4 ms·

Depends on how much debt the poor have.

bko 5y ago
I don't see your point. I guess you assume inflation will also translate the higher wages so that people would be able to pay off their debt? Inflation will lead to higher rates so you won't be able to refinance or get a cheap mortgage. This will drive home prices down which may or may not offset the increase in interest expense. Here's credit card debt based on income. I'm guessing most of this debt is a kind of rolling balance for regular expenses. I doubt wages would be able to keep up w/ consumer prices. I don't think people think inflation will somehow get them out of their debt if they're using it for every day purchases that have now become more expensive $290,000 and more – $12,600 $152,000 to $290,999 – $9,780 $95,00 to $151,999 – $6,990 $59,000 to $94,999 – $4,910 $35,000 to $58,999 – $4,650 Less than $34,999 – $3,830 https://www.debt.org/faqs/americans-in-debt/demographics/ https://www.debt.org/faqs/americans-in-debt/demographics/
- bidirectional 5y ago
  Inflation erodes the value of debt.
- syops 5y ago
  Inflation makes existing debt easier to pay off. It doesn’t make acquiring new debt easier.
- matthewdgreen 5y ago
  >I guess you assume inflation will also translate the higher wages so that people would be able to pay off their debt? Here is a chart of real, disposable personal income: https://jabberwocking.com/wp-content/uploads/2021/05/blog_disposable_income_per_capita.gif https://jabberwocking.com/wp-content/uploads/2021/05/blog_di...
- imtringued 5y ago
  Higher rates primarily happen during full employment. I'd want to be poor with a job, rather than poor without.
throwaway0a5e 5y ago
Most of the poor and middle (spare me the lecture about how someone grossing 200k+ is middle because they're unwilling to suffer a longer commute or live where the schools are slightly worse) don't have a mortgage on a house. Those that do don't tend to have them in the trendy places being pumped full of urban monopoly money. And even then if you need a roof over your head you can't sell because then you'd get screwed right back out of any earnings by having to buy back in. Cashing out and moving to BFE is harder if you're more chained to a particular locale because of support network or a particular job/industry. Also if you're middle class or poor then there's now fewer BFE's within your budget thanks to covid and remote work. Student debt is a thing but the amounts and repayment rates are so low nobody was hurting that much anyway (the guy who's 60k in the red for a journalism degree is not in any way typical). Even with stupidly high inflation a car loan will never make you money because you can't liquidate because you'd need to buy back in. If you've got credit card debt or a payday loan or something else with a stupid high interest rate then anything short of Venezuela levels of inflation doesn't really help you. You get marginally less screwed but in the bigger picture you get more screwed because your day to day cash-flow is worse making the payments harder even if they're shrinking relatively The only people being helped by debt being inflated away didn't need the help to begin wit. Everyone else is being screwed because any savings they have will go poof and their standard of living will be knocked down because wages always lag inflation. A little inflation is fine/good but enough inflation that people are feeling the squeeze in the short term (you'd have to be blind to social media to not see this is the case) is too much.
- creddit 5y ago
  > Most of the poor and middle (spare me the lecture about how someone grossing 200k+ is middle because they're unwilling to suffer a longer commute or live where the schools are slightly worse) don't have a mortgage on a house. Please spare us the strawmen you're fighting in your head. Most US households own their own home (65+%). The vast majority of households with incomes above the median own their own home (79.4%) and even the majority of households BELOW the median own their own home (51.8%)[1]. So I'd also like you to spare us your made up evidence. > Student debt is a thing but the amounts and repayment rates are so low nobody was hurting that much anyway (the guy who's 60k in the red for a journalism degree is not in any way typical). Average student loan debt for a new grad is ~$30k. Hardly trivial. > Even with stupidly high inflation a car loan will never make you money because you can't liquidate because you'd need to buy back in. Is your belief that inflation is good for debt holders because they can earn money on the assets that back up the debt? The point is that debt is denominated in nominal dollars. 1: https://www.census.gov/housing/hvs/files/currenthvspress.pdf https://www.census.gov/housing/hvs/files/currenthvspress.pdf

