6 ms·

Inflation hits hardest the poorer who doesn't have diversified savings or their wealth in properties, stocks, or anything else that is likely to at least hold v

by henvic 6y ago

Inflation hits hardest the poorer who doesn't have diversified savings or their wealth in properties, stocks, or anything else that is likely to at least hold value. Inflation basically steals wealth from everyone – especially the poorest that makes the mistake of saving cash – and gives the money to the richest friendly with state powers. It's unethical and a crime against humanity, even more so considering that the fiat currency people are forced to use is legal tender, and you cannot exchange your earnings in other more stable currencies legally in most jurisdiction with this doutrine (almost all). https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/

UncleMeat 6y ago
The poor don't have savings in cash. Inflation loss on a nonexistent savings account is virtually zero. If you are concerned about this, would you be okay with a direct payment to populations without enough money to save in equities? That'd fix the problem.
- 1996 6y ago
  The poor may have some cash, if only $100 in the bank. They certainly have no bonds, stocks, or real estate. If they have no cash and only draw a salary, it will still hit them badly, as salaries are not inflation adjusted, and any pay increase requires negotiations with the employer - who may decide to increase the wage by only a fraction of the inflation. Said differently: all people who don't have wealth in inflation proof assets (stocks, real estate etc) suffer from inflation.
  - UncleMeat 6y ago
    Great. Let's make minimum wage automatically adjust to inflation, force businesses to provide CoL increases, and provide a tax credit for the poor against savings loss. In my experience, the libertarian community that hates inflation so much uses the poor as a rhetorical cudgel rather than an actual primary concern.
  - carlob 6y ago
    > Said differently: all people who don't have wealth in inflation proof assets (stocks, real estate etc) suffer from inflation. Except those who are in debt
    - leetcrew 6y ago
      inflation is typically priced into interest rates. unexpected changes in inflation can benefit either creditors or debtors, but a constant rate of inflation is a non-factor.
  - leetcrew 6y ago
    annual losses from inflation on $100 are pretty trivial though, somewhere around $3/yr. the stickiness of wages is the bigger issue for the poor re inflation. also people with assets are not totally protected from inflation. suppose I bought a $10k asset in 2001 that, for whatever reason, perfectly tracked inflation. if I sold it today, I would owe 15% tax on a nominal gain of 50%, resulting in a real loss.
  - axlee 6y ago
    The fact that you never mention debt a single time shows me that you're pushing an agenda and not offering a full analysis.
    - ghostwriter 6y ago
      if you insist on mentioning the debt to support your argument, you exclude and dismiss those who do everything to never live off debt. Those are not rich, they are hard working people who try desperately to bring economic stability into their families and to get into a lower middle class.
    - ibeckermayer 6y ago
      What about debt is relevant? Sure, if you’re in debt then a sense you “owe less”, in that the units you owe are now worth less. But practically speaking, if you’re an hourly or salaried employee that’s too poor to own significant securities or real estate assets and your wages don’t keep pace with inflation (wtfhappenedin1971.com), that’s a totally meaningless ivory tower economics point. You’re just further priced out of those assets, are paying more for the consumer goods you need to live that are now inflated, and you’re still paying the same dollar amount on your debt.
    - henvic 6y ago
      The fact that you are demanding him to mention debt shows you've a short-sighted view of the world, seeing only what happens close to home from what appears to be a privileged point-of-view. Not everyone in the world has easy access to credit like you imply. You're the one pushing an agenda here.
  - mrtksn 6y ago
