The whole point of inflation is to disincentivize people from holding money in the first place. Money only has value when it moves, not when it's stuffed under a mattress. I really think we need to bring back mandatory economics classes in high school.
The idea is that you use it to invest: into real estate, into equities, into bonds, heck even a savings account collateralizes mortgages. Yes, even your magic beans represent the system working. The system is designed to encourage the continued survival of the most economically fit companies, etc, by your picking winners.
Don't hold money. Certainly not more than you need in the event of an emergency.
Guess what? Someone, somewhere, is holding every dollar in existence. Someone has to hold it. They don’t just vanish after being used in a transaction. Saying “don’t hold money” tells me everything I need to know about your understanding of economics.
> Someone, somewhere, is holding every dollar in existence. Someone has to hold it.
Yes, for very short periods of time, ideally. To the extent that remains true the effect of inflation is smoothed out. As at each stage in the transaction chain prices can adjust pricing to reflect inflation. Think of it like a continuously variable transmission. Yes, it has gears. But the effect is basically smoothed out if you do it quickly enough.
> Saying “don’t hold money” tells me everything I need to know about your understanding of economics.
No, arcticbull is right in this regard. The way Keynesian economics and encouraging the velocity of money works is that it discourages hoarding and encourages the speed at which money passes hands in an economy. It's great for the banks and rentier class but it's crappy for laborers and savers.
In such an environment you want to get rid of your USD as fast as possible and turn them into something you value, whether it be land or whatever. The money itself is by design an inflationary currency. Most people don't understand this, which is just fine with the people who print the money and the ones who distribute and loan it out.
Now, having lots of liquid cash AKA liquidity is a good thing as long as you get rid of it soon by putting it in assets. Lots of people gladly go into debt taking out loans to buy productive assets and declare bankruptcy multiple times playing this kind of game. It's kind of insane in a way.
This is dimwit CNN talking head economics. Go read what Keynes (and Mises) actually wrote instead of regurgitating an undergraduate economics textbook.
The idea is that you use it to invest: into real estate, into equities, into bonds, heck even a savings account collateralizes mortgages. Yes, even your magic beans represent the system working. The system is designed to encourage the continued survival of the most economically fit companies, etc, by your picking winners.
Don't hold money. Certainly not more than you need in the event of an emergency.