bko 5y ago

I don't see your point. I guess you assume inflation will also translate the higher wages so that people would be able to pay off their debt? Inflation will lead to higher rates so you won't be able to refinance or get a cheap mortgage. This will drive home prices down which may or may not offset the increase in interest expense. Here's credit card debt based on income. I'm guessing most of this debt is a kind of rolling balance for regular expenses. I doubt wages would be able to keep up w/ consumer prices. I don't think people think inflation will somehow get them out of their debt if they're using it for every day purchases that have now become more expensive $290,000 and more – $12,600 $152,000 to $290,999 – $9,780 $95,00 to $151,999 – $6,990 $59,000 to $94,999 – $4,910 $35,000 to $58,999 – $4,650 Less than $34,999 – $3,830 https://www.debt.org/faqs/americans-in-debt/demographics/ https://www.debt.org/faqs/americans-in-debt/demographics/

bidirectional 5y ago
Inflation erodes the value of debt.
syops 5y ago
Inflation makes existing debt easier to pay off. It doesn’t make acquiring new debt easier.
matthewdgreen 5y ago
>I guess you assume inflation will also translate the higher wages so that people would be able to pay off their debt? Here is a chart of real, disposable personal income: https://jabberwocking.com/wp-content/uploads/2021/05/blog_disposable_income_per_capita.gif https://jabberwocking.com/wp-content/uploads/2021/05/blog_di...
imtringued 5y ago
Higher rates primarily happen during full employment. I'd want to be poor with a job, rather than poor without.

throwaway0a5e 5y ago

Most of the poor and middle (spare me the lecture about how someone grossing 200k+ is middle because they're unwilling to suffer a longer commute or live where the schools are slightly worse) don't have a mortgage on a house. Those that do don't tend to have them in the trendy places being pumped full of urban monopoly money. And even then if you need a roof over your head you can't sell because then you'd get screwed right back out of any earnings by having to buy back in. Cashing out and moving to BFE is harder if you're more chained to a particular locale because of support network or a particular job/industry. Also if you're middle class or poor then there's now fewer BFE's within your budget thanks to covid and remote work. Student debt is a thing but the amounts and repayment rates are so low nobody was hurting that much anyway (the guy who's 60k in the red for a journalism degree is not in any way typical). Even with stupidly high inflation a car loan will never make you money because you can't liquidate because you'd need to buy back in. If you've got credit card debt or a payday loan or something else with a stupid high interest rate then anything short of Venezuela levels of inflation doesn't really help you. You get marginally less screwed but in the bigger picture you get more screwed because your day to day cash-flow is worse making the payments harder even if they're shrinking relatively The only people being helped by debt being inflated away didn't need the help to begin wit. Everyone else is being screwed because any savings they have will go poof and their standard of living will be knocked down because wages always lag inflation. A little inflation is fine/good but enough inflation that people are feeling the squeeze in the short term (you'd have to be blind to social media to not see this is the case) is too much.

creddit 5y ago
> Most of the poor and middle (spare me the lecture about how someone grossing 200k+ is middle because they're unwilling to suffer a longer commute or live where the schools are slightly worse) don't have a mortgage on a house. Please spare us the strawmen you're fighting in your head. Most US households own their own home (65+%). The vast majority of households with incomes above the median own their own home (79.4%) and even the majority of households BELOW the median own their own home (51.8%)[1]. So I'd also like you to spare us your made up evidence. > Student debt is a thing but the amounts and repayment rates are so low nobody was hurting that much anyway (the guy who's 60k in the red for a journalism degree is not in any way typical). Average student loan debt for a new grad is ~$30k. Hardly trivial. > Even with stupidly high inflation a car loan will never make you money because you can't liquidate because you'd need to buy back in. Is your belief that inflation is good for debt holders because they can earn money on the assets that back up the debt? The point is that debt is denominated in nominal dollars. 1: https://www.census.gov/housing/hvs/files/currenthvspress.pdf https://www.census.gov/housing/hvs/files/currenthvspress.pdf