    Salaries are always adjusted to the inflation if there's a free market. Depending on how hard is the inflation, you receive yearly, semi yearly, monthly, weekly or in extreme cases daily adjustments. Your salary updates also include the expected inflation. That's of course when the economy is performing well. If the economy is slowing in an inflationary environment, you may easily end up on the wrong side since every update is actually a salary renegotiation and in a slowing economy your job might receive pay cuts in real terms.
  - henvic 6y ago
    I can't believe you were downvoted for saying the truth. It's sad engineers making even $200,000 or more can't understand how even $100-1000 in the bank can change lives forever for many people in poor countries. It's even sadder when some of them come from places that had hyper inflation, and can't see the big picture.
    - UncleMeat 6y ago
      The point is that this is a terrible argument for "we should switch to gold" or "we should have 0% inflation". Losing $2-$20 to inflation annually is trivially handled with tax credits or whatever.
      - henvic 6y ago
        You definitely have no idea about what you're talking about when you say that 20% inflation should be trivially handled.
        UncleMeat 6y ago
        $2-$20 is 2% of $100-$1000.
    - iso1210 6y ago
      He's claiming that people who go into their overdraft and credit cards every month have $100 in their bank. They don't, most people live paycheck to paycheck, their bank balance just before payday is $nothing
      - leetcrew 6y ago
        this is definitely not true. the median US household has several thousand dollars in their checking account. they might be living paycheck-to-paycheck in the sense that their net cashflow is close to zero, but they don't have nothing in their bank account just before payday. you would have to go deep into the 20th percentile to find households like you describe. https://www.thebalance.com/what-is-the-average-bank-account-balance-4171574 https://www.thebalance.com/what-is-the-average-bank-account-...
- throw0101a 6y ago
  > The poor don't have savings in cash. Inflation loss on a nonexistent savings account is virtually zero. The poor are also often in debt, and inflation helps eat away at that. Especially if they can get wage increases based on the CPI. Which is why minimum wage should (IMHO) be linked to inflation/CPI.
  - moralsupply 6y ago
    The minimum wage is universally zero. Government-mandated minimum wage is effective price control, which never works. It has the effect of taking people who are not qualified to produce enough value to justify the minimum wage out of the job market. It's a mechanism to keep poor people poor. CPI barely reflects the actual inflation of the currency. Whatever it doesn't cover in its calculation tends to get overinflated. The government designs the CPI to be low in comparison to "real" monetary inflation so that it can get away with printing more money.
    - imtringued 6y ago
      This is why the raise in minimum wage should be compensated by also offering government jobs that do pay minimum wage or slightly less. Given enough time people will actually end up getting their minimum wage or even more than minimum wage. However the talks about a $15 minimum wage actually have one very interesting detail. There are no plans for an immediate hike. It's going to be raised over time which means companies have enough time to adapt. It also sends a clear psychological signal to everyone that the times of cheap labor are going to be over because it is something that is happening year by year.
lmarcos 6y ago
> especially the poorest that makes the mistake of saving cash Perhaps a bit off topic, but: do the majority of the people who are not considered part of the "poorest" ones do put their savings in stocks, properties and the like? The majority of people I know in their 20s, 30s with a decent income per month (I admit, mostly software engineers) don't do other thing than put cash in their regular bank accounts. No stocks, no properties. If any, they have a "savings account" that offer like 0.001% interests. This is in Western Europe.
- DavidSJ 6y ago
  If you have a steady income and significant savings (say, anything more than six months of expenses), and you haven’t invested a significant fraction of that savings in some growth-oriented asset class like stocks, you’re making a very foolish long-term decision.
