Inflation is worse than unemployment
Debate Rounds (3)
My specific position will be relative to the economic viability of the citizenry in relation to consumerism being a major driving force of economic development and thus if unemployment is high enough consumerism effectively drops damaging the markets of any country and lowering the value of the market itself and therefore decreasing cashflows to the point where inflation is disregarded.
Furthermore, when inflation is high in an economy, people tend to expect more inflation. The expectation of inflation leads to even more rapid inflation.
I will stop here; this is my argument, I look forward to your response.
What I mean by this is simply that inflation lowers buying power but only extreme inflation really has a more tangible effect lowering economic standing to the point where it's crippling however a total lack of assets is definitely fatal to one's buying power and doesn't have a degrading effect against the dollar because there are no dollars to degrade. Unemployment effects three distinct systems which worsen the outcome for all citizens:
1. The Private Citizen: With no money they cannot buy anything.
2. The Corporate Entity: With no buyers they cannot produce profits.
3. The State: With no jobs for the citizens SUTA is reduced, Unemployment is increased with the stores for governmental money being depleted perhaps beyond the fund that SUTA was built for, and no taxation can be collected on other fronts for services provided by the city which create deficits within the city itself.
All of this is cyclic however in when the Private Citizen cannot buy from the Corporate Entity the Corporate Entity cannot pay The State which causes the Corporate Entity to leave which lowers job market for the Private Citizen which only worsens unemployment and lowers SUTA taxation which in turn greatly increases the government deficit causing The Government to eventually go bankrupt due to being unable to meet the obligations of it's citizenry.
While inflation can indeed raise prices to the point where maintaining person's on payroll is difficult and some have to be released so long as the business itself does not close down it pays SUTA and furthermore it won't leave the locale; if it does not leave then money is generated, or rather funds are passed, and the economic condition of all entities tends to stabilize and survive whatever dryspell is causing the issues such as a recession or even just a change in the natural resources of an area or natural disaster.
Furthermore, when unemployment is high, those who keep their jobs are largely unaffected while inflation hurts everyone. Furthermore, inflation can lead to an enlarged national debt because one dollar no longer supports the same amount of programs because it is devalued. Speaking of currency devaluation, inflation will also cause the value of the dollar to decrease in relation to foreign dollars.
Also, in response to your first comments. During times of high unemployment, inflation is usually lower.
This is a reference to the failure of the Phillips Curve (http://www.economicshelp.org...) which stated that inflation and unemployment were inversely related and was actually a by-product of your argumentation which is that one is worse than the other and specifically inflation is worse because of how it manages to hit every dollar versus concern for a lack of cash flow.
The grounds for inflation causing unemployment are extreme (http://economicsonlinetutor.com...) and while natural often self-correcting. However there is greater effect from unemployment (http://www.raybromley.com...) relating to how the Equilibrium for the economy in any status would behave. Surpluses of funds among the consumer base does not necessarily equate a surplus of monetary printing and furthermore a shortage of funds among the consumer base still does not necessarily equate a lessening of monetary printing since, as I went over with SUTA, those lives still require funding at the base level and therefore monetary printing continues regardless (http://money.cnn.com...).
Stagflation is the major keypoint that is a thorn in your side as you alluded to in the 70s where the two are not directly connected therefore there's no direct correlation that gives rise to inflation being "more harmful" than unemployment and a lack of economic cash flow; when the value of money drops significantly it has the same effect as when production stops of certain commodities however unemployment has greater effect in both realms and generally when extreme drives stagflation which is "not supposed to happen" according to the Phillips Curve or drives inflation of pricing due to lack of competition because businesses refuse to invest in the area.
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