability, which is also unavoidable.

Inflation happens from wage increases that are meant to combat inflation, which is also unavoidable.

Aside from inventing and perfecting a consumer based molecular assembler/replicator, there is no solution to this.

Without good paying jobs people can't keep up with inflation.

[Bellatris]

They're both equally important, because if either get out of control there will be chaos and misery, and it will not matter if you have a job if the cost of a bottle of milk is $50,000.
Look at what happened to Germany in 1919, and more recently to Zimbabwe and Venezuela.

[Riebeck]

Think about this: If every country printed $10,000 stimulus to give to every citizen in their country, it would be free money with no inflation consequence because if every country did it there would be no other currency to compare it to. I forget what it's called but thats basically what's happening right and and why the markets keep rising.

[Gwenhwyfar]

Despite being a lawyer I have no real opinion on either of these issues. I focus narrowly on the cases I’m litigating.

[Still-alive]

Oh you’re an actual lawyer. Thought you may have been a paralegal. Cool beans

[Gwenhwyfar]

Thanks 😊

[sofiec]

People who think they understand inflation: muh stock prices are going down
people who control inflation: money machine go brrrrr
people who are the deep state of inflation: the Bonds mafia

[Kaneki05]

Agreed. It's not that hard to control really. Just as things apper to cost more, jobs start appering to pay more. So then it just stay's roughly the same just looks different.

[Jersey2]

Inflation will destroy old people on fixed income. Their buying power will be halved. Ever time Biden speaks he wants to spend another two trillion. Now he wants to give away the vaccine to countries who could pay billions pay nothing.

[Hispanic-Cool-Guy]

Agree. Unemployment is terrible but out of control inflation hurts more the common man and woman trying to raise and feed a family. You're feel like being you're suffocated and your money isn't worth nothing.

[exitseven]

Unemployment is a more temporary situation that fluctuates a lot over time. When prices go up, they never come down.

[Brainsbeforebeauty]

They both have negative affects not only on people but the state of the economy as a whole

[tartaarsaus]

Agreed. Inflation is fundamental to a functioning economy, while unemployment can be dealt with through fiscal policy.

[tartaarsaus]

And for the record, good inflation is not zero inflation. Inflation from 1.5-2% is a reasonable goal.

[tartaarsaus]

*low and stable inflation

[MasterOfReality]

Get ready for hyperinflation... It’s coming soon. Thanks Democrats!! Couldn’t you at least have defrauded us with someone competent?

[tartaarsaus]

The democrats don’t set monetary policy. The people who set monetary policy are politically independent and confirmed by a Republican senate

[MasterOfReality]

@tartaarsaus no, thanks for defrauding us with an incompetent bafoon democrat for a president.

[tartaarsaus]

@MasterOfReality

Lol if you think you understand monetary policy better than the FED

[MasterOfReality]

@tartaarsaus the fed needs to be destroyed too.

[tartaarsaus]

@MasterOfReality

Removing the central bank is the most direct way to ruin the economy lol

[MasterOfReality]

@tartaarsaus says who? The fed is a totally unregulated body controlling our financial policies. And it’s against the constitution itself. Only Congress can issue/print money. It’s why JFK was assassinated in my opinion. He tried to return us to that practice.

[tartaarsaus]

@MasterOfReality

Consensus among economists that a gold standard is stupid and politicians controlling money supply is stupid.

And for whether it’s unconstitutional, go to the SCOTUS if you think it is unconstitutional.

[tartaarsaus]

And no, it is not unregulated because it literally exists by mandate of Congress and Congress sets the mandate.

[MasterOfReality]

@tartaarsaus SCOTUS has been corrupt for years and has made many blatant non-constitutional calls before. I think we need to scrap this whole thing and start over.

[tartaarsaus]

@MasterOfReality

Or they understand the constitution better than you do. I wonder which it is

[MasterOfReality]

@tartaarsaus it doesn’t take a genius to recognize the corruption and the rulings based solely on politics. When you can predict with 100% accuracy how the liberal justices will rule, that kinda says it all. Unlike you, I don’t have faith in those in government strictly for obtaining their positions and don’t think theyvare correct simply because. In fact, I don’t have faith in our government period.

[OddBeMe]

Strongly disagree. They’re linked for sure. But unemployment is 10x more of a threat to economy.