  - lmarcos 6y ago
    I don't disagree. I just say that, in my limited life experience, most of my acquaintances do not have other thing than cash in the bank. These acquaintances are not precisely "poor".
    - chrisseaton 6y ago
      > most of my acquaintances do not have other thing than cash in the bank That's madness - I can't imagine why they'd do that. Their money would be rapidly eroding away. But also - remember almost every professional has a pension, which is always invested, so yes almost every professional owns stocks and shares.
      - adamnew123456 6y ago
        > That's madness - I can't imagine why they'd do that. I think your confusion is in assuming that this is something you do rather than it being the status quo that receives no attention. Up until recently I had about $80k sitting in a HYSA while interest rates on that account dropped like a rock. I only really noticed that after crunching the numbers and figuring out that was much beyond what I would realistically need. It took a few days to figure out what I could do about that given my income and employment situation. I'm not sure how much of this applies to someone who is natively middle-class, but I find that part of the luxury of having a good income and a minimal lifestyle is just not thinking about money. If that's where your baseline is then you need some other motivation to scrutinize your finances. It comes more easily to me because I find it interesting but I can see someone without that drive just letting cash sit and being satisfied that the number looks big enough.
carlob 6y ago
I think by most estimates the poorest half of the population have negative wealth, if that is true then inflation actually reduces their debt.
- D_Alex 6y ago
  Unfortunately higher inflation comes with higher interest rates. So if you have "negative wealth" you are no better off.
  - henvic 6y ago
    Not necessarily. You've to analyze where your wealth goes to and where does the money goes to. Even if you're one of the ones who benefit from 'getting the money first' (like, if you mortgaged a house with low interest rates) there might be nefarious consequences. For example, right now I'm looking into buying a house through a mortgage that with less than 2% yearly interest. I'm going to pay the house in about 30 years if I never change the conditions of the agreement, and I can have 10 years guaranteed low interest rates. So you might believe I should be completely happy with inflation... Except what you don't see is the effect the inflation has in the overall economy, and also more immediately on my pocket. The house is going to be about 5 years of my current gross yearly salary. If there wasn't this artificial easy credit through inflation, I could probably pay a lot less for the house and maybe even decide to continue renting instead because perhaps renting would be cheaper if people weren't holding properties to speculate and I had more money in general. Anyway, it's still a 25 years difference where I'm going to be losing a lot of money to inflation. I highly recommend this: http://bastiat.org/en/twisatwins.html http://bastiat.org/en/twisatwins.html
mrtksn 6y ago
That's not the case at all. All this "gold standart" stuff and BTCs claim is to preserve wealth and poor people by definition don't have wealth. Let me tell you how poor's life looks like when things are alright: You have a job that is good enough to cover your rent, your food, your bills and the instalments of your phone and computer and you might put aside a little bit that at some time in the future you might use to pay the downpayment of an apartment or a car. When there's a steep inflation, be it anything from Turkey level to Venezuela level inflation, your salary gets adjusted to sustain your lifestyle and you put your money in Gold/USD/EUR/GBP/AnythingMoreStable or property. That's it. Poor don't get any poorer just because of inflation. If anything, if the inflation has accelerated the disposable amount of your salary increases in real terms since your loan payments remain the same most of the time. The lender usually incorporates this into the rates but every now and then the inflation can be beyond