4 ms·

> I have at no point stated that. What I said is that inflation affects all debts equally. So you do, at least, understand that a person with more debt benefit

> I have at no point stated that. What I said is that inflation affects all debts equally. So you do, at least, understand that a person with more debt benefits more than a person with less debt? > Interest rate on loans is defined on "cost plus" basis, where "cost" is the treasury interest rate, and the "plus" is based on your default risk. However, the "cost" is the same for everyone no matter what. So you are aware that poor people generally pay a premium for loans, based on their risk of default? And you see how that impacts their access to credit? And how this leads to wealthy people benefitting more? > You can get a mortgage with as little as 3% down payment, so yes, I am referring to someone who has a $100K mortgage debt, a $100K house an $10K in other, misc assets like savings or investments. That is the kind of person who may benefit from inflation, depending on their investment choices.

arcticbull 6y ago
> So you do, at least, understand that a person with more debt benefits more than a person with less debt? I believe I explicitly stated it benefits debtors over creditors. Poor folks are leveraged substantially more than rich folks, hence the disproportionate benefit. Without inflation they'd be assessed the same interest rates, with the same risk premiums, but would not benefit from inflation so this is strictly worse, is it not? > So you are aware that poor people generally pay a premium for loans, based on their risk of default? And you see how that impacts their access to credit? And how this leads to wealthy people benefitting more? That has nothing to do with inflation which impacts the principal of issued loans.
- chordalkeyboard 6y ago
  > Poor folks are leveraged substantially more than rich folks, hence the disproportionate benefit. This is false, rich folks have far more debt than poor people, not to mention access to lower prices for loans. > Without inflation they'd be assessed the same interest rates, with the same risk premiums, but would not benefit from inflation so this is strictly worse, is it not? You’re right that the rich, who hold vastly greater amounts of debt, would not benefit from the central bank depreciating their liabilities. > That has nothing to do with inflation which impacts the principal of issued loans. When the principal decreases by 2% per annum and the rich person pays 2% interest and the poor person oays %600 percent, the rich person gets free credit while the poor person pays ~600% per annum. Surely you can see that this is worse for the poor person, even before factoring in that the rich person gets capital gains from asset inflation while the poor person gets real decrease in wages.
  - arcticbull 6y ago
    > This is false, rich folks have far more debt than poor people ... On a percentage basis? [citation needed]
arcticbull 6y ago
> When the principal decreases by 2% per annum and the rich person pays 2% interest and the poor person pays %600 percent, the rich person gets free credit while the poor person pays ~600% per annum. Surely you can see that this is worse for the poor person, even before factoring in that the rich person gets capital gains from asset inflation while the poor person gets real decrease in wages. Inflation is a small part of the interest rate calculation. Even if inflation were 0% a rich person would pay 0% and a poor person 598%. You've achieved nothing. > Surely you can see that this is worse for the poor person, even before factoring in that the rich person gets capital gains from asset inflation while the poor person gets real decrease in wages. Wages have kept pace with inflation, and capital gains tax is a social/fiscal policy matter for Congress, not for Janet Yellen. Try again.

arcticbull 6y ago

> So you do, at least, understand that a person with more debt benefits more than a person with less debt? I believe I explicitly stated it benefits debtors over creditors. Poor folks are leveraged substantially more than rich folks, hence the disproportionate benefit. Without inflation they'd be assessed the same interest rates, with the same risk premiums, but would not benefit from inflation so this is strictly worse, is it not? > So you are aware that poor people generally pay a premium for loans, based on their risk of default? And you see how that impacts their access to credit? And how this leads to wealthy people benefitting more? That has nothing to do with inflation which impacts the principal of issued loans.

chordalkeyboard 6y ago
> Poor folks are leveraged substantially more than rich folks, hence the disproportionate benefit. This is false, rich folks have far more debt than poor people, not to mention access to lower prices for loans. > Without inflation they'd be assessed the same interest rates, with the same risk premiums, but would not benefit from inflation so this is strictly worse, is it not? You’re right that the rich, who hold vastly greater amounts of debt, would not benefit from the central bank depreciating their liabilities. > That has nothing to do with inflation which impacts the principal of issued loans. When the principal decreases by 2% per annum and the rich person pays 2% interest and the poor person oays %600 percent, the rich person gets free credit while the poor person pays ~600% per annum. Surely you can see that this is worse for the poor person, even before factoring in that the rich person gets capital gains from asset inflation while the poor person gets real decrease in wages.
- arcticbull 6y ago
  > This is false, rich folks have far more debt than poor people ... On a percentage basis? [citation needed]

arcticbull 6y ago

> When the principal decreases by 2% per annum and the rich person pays 2% interest and the poor person pays %600 percent, the rich person gets free credit while the poor person pays ~600% per annum. Surely you can see that this is worse for the poor person, even before factoring in that the rich person gets capital gains from asset inflation while the poor person gets real decrease in wages. Inflation is a small part of the interest rate calculation. Even if inflation were 0% a rich person would pay 0% and a poor person 598%. You've achieved nothing. > Surely you can see that this is worse for the poor person, even before factoring in that the rich person gets capital gains from asset inflation while the poor person gets real decrease in wages. Wages have kept pace with inflation, and capital gains tax is a social/fiscal policy matter for Congress, not for Janet Yellen. Try again.