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It also depletes savings of the poor. You can’t say inflation or deflation is universally good or bad. They have many effects.

pessimizer 6y ago
The poor don't have savings, they have debts.
- azinman2 6y 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 6y 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 6y 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 6y ago
And really, it's all a balancing act. Inflation is good sometimes and bad at other times. It's... complicated, yo
nly 6y ago
The poor have no savings

pessimizer 6y ago

The poor don't have savings, they have debts.

azinman2 6y 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 6y 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 6y 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 6y ago

And really, it's all a balancing act. Inflation is good sometimes and bad at other times. It's... complicated, yo

nly 6y ago

The poor have no savings