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> The debasing of fiat currency is a "stealth" redistribution of wealth, regardless of the pretenses for it. The "debasing of fiat currency" reduces debt burde

> The debasing of fiat currency is a "stealth" redistribution of wealth, regardless of the pretenses for it. The "debasing of fiat currency" reduces debt burdens, and I would think that middle- and low-income folks are probably more likely to have debt (student loans, mortgages). A low-inflation or even deflationary environment is probably a worse thing for the non-rich.

WalterBright 5y ago
> reduces debt burdens Not really, because inflation causes interest rates to go up correspondingly.
- gizmo686 5y ago
  Which is not relevant to most consumer debt, where the interest rate is set at the start and locked in for the life of the loan.
  - WalterBright 5y ago
    Fixed rate debts interest are set to accommodate the current inflation rate plus higher values to accommodate the risk of inflation increasing. Lenders are not fools when it comes to inflation.
  - loeg 5y ago
    Quite a lot of consumer debt is variable rate (credit cards, ARMs, ...), or nominally fixed rate, but rolls over somewhat frequently (car loans, mortgages as people move or refinance, pay later spending, etc).
gruez 5y ago
>and low-income folks are probably more likely to have debt (student loans, mortgages). Source? For student loans at least, the amount of debt held is positively correlated with household income, not negatively like you suggest. https://www.urban.org/sites/default/files/styles/optimized_default/public/2019-05/eddebtcolumn_revised.jpg?itok=xqPlrb5W https://www.urban.org/sites/default/files/styles/optimized_d...
- throw0101a 5y ago
  The theory at least: > If wages increase with inflation, and if the borrower already owed money before the inflation occurred, the inflation benefits the borrower. This is because the borrower still owes the same amount of money, but now they more money in their paycheck to pay off the debt. This results in less interest for the lender if the borrower uses the extra money to pay off their debt early. * https://www.investopedia.com/ask/answers/111414/does-inflation-favor-lenders-or-borrowers.asp https://www.investopedia.com/ask/answers/111414/does-inflati... (The article mentions some benefits to lenders too.)

WalterBright 5y ago

> reduces debt burdens Not really, because inflation causes interest rates to go up correspondingly.

gizmo686 5y ago
Which is not relevant to most consumer debt, where the interest rate is set at the start and locked in for the life of the loan.
- WalterBright 5y ago
  Fixed rate debts interest are set to accommodate the current inflation rate plus higher values to accommodate the risk of inflation increasing. Lenders are not fools when it comes to inflation.
- loeg 5y ago
  Quite a lot of consumer debt is variable rate (credit cards, ARMs, ...), or nominally fixed rate, but rolls over somewhat frequently (car loans, mortgages as people move or refinance, pay later spending, etc).

gruez 5y ago

>and low-income folks are probably more likely to have debt (student loans, mortgages). Source? For student loans at least, the amount of debt held is positively correlated with household income, not negatively like you suggest. https://www.urban.org/sites/default/files/styles/optimized_default/public/2019-05/eddebtcolumn_revised.jpg?itok=xqPlrb5W https://www.urban.org/sites/default/files/styles/optimized_d...

throw0101a 5y ago
The theory at least: > If wages increase with inflation, and if the borrower already owed money before the inflation occurred, the inflation benefits the borrower. This is because the borrower still owes the same amount of money, but now they more money in their paycheck to pay off the debt. This results in less interest for the lender if the borrower uses the extra money to pay off their debt early. * https://www.investopedia.com/ask/answers/111414/does-inflation-favor-lenders-or-borrowers.asp https://www.investopedia.com/ask/answers/111414/does-inflati... (The article mentions some benefits to lenders too.)