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Inflation hurts bankers, but is very good for anyone who has debt. Mild inflation poses zero damage to poor people as wages and interest on their saving increa

Inflation hurts bankers, but is very good for anyone who has debt. Mild inflation poses zero damage to poor people as wages and interest on their saving increases linearly with the inflation. I don't know where anyone got the idea that inflation was bad for poor people, but it was probably from people associated with the banks. On the other hand, one situation that inflation can be very bad is when the government has a lot of debt and doesn't have a balanced budget, which is just about every first world country at the moment.

VirusNewbie 5y ago
This is exactly backwards. Inflation helps debtors especially those who use debt to be leveraged into assets, who are by and large are upper middle class (housing) and the upper class by proxy with equities. Inflation is robbing poor people and transferring their wealth to the upper class.
- mrjangles 5y ago
  If something helps debtors, it is clearly to the detriment of creditors. I don't understand how your comment can make sense unless you are claiming that creditors are usually poor and debtors are usually rich, which is a pretty far out claim.
- xapata 5y ago
  You're both incorrect. Poor people are affected by the ratio of price inflation to wage inflation, which is for the first time in ~50 years flipped such that wages are growing faster than prices. Inflation transfers money from creditors to debtors, to the extent it's a surprise. Interest rates and origination fees incorporate risk of inflation. The US government is in debt to US treasury bill holders. You could say inflation is a wealth transfer from T-bill holders to the government, but the buyers of T-bills knew the risks and made their choices. Maybe they've even hedged. Poor people have credit card debt, payday loan debt, medical debt, etc. I wouldn't say housing is exclusive to the upper middle class, because 65% of Americans own houses. That seems like a low bar for "upper" class.
  - antisthenes 5y ago
    > which is for the first time in ~50 years flipped such that wages are growing faster than prices. > Real average hourly earnings decreased 1.9 percent, seasonally adjusted, from November 2020 to November 2021. The change in real average hourly earnings combined with no change in the average workweek resulted in a 1.9-percent decrease in real average weekly earnings over this period. Good try, but incorrect.
    - xapata 5y ago
      Check the same value since November 2019. I can't find the figures now, but I'm hopeful the gains weren't wiped out.
  - VirusNewbie 5y ago
    Who do you think has more debt in absolute terms, the lower class or the upper class? Whose debt is primarily leveraged into income producing assets opposed to simply debt? It doesn't matter if every single person in the US has debt and inflation makes that cheaper, if it disproportionally wipes out upper class debt you're doing wealth transfer indirectly to the upper class.
    - xapata 5y ago
      Good point. However, we care more about marginal value for an individual. A dollar given to a poor person is more valuable than a dollar given to a wealthy person. Giving $10 to Elon Musk accompanied by $1 to, well, just about anyone else, would increase equity, because we would value the $1 more than ten-fold what Musk would. Those particular numbers might be incorrect for the example, but the principle holds. That's why we have progressive tax brackets.
      - VirusNewbie 5y ago
        > Giving $10 to Elon Musk accompanied by $1 to, well, just about anyone else, would increase equity, It literally would do the opposite, literally. Do you know what the word equity means? You might say it's the right thing to do ethically, that it's a trade off you might make, and we can get into all sorts of pros and cons of it, but it is the opposite of increasing equity.
nostrademons 5y ago
Inflation is very rarely linear. When inflation hits, prices don't rise uniformly. Some industries have pricing power; others don't. Some professions have negotiating leverage, others don't. Those with the most negotiating leverage have the biggest ability to raise prices, while those in purely commodity businesses often get stuck with small nominal raises. Poor people are disproportionately in competitive jobs without a lot of negotiating leverage, because if they were in a differentiated job with a lot of negotiating leverage, they'd be rich.
- xapata 5y ago
  > competitive jobs Isn't the big news of the day that there's a labor "shortage" and wages are rising?
  - nostrademons 5y ago
    Yes. Professions where you can walk off the job and find a dozen other ones that have openings (say, software engineer) get much higher wage increases than ones where if you walk off the job you have a very limited set of other employers (say, geologist or elementary school teacher). That's why you have a very bifurcated set of anecdotes, where some people are like "my COLA was still a measly 3% this year" and others are like "I switched jobs for a 20% raise."
    - xapata 5y ago
      I've been hearing about significant wage increases for many jobs, especially at the lower end of the spectrum.
mint2 5y ago
Inflation does not have zero damage to poor people. It means despite wage increases they haven’t actually seen meaningful gains in 40 years before the pandemic. https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
- mrjangles 5y ago
  This has nothing to do with inflation. If what is being claimed is true, it would mean that without inflation they would have received no wage increases at all.

