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A simple thought experiment: - Suppose you are spending 90% of your income on day-to-day expenses. Your margin of survival is 10%. Then there is 2% inflation

A simple thought experiment: - Suppose you are spending 90% of your income on day-to-day expenses. Your margin of survival is 10%. Then there is 2% inflation. Now your margin of survival is ~8% which is a ~20% decrease. - Suppose you are spending 20% of your income on day-to-day expenses. Your margin of survival is 80%. Then there is 2% inflation. Your margin of survival is still ~80% which is a negligible decrease. For those who will say "wages catch up". They don't catch up for people on fixed income (welfare, retirement), and not catching up for the labor class is a policy feature: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... > Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment...

iso1210 6y ago
> For those who will say "wages catch up". They don't catch up for people on fixed income (welfare, retirement), In the UK the state pension is pegged to increase by at least CPI or wages, there's no economic reason not to peg welfare or retirement to CPI, just a political one.
- dnautics 6y ago
  how do you peg retirement to CPI? Where is that money coming from?
  - iso1210 6y ago
    State retirement the government simply increases it (as in the UK) For private retirement you buy an inflation linked annuity
    - dnautics 6y ago
      "government simply increases it" print more money, cause pain for everyone who isn't privileged to work for the government. "inflation linked annuity" socialize the risk for big businesses/municipal debt (inflation linked annuities are often bundles of investments that can produce a yield that matches inflations, you can't magically create these things)
- sitkack 6y ago
  Inflation is a tool to push wages down, you can collectively bargain against labor with inflation. If you are in the owning class, you want wages tied to a currency and not the CPI. And you want a steady form of inflation that you can account for, while labor costs can drop at 2% plus per year.
  - iso1210 6y ago
    > Inflation is a tool to push wages down, you can collectively bargain against labor with inflation. And labour collectively bargains to ensure pay remains on track with inflation, so no problem
    - sitkack 6y ago
      Working As Intended.
  - imtringued 6y ago
    Inflation is a tool to increase future wages at the expense of past wages.

iso1210 6y ago

> For those who will say "wages catch up". They don't catch up for people on fixed income (welfare, retirement), In the UK the state pension is pegged to increase by at least CPI or wages, there's no economic reason not to peg welfare or retirement to CPI, just a political one.

dnautics 6y ago
how do you peg retirement to CPI? Where is that money coming from?
- iso1210 6y ago
  State retirement the government simply increases it (as in the UK) For private retirement you buy an inflation linked annuity
  - dnautics 6y ago
    "government simply increases it" print more money, cause pain for everyone who isn't privileged to work for the government. "inflation linked annuity" socialize the risk for big businesses/municipal debt (inflation linked annuities are often bundles of investments that can produce a yield that matches inflations, you can't magically create these things)
sitkack 6y ago
Inflation is a tool to push wages down, you can collectively bargain against labor with inflation. If you are in the owning class, you want wages tied to a currency and not the CPI. And you want a steady form of inflation that you can account for, while labor costs can drop at 2% plus per year.
- iso1210 6y ago
  > Inflation is a tool to push wages down, you can collectively bargain against labor with inflation. And labour collectively bargains to ensure pay remains on track with inflation, so no problem
  - sitkack 6y ago
    Working As Intended.
- imtringued 6y ago
  Inflation is a tool to increase future wages at the expense of past wages.