the expected and you may end up paying much less in real terms. When the things are not alright, the inflation is irrelevant to you. Whatever little you have, you are going to spend it before any meaningful impact due inflation. Next time you get money, you will get more to match the increase in the prices. How do I know? I have been there. I've seen an inflation where you cannot predict the price of the bread tomorrow and I have seen a stable inflation where you simply incorporate it into your calculation and you are fine. I've lived in 2 two countries that dropped 0's from their currency, one dropped 000, the other dropped 000,000. The inflation bites when it is unstable and unpredictable. Then businesses cannot incorporate the inflation into their cash flow and the economy slows down due to risk and difficulties of doing business. That's when the poor are impacted hard because that's when they loose jobs and switch to "things are not alright" mode.
- ZoomZoomZoom 6y ago
  >your salary gets adjusted to sustain your lifestyle Wait, did I miss the application for this or something? >and you put your money in Gold/USD/EUR/GBP/AnythingMoreStable or property. Unless it's illegal. > if the inflation has accelerated the disposable amount of your salary increases in real terms since your loan payments remain the same most of the time. So you have a choice: 1. Take a leap of faith your income will get adjusted to real inflation numbers and take a loan hoping it will get eaten by inflation, at the same time increasing the debt pressure on your income and your psyche. 2. Not taking a loan so having no instrument to even partly negate the effect of inflation and having no adequate alternative instruments to loans/mortgages to save the value of your income.
iso1210 6y ago
The poorest have a negative net worth, so inflation reduces their debt. The next lot have some wealth in property and pensions. Property especially benefits from inflation as the remaining mortgage reduces as a %age Now sue, if inflation is high and wages don't increase with inflation that does effect the poorest, but the poorest are screwed anyway. Median savings account levels based on earnings: Bottom 20% of earners: $600 20th to 39.9th percentile: $1,700 40th to 59.9th percentile: $3,800 60th to 79.9th percentile: $8,200 80th to 89.9th percentile: $18,700 Top 10% of earners: $62,000
- ptero 6y ago
  > The poorest have a negative net worth, so inflation reduces their debt Yes, and it helps those who got into debt some time in the past, and without this debt have a positive cash flow today; for example a graduate making good salary but saddled with old student loans. But I think (although not 100% sure) most poorer people in debt do not have a positive cash flow even when not counting debt payment. They are getting deeper into debt because they spend more than they get. And inflation will probably push those people deeper into the hole: they are on bare essentials (cannot cut those; and they are getting more expensive), and their jobs are more likely to be cut. Richer folks by comparison have many options to hedge against inflation, from property sprinkled around the world to commodities, precious metals in cold storage, inflation-resistant stocks, etc. My 2c.
- vladimirralev 6y ago
  The poor can only take high premium inflation adjusted loans. Inflation doesn't reduce the burden. The poor would generally make minimum wage ($7.25 in the US for about 15-20 years now). Same people who say there is no inflation call this "a starvation wage" never making the link between printing money and the wages pushing poor people into starvation. The poor spend most of their money on housing, food, medical and energy. All of which are massively up (6% up YoY average last week). Food and energy of course are ignored in headline inflation as a rule.
- henvic 6y ago
  Only if you consider the poorest living in a mortgaged house that costs $800,000 with $720,000 left to pay while making $120,000 a year. This is not valid for the poor people making $15,000 a year with $600 in their bank account. These people are losing a lot of wealth. Debt is not that easily accessed by everyone! And when it comes at the cost of inflation as it often (or even almost always!) does, it's even worse.