VirusNewbie 5y ago

This is exactly backwards. Inflation helps debtors especially those who use debt to be leveraged into assets, who are by and large are upper middle class (housing) and the upper class by proxy with equities. Inflation is robbing poor people and transferring their wealth to the upper class.

mrjangles 5y ago
If something helps debtors, it is clearly to the detriment of creditors. I don't understand how your comment can make sense unless you are claiming that creditors are usually poor and debtors are usually rich, which is a pretty far out claim.
xapata 5y ago
You're both incorrect. Poor people are affected by the ratio of price inflation to wage inflation, which is for the first time in ~50 years flipped such that wages are growing faster than prices. Inflation transfers money from creditors to debtors, to the extent it's a surprise. Interest rates and origination fees incorporate risk of inflation. The US government is in debt to US treasury bill holders. You could say inflation is a wealth transfer from T-bill holders to the government, but the buyers of T-bills knew the risks and made their choices. Maybe they've even hedged. Poor people have credit card debt, payday loan debt, medical debt, etc. I wouldn't say housing is exclusive to the upper middle class, because 65% of Americans own houses. That seems like a low bar for "upper" class.
- antisthenes 5y ago
  > which is for the first time in ~50 years flipped such that wages are growing faster than prices. > Real average hourly earnings decreased 1.9 percent, seasonally adjusted, from November 2020 to November 2021. The change in real average hourly earnings combined with no change in the average workweek resulted in a 1.9-percent decrease in real average weekly earnings over this period. Good try, but incorrect.
  - xapata 5y ago
    Check the same value since November 2019. I can't find the figures now, but I'm hopeful the gains weren't wiped out.
- VirusNewbie 5y ago
  Who do you think has more debt in absolute terms, the lower class or the upper class? Whose debt is primarily leveraged into income producing assets opposed to simply debt? It doesn't matter if every single person in the US has debt and inflation makes that cheaper, if it disproportionally wipes out upper class debt you're doing wealth transfer indirectly to the upper class.
  - xapata 5y ago
    Good point. However, we care more about marginal value for an individual. A dollar given to a poor person is more valuable than a dollar given to a wealthy person. Giving $10 to Elon Musk accompanied by $1 to, well, just about anyone else, would increase equity, because we would value the $1 more than ten-fold what Musk would. Those particular numbers might be incorrect for the example, but the principle holds. That's why we have progressive tax brackets.
    - VirusNewbie 5y ago
      > Giving $10 to Elon Musk accompanied by $1 to, well, just about anyone else, would increase equity, It literally would do the opposite, literally. Do you know what the word equity means? You might say it's the right thing to do ethically, that it's a trade off you might make, and we can get into all sorts of pros and cons of it, but it is the opposite of increasing equity.

nostrademons 5y ago

Inflation is very rarely linear. When inflation hits, prices don't rise uniformly. Some industries have pricing power; others don't. Some professions have negotiating leverage, others don't. Those with the most negotiating leverage have the biggest ability to raise prices, while those in purely commodity businesses often get stuck with small nominal raises. Poor people are disproportionately in competitive jobs without a lot of negotiating leverage, because if they were in a differentiated job with a lot of negotiating leverage, they'd be rich.

xapata 5y ago
> competitive jobs Isn't the big news of the day that there's a labor "shortage" and wages are rising?
- nostrademons 5y ago
  Yes. Professions where you can walk off the job and find a dozen other ones that have openings (say, software engineer) get much higher wage increases than ones where if you walk off the job you have a very limited set of other employers (say, geologist or elementary school teacher). That's why you have a very bifurcated set of anecdotes, where some people are like "my COLA was still a measly 3% this year" and others are like "I switched jobs for a 20% raise."
  - xapata 5y ago
    I've been hearing about significant wage increases for many jobs, especially at the lower end of the spectrum.

mint2 5y ago

Inflation does not have zero damage to poor people. It means despite wage increases they haven’t actually seen meaningful gains in 40 years before the pandemic. https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...

mrjangles 5y ago
This has nothing to do with inflation. If what is being claimed is true, it would mean that without inflation they would have received no wage increases at all.