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> But inflation also implies economic growth Inflation does not imply growth in real GDP, no. > which generally raises the value of equity holdings. The impa

> But inflation also implies economic growth Inflation does not imply growth in real GDP, no. > which generally raises the value of equity holdings. The impact of inflation is dependent upon asset allocation. Ceteris paribus, inflation hurts debtholders (who, incidentally, tend to be wealthy), and it helps debtors (who, incidentally, tend to be poorer).

nonbel 8y ago
Inflation hits prices before wages. Wage increases due to inflation always lag the price increases of the food/shelter/etc people need to buy. Is this controversial?
- AnimalMuppet 8y ago
  No, it's not controversial. However, it also doesn't seem to respond to anything chimeracoder said. You sound like you think you're arguing with chimeracoder, but I don't see which point you're responding to.
  - nonbel 8y ago
    From a few posts up: >"This is backwards. Inflation destroys the value of debt. Poor tend to be borrowers and rich tend to be lenders, so inflation is an equalizer." chimeracoder seemed to be agreeing with this "equalizer" position by saying: >"Ceteris paribus, inflation hurts debtholders (who, incidentally, tend to be wealthy), and it helps debtors (who, incidentally, tend to be poorer)."
    - AnimalMuppet 8y ago
      All true. But I fail to see how your point about raises happening after price increases refutes the point that inflation destroys (reduces) the value of debt. Now, true, if you're a worker who owes money, and inflation kills your cash flow (because raises come later than price increases), it may not matter to you that the value of your debt decreased, because the cash flow problem is going to bankrupt you before the debt erosion helps you. But it's still a separate effect.
      - nonbel 8y ago
        I just don't think the fact that there is debt erosion has much impact on the gap between rich and poor. I'm talking about an income that ten years ago would get you a full one bedroom apartment now gets you living in a converted closet. Meanwhile the pay for the same work has gone from 12 $/hr to 15 $/hr. Also, this is ignoring that anyone sane issuing debt plans for inflation and accounts for this somehow (interest rate schedule, etc)... Edit: Another thing, this "inflation helps the poor idea" seems to be a version of trickle down economics.

nonbel 8y ago

Inflation hits prices before wages. Wage increases due to inflation always lag the price increases of the food/shelter/etc people need to buy. Is this controversial?

AnimalMuppet 8y ago
No, it's not controversial. However, it also doesn't seem to respond to anything chimeracoder said. You sound like you think you're arguing with chimeracoder, but I don't see which point you're responding to.
- nonbel 8y ago
  From a few posts up: >"This is backwards. Inflation destroys the value of debt. Poor tend to be borrowers and rich tend to be lenders, so inflation is an equalizer." chimeracoder seemed to be agreeing with this "equalizer" position by saying: >"Ceteris paribus, inflation hurts debtholders (who, incidentally, tend to be wealthy), and it helps debtors (who, incidentally, tend to be poorer)."
  - AnimalMuppet 8y ago
    All true. But I fail to see how your point about raises happening after price increases refutes the point that inflation destroys (reduces) the value of debt. Now, true, if you're a worker who owes money, and inflation kills your cash flow (because raises come later than price increases), it may not matter to you that the value of your debt decreased, because the cash flow problem is going to bankrupt you before the debt erosion helps you. But it's still a separate effect.
    - nonbel 8y ago
      I just don't think the fact that there is debt erosion has much impact on the gap between rich and poor. I'm talking about an income that ten years ago would get you a full one bedroom apartment now gets you living in a converted closet. Meanwhile the pay for the same work has gone from 12 $/hr to 15 $/hr. Also, this is ignoring that anyone sane issuing debt plans for inflation and accounts for this somehow (interest rate schedule, etc)... Edit: Another thing, this "inflation helps the poor idea" seems to be a version of trickle down economics.