by henvic 6y ago

UncleMeat 6y ago

The poor don't have savings in cash. Inflation loss on a nonexistent savings account is virtually zero. If you are concerned about this, would you be okay with a direct payment to populations without enough money to save in equities? That'd fix the problem.

1996 6y ago
The poor may have some cash, if only $100 in the bank. They certainly have no bonds, stocks, or real estate. If they have no cash and only draw a salary, it will still hit them badly, as salaries are not inflation adjusted, and any pay increase requires negotiations with the employer - who may decide to increase the wage by only a fraction of the inflation. Said differently: all people who don't have wealth in inflation proof assets (stocks, real estate etc) suffer from inflation.
- UncleMeat 6y ago
  Great. Let's make minimum wage automatically adjust to inflation, force businesses to provide CoL increases, and provide a tax credit for the poor against savings loss. In my experience, the libertarian community that hates inflation so much uses the poor as a rhetorical cudgel rather than an actual primary concern.
- carlob 6y ago
  > Said differently: all people who don't have wealth in inflation proof assets (stocks, real estate etc) suffer from inflation. Except those who are in debt
  - leetcrew 6y ago
    inflation is typically priced into interest rates. unexpected changes in inflation can benefit either creditors or debtors, but a constant rate of inflation is a non-factor.
- leetcrew 6y ago
  annual losses from inflation on $100 are pretty trivial though, somewhere around $3/yr. the stickiness of wages is the bigger issue for the poor re inflation. also people with assets are not totally protected from inflation. suppose I bought a $10k asset in 2001 that, for whatever reason, perfectly tracked inflation. if I sold it today, I would owe 15% tax on a nominal gain of 50%, resulting in a real loss.
- axlee 6y ago
  The fact that you never mention debt a single time shows me that you're pushing an agenda and not offering a full analysis.
  - ghostwriter 6y ago
    if you insist on mentioning the debt to support your argument, you exclude and dismiss those who do everything to never live off debt. Those are not rich, they are hard working people who try desperately to bring economic stability into their families and to get into a lower middle class.
  - ibeckermayer 6y ago
    What about debt is relevant? Sure, if you’re in debt then a sense you “owe less”, in that the units you owe are now worth less. But practically speaking, if you’re an hourly or salaried employee that’s too poor to own significant securities or real estate assets and your wages don’t keep pace with inflation (wtfhappenedin1971.com), that’s a totally meaningless ivory tower economics point. You’re just further priced out of those assets, are paying more for the consumer goods you need to live that are now inflated, and you’re still paying the same dollar amount on your debt.
  - henvic 6y ago
    The fact that you are demanding him to mention debt shows you've a short-sighted view of the world, seeing only what happens close to home from what appears to be a privileged point-of-view. Not everyone in the world has easy access to credit like you imply. You're the one pushing an agenda here.
- mrtksn 6y ago
  Salaries are always adjusted to the inflation if there's a free market. Depending on how hard is the inflation, you receive yearly, semi yearly, monthly, weekly or in extreme cases daily adjustments. Your salary updates also include the expected inflation. That's of course when the economy is performing well. If the economy is slowing in an inflationary environment, you may easily end up on the wrong side since every update is actually a salary renegotiation and in a slowing economy your job might receive pay cuts in real terms.
- henvic 6y ago
  I can't believe you were downvoted for saying the truth. It's sad engineers making even $200,000 or more can't understand how even $100-1000 in the bank can change lives forever for many people in poor countries. It's even sadder when some of them come from places that had hyper inflation, and can't see the big picture.
  - UncleMeat 6y ago
    The point is that this is a terrible argument for "we should switch to gold" or "we should have 0% inflation". Losing $2-$20 to inflation annually is trivially handled with tax credits or whatever.
    - henvic 6y ago
      You definitely have no idea about what you're talking about when you say that 20% inflation should be trivially handled.
      - UncleMeat 6y ago
        $2-$20 is 2% of $100-$1000.
  - iso1210 6y ago
    He's claiming that people who go into their overdraft and credit cards every month have $100 in their bank. They don't, most people live paycheck to paycheck, their bank balance just before payday is $nothing
    - leetcrew 6y ago
      this is definitely not true. the median US household has several thousand dollars in their checking account. they might be living paycheck-to-paycheck in the sense that their net cashflow is close to zero, but they don't have nothing in their bank account just before payday. you would have to go deep into the 20th percentile to find households like you describe. https://www.thebalance.com/what-is-the-average-bank-account-balance-4171574 https://www.thebalance.com/what-is-the-average-bank-account-...
throw0101a 6y ago
> The poor don't have savings in cash. Inflation loss on a nonexistent savings account is virtually zero. The poor are also often in debt, and inflation helps eat away at that. Especially if they can get wage increases based on the CPI. Which is why minimum wage should (IMHO) be linked to inflation/CPI.
- moralsupply 6y ago
  The minimum wage is universally zero. Government-mandated minimum wage is effective price control, which never works. It has the effect of taking people who are not qualified to produce enough value to justify the minimum wage out of the job market. It's a mechanism to keep poor people poor. CPI barely reflects the actual inflation of the currency. Whatever it doesn't cover in its calculation tends to get overinflated. The government designs the CPI to be low in comparison to "real" monetary inflation so that it can get away with printing more money.
  - imtringued 6y ago
    This is why the raise in minimum wage should be compensated by also offering government jobs that do pay minimum wage or slightly less. Given enough time people will actually end up getting their minimum wage or even more than minimum wage. However the talks about a $15 minimum wage actually have one very interesting detail. There are no plans for an immediate hike. It's going to be raised over time which means companies have enough time to adapt. It also sends a clear psychological signal to everyone that the times of cheap labor are going to be over because it is something that is happening year by year.

