4 ms·

Inflation reduces wealth inequality. inflation is good.

• azinman2 5y ago
  It also depletes savings of the poor. You can’t say inflation or deflation is universally good or bad. They have many effects.
  • pessimizer 5y ago
    The poor don't have savings, they have debts.
    • azinman2 5y ago
      Not always. My grandparents were poor, but lived within their small means. I remember them telling me how horrible it was to live through the 1970s inflation that decimated the small amount of savings that they had. But like I said about the no universally good or bad, inflation is good for effectively reducing debt.
  • variaga 5y ago
    Inflation helps debtors (because the real value of the nominal debt is reduced by inflation - debtors borrowed "high value" money and later, after inflation, can pay it off with "low value" money) and hurts creditors (same reason, just the effect is reversed). Rich people are (mostly) creditors. Poor people are (mostly) debtors. Inflation tends to hurt rich people (creditors) and help poor people (debtors). The people who run the economy are almost universally rich, and are (coincidentally, I'm sure /s) almost universally opposed to any increase in inflation. Side note: assets (real estate, gold, ...) are mostly inflation-neutral since their prices go up at the same rate as the prices of everything else. Where poor people do get hurt is when consumer prices go up and wages don't but that's not inflation - inflation is when the price of everything goes up, including labor i.e. wages.
    • azinman2 5y ago
      You can have debt (a car bill) and still have savings ($500 in the bank). That savings is often an emergency fund, and when the effectiveness of that fund is reduced, so is your ability to respond to an emergency. All of these things can be true simultaneously.
  • batty_alex 5y ago
    And really, it's all a balancing act. Inflation is good sometimes and bad at other times. It's... complicated, yo
  • nly 5y ago
    The poor have no savings
• lend000 5y ago
  Not sure if this is tongue in cheek, but no. Inflation relatively benefits those who have a higher percentage of their net worth in assets than cash (i.e. the rich). It also benefits those who have a lot of debt. Before the Fed got into the habit of keeping artificially low interest rates as a means to originate inflation (and fund Congress), this might have benefited the poor (at least those credit-worthy enough to take on meaningful debt). But now, the depreciation of debts in an inflationary environment also tends to disproportionally benefit the wealthy, who have easy access to cheap credit and frequently use it.