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> A rebalancing is going to have to take place, and somehow the wealth needs to be transferred back to the working class Inflation is the traditional way that
by jcfrei 5y ago
> A rebalancing is going to have to take place, and somehow the wealth needs to be transferred back to the working class
Inflation is the traditional way that wealth gets transferred to the working class (besides higher marginal tax rates - but that seems to have gone out of fashion). While inflation hurts everyone it hurts especially savers and especially old savers who have most of their wealth in assets with a fixed interest rate. Workers can renegotiate higher salaries so in the long run they are less affected than somebody with lots of savings during times of high inflation. Very low inflation for the past decade are a big part of the reason why the wealth gap has increased so much.
- navane 5y agoTransferred to the working class, but from where? From people with savings, but not people who own assets. So this is a redistribution between the lower castes, not from the higher to the lower caste. I know the official inflation numbers for the past decade were small, but this highly depends on what you put in your basket. The rise of stocks, real estate, education and health over the past decade shows that inflation was there all the time. Therefore I do not see why low inflation would increase the wealth gap. The wealth gap always increases without external disruptions (world wars, strong government) because the return on capital is higher than the growth of the economy as a whole.