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This is incorrect. Historically, periods of very low inflation (such as the 19th century during which currencies were pegged to the gold standard) were great c
by whakim 5y ago
This is incorrect.
Historically, periods of very low inflation (such as the 19th century during which currencies were pegged to the gold standard) were great creators of inequality, because they allow the wealthy to continuously expand their capital stock through rents.
- gruez 5y ago>because they allow the wealthy to continuously expand their capital stock through rents. Is that hard to do during inflation or something? Given that asset values generally don't get inflated away, I'm not sure how inflation would be bad for them.
- whakim 5y agoAsset values do rise with inflation, and that itself doesn't make the owners of capital any better or worse off. But in an extremely low inflation environment, owners of capital can collect rents on their capital which will generate a consistent return that won't be destroyed or devalued by inflation. The relationship between inflation and inequality is pretty complicated because there are a bunch of other factors (notably growth) that play a significant role. I just wanted to point out that the economics of inequality does not support OP's argument (i.e., inflation creates inequality).