lmarcos 6y ago

> especially the poorest that makes the mistake of saving cash Perhaps a bit off topic, but: do the majority of the people who are not considered part of the "poorest" ones do put their savings in stocks, properties and the like? The majority of people I know in their 20s, 30s with a decent income per month (I admit, mostly software engineers) don't do other thing than put cash in their regular bank accounts. No stocks, no properties. If any, they have a "savings account" that offer like 0.001% interests. This is in Western Europe.

DavidSJ 6y ago
If you have a steady income and significant savings (say, anything more than six months of expenses), and you haven’t invested a significant fraction of that savings in some growth-oriented asset class like stocks, you’re making a very foolish long-term decision.
- lmarcos 6y ago
  I don't disagree. I just say that, in my limited life experience, most of my acquaintances do not have other thing than cash in the bank. These acquaintances are not precisely "poor".
  - chrisseaton 6y ago
    > most of my acquaintances do not have other thing than cash in the bank That's madness - I can't imagine why they'd do that. Their money would be rapidly eroding away. But also - remember almost every professional has a pension, which is always invested, so yes almost every professional owns stocks and shares.
    - adamnew123456 6y ago
      > That's madness - I can't imagine why they'd do that. I think your confusion is in assuming that this is something you do rather than it being the status quo that receives no attention. Up until recently I had about $80k sitting in a HYSA while interest rates on that account dropped like a rock. I only really noticed that after crunching the numbers and figuring out that was much beyond what I would realistically need. It took a few days to figure out what I could do about that given my income and employment situation. I'm not sure how much of this applies to someone who is natively middle-class, but I find that part of the luxury of having a good income and a minimal lifestyle is just not thinking about money. If that's where your baseline is then you need some other motivation to scrutinize your finances. It comes more easily to me because I find it interesting but I can see someone without that drive just letting cash sit and being satisfied that the number looks big enough.

carlob 6y ago

I think by most estimates the poorest half of the population have negative wealth, if that is true then inflation actually reduces their debt.

D_Alex 6y ago
Unfortunately higher inflation comes with higher interest rates. So if you have "negative wealth" you are no better off.
- henvic 6y ago
  Not necessarily. You've to analyze where your wealth goes to and where does the money goes to. Even if you're one of the ones who benefit from 'getting the money first' (like, if you mortgaged a house with low interest rates) there might be nefarious consequences. For example, right now I'm looking into buying a house through a mortgage that with less than 2% yearly interest. I'm going to pay the house in about 30 years if I never change the conditions of the agreement, and I can have 10 years guaranteed low interest rates. So you might believe I should be completely happy with inflation... Except what you don't see is the effect the inflation has in the overall economy, and also more immediately on my pocket. The house is going to be about 5 years of my current gross yearly salary. If there wasn't this artificial easy credit through inflation, I could probably pay a lot less for the house and maybe even decide to continue renting instead because perhaps renting would be cheaper if people weren't holding properties to speculate and I had more money in general. Anyway, it's still a 25 years difference where I'm going to be losing a lot of money to inflation. I highly recommend this: http://bastiat.org/en/twisatwins.html http://bastiat.org/en/twisatwins.html

