4 ms·

remarkable how many people in this thread are assuming the bottom of the income distribution is hurt the most by inflation. Think about who has debt (mortgage,

remarkable how many people in this thread are assuming the bottom of the income distribution is hurt the most by inflation. Think about who has debt (mortgage, student, medical expenses, car payments) and who that debt is owed to (banks, corporations) and what happens to that debt in real dollars when inflation is happening. The debt becomes less meaningful. Wages rise (they have in fact been rising), and the payments are less of a burden, while the people that are owed money get less value from the payments.

qgin 4y ago
You're very right, but I think the trick is that prices rise faster than wages, if they ever fully catch up. That lag between price and wage increase is a super immediate problem for anyone going paycheck-to-paycheck.
- susanasj 4y ago
  yes definitely agree.
- deleted 4y ago
  [deleted]
laputan_machine 4y ago
Inflation affects the poor more than the wealthy. Food, energy, shelter all become less attainable for the poor. They will always be attainable for the rich. In absolute terms the rich will "lose" more money, or not gain as much, but this isn't the concern. The concern is the inevitable increase of absolute poverty that will happen, and that is because the poor will be worse affected. Rich people aren't going to struggle to pay their gas bill, or struggle to buy food.
- TimTheTinker 4y ago
  Any change at all from the ideal will disproportionately negatively affect the poor, marginalized, disadvantaged, etc. This is true in any sphere of life, not just economics. That's why "love your neighbor as yourself" is indispensable. No policy or variable tweaking can take the place of simply caring for others.
datadata 4y ago
A good chunk of the debt (~9 trillion) is owned by the Fed itself. When the bank finances a mortgage for example, because it is a fractional reserve system the bank is lending only a small fraction of its own capital. The bank simply borrows from the fed either directly or indirectly by selling. The bank's profit is that the mortgage interest rate on the mortgage (and risk) is higher than that of the risk free borrow rate.

qgin 4y ago

You're very right, but I think the trick is that prices rise faster than wages, if they ever fully catch up. That lag between price and wage increase is a super immediate problem for anyone going paycheck-to-paycheck.

susanasj 4y ago
yes definitely agree.
deleted 4y ago
[deleted]

laputan_machine 4y ago

Inflation affects the poor more than the wealthy. Food, energy, shelter all become less attainable for the poor. They will always be attainable for the rich. In absolute terms the rich will "lose" more money, or not gain as much, but this isn't the concern. The concern is the inevitable increase of absolute poverty that will happen, and that is because the poor will be worse affected. Rich people aren't going to struggle to pay their gas bill, or struggