15 ms·

Poor people can benefit from inflation in the sense of it wiping out debt or spurning wage inflation/decreasing wealth inequality

dragontamer 5y ago
> wiping out debt Do poor people have access to severe amounts of debt? The #1 source of debt in the USA seems to be the home mortgage, and #2 is probably the car-loan after that. Poor people don't have access to home mortgages because they can't afford it: they're in the renter class. So all inflation does is increase the price of rents to them. Car loans are also somewhat difficult for people with low credit scores. EDIT: Ah right: student loan debt. Which is once again, largely a rich person thing in the aggregate. Poor people aren't going to college. The middle class who can go to college may get significant amounts of student debt, but its nothing compared to the student loans the upper-class get for Lawyer / Medical Doctor schools. > spurning wage inflation While average wages have inflated, have they increased by 7.5% over the past year? I don't think so. --------- You need to be relatively well off to have a home-mortgage that benefits from inflation. (+Home value while decreasing the value to the loan). In fact, it is the richest among us who have the access to the most amounts of debt instruments (ex: a home speculator / house-flipper may own 10 homes and 10 different mortgages, but they needed a high amount of capital to find themselves in that situation).
- glenstein 5y ago
  I would add medical debt, student loans, credit card debt.
  - dragontamer 5y ago
    I think I accept your point on medical debt. Medical debt can happen to anyone. But even credit-card debt is dependent on your credit score. Poor people don't have good credit, and therefore their ability to take on credit-card debt is limited compared to a richer person.
    - asdff 5y ago
      They take on payday loans instead from predatory lenders you only find in poor neighborhoods.
- rory 5y ago
  It's true that statistically poor people have less access to debt, especially post-2008, but the rate isn't so low that they can be called a renter class. The lowest income quintile in the still has a 30% homeownership rate[0]. There are a lot of places in the USA where a mortgage is a lot cheaper than renting (think rust belt), and several states have fairly strong low-income mortgage programs. [0] https://www.zillow.com/research/homeownership-by-income-9419/ https://www.zillow.com/research/homeownership-by-income-9419...
WillPostForFood 5y ago
Rich people are more likely have debt like fixed rate mortgages that inflation can wipe out. Poor people are more likely to have interest indexed debt like credit cards or variable rate loans that will crush them when inflation rises. Inflation is terrible for the poor. We can already see wages lagging behind inflation.
- TheGigaChad 5y ago

dragontamer 5y ago

> wiping out debt Do poor people have access to severe amounts of debt? The #1 source of debt in the USA seems to be the home mortgage, and #2 is probably the car-loan after that. Poor people don't have access to home mortgages because they can't afford it: they're in the renter class. So all inflation does is increase the price of rents to them. Car loans are also somewhat difficult for people with low credit scores. EDIT: Ah right: student loan debt. Which is once again, largely a rich person thing in the aggregate. Poor people aren't going to college. The middle class who can go to college may get significant amounts of student debt, but its nothing compared to the student loans the upper-class get for Lawyer / Medical Doctor schools. > spurning wage inflation While average wages have inflated, have they increased by 7.5% over the past year? I don't think so. --------- You need to be relatively well off to have a home-mortgage that benefits from inflation. (+Home value while decreasing the value to the loan). In fact, it is the richest among us who have the access to the most amounts of debt instruments (ex: a home speculator / house-flipper may own 10 homes and 10 different mortgages, but they needed a high amount of capital to find themselves in that situation).

glenstein 5y ago
I would add medical debt, student loans, credit card debt.
- dragontamer 5y ago
  I think I accept your point on medical debt. Medical debt can happen to anyone. But even credit-card debt is dependent on your credit score. Poor people don't have good credit, and therefore their ability to take on credit-card debt is limited compared to a richer person.
  - asdff 5y ago
    They take on payday loans instead from predatory lenders you only find in poor neighborhoods.
rory 5y ago
It's true that statistically poor people have less access to debt, especially post-2008, but the rate isn't so low that they can be called a renter class. The lowest income quintile in the still has a 30% homeownership rate[0]. There are a lot of places in the USA where a mortgage is a lot cheaper than renting (think rust belt), and several states have fairly strong low-income mortgage programs. [0] https://www.zillow.com/research/homeownership-by-income-9419/ https://www.zillow.com/research/homeownership-by-income-9419...

WillPostForFood 5y ago

Rich people are more likely have debt like fixed rate mortgages that inflation can wipe out. Poor people are more likely to have interest indexed debt like credit cards or variable rate loans that will crush them when inflation rises. Inflation is terrible for the poor. We can already see wages lagging behind inflation.

TheGigaChad 5y ago