mrtksn 6y ago

That's not the case at all. All this "gold standart" stuff and BTCs claim is to preserve wealth and poor people by definition don't have wealth. Let me tell you how poor's life looks like when things are alright: You have a job that is good enough to cover your rent, your food, your bills and the instalments of your phone and computer and you might put aside a little bit that at some time in the future you might use to pay the downpayment of an apartment or a car. When there's a steep inflation, be it anything from Turkey level to Venezuela level inflation, your salary gets adjusted to sustain your lifestyle and you put your money in Gold/USD/EUR/GBP/AnythingMoreStable or property. That's it. Poor don't get any poorer just because of inflation. If anything, if the inflation has accelerated the disposable amount of your salary increases in real terms since your loan payments remain the same most of the time. The lender usually incorporates this into the rates but every now and then the inflation can be beyond the expected and you may end up paying much less in real terms. When the things are not alright, the inflation is irrelevant to you. Whatever little you have, you are going to spend it before any meaningful impact due inflation. Next time you get money, you will get more to match the increase in the prices. How do I know? I have been there. I've seen an inflation where you cannot predict the price of the bread tomorrow and I have seen a stable inflation where you simply incorporate it into your calculation and you are fine. I've lived in 2 two countries that dropped 0's from their currency, one dropped 000, the other dropped 000,000. The inflation bites when it is unstable and unpredictable. Then businesses cannot incorporate the inflation into their cash flow and the economy slows down due to risk and difficulties of doing business. That's when the poor are impacted hard because that's when they loose jobs and switch to "things are not alright" mode.

ZoomZoomZoom 6y ago
>your salary gets adjusted to sustain your lifestyle Wait, did I miss the application for this or something? >and you put your money in Gold/USD/EUR/GBP/AnythingMoreStable or property. Unless it's illegal. > if the inflation has accelerated the disposable amount of your salary increases in real terms since your loan payments remain the same most of the time. So you have a choice: 1. Take a leap of faith your income will get adjusted to real inflation numbers and take a loan hoping it will get eaten by inflation, at the same time increasing the debt pressure on your income and your psyche. 2. Not taking a loan so having no instrument to even partly negate the effect of inflation and having no adequate alternative instruments to loans/mortgages to save the value of your income.

iso1210 6y ago

The poorest have a negative net worth, so inflation reduces their debt. The next lot have some wealth in property and pensions. Property especially benefits from inflation as the remaining mortgage reduces as a %age Now sue, if inflation is high and wages don't increase with inflation that does effect the poorest, but the poorest are screwed anyway. Median savings account levels based on earnings: Bottom 20% of earners: $600 20th to 39.9th percentile: $1,700 40th to 59.9th percentile: $3,800 60th to 79.9th percentile: $8,200 80th to 89.9th percentile: $18,700 Top 10% of earners: $62,000

ptero 6y ago
> The poorest have a negative net worth, so inflation reduces their debt Yes, and it helps those who got into debt some time in the past, and without this debt have a positive cash flow today; for example a graduate making good salary but saddled with old student loans. But I think (although not 100% sure) most poorer people in debt do not have a positive cash flow even when not counting debt payment. They are getting deeper into debt because they spend more than they get. And inflation will probably push those people deeper into the hole: they are on bare essentials (cannot cut those; and they are getting more expensive), and their jobs are more likely to be cut. Richer folks by comparison have many options to hedge against inflation, from property sprinkled around the world to commodities, precious metals in cold storage, inflation-resistant stocks, etc. My 2c.
vladimirralev 6y ago
The poor can only take high premium inflation adjusted loans. Inflation doesn't reduce the burden. The poor would generally make minimum wage ($7.25 in the US for about 15-20 years now). Same people who say there is no inflation call this "a starvation wage" never making the link between printing money and the wages pushing poor people into starvation. The poor spend most of their money on housing, food, medical and energy. All of which are massively up (6% up YoY average last week). Food and energy of course are ignored in headline inflation as a rule.
henvic 6y ago
Only if you consider the poorest living in a mortgaged house that costs $800,000 with $720,000 left to pay while making $120,000 a year. This is not valid for the poor people making $15,000 a year with $600 in their bank account. These people are losing a lot of wealth. Debt is not that easily accessed by everyone! And when it comes at the cost of inflation as it often (or even almost always!) does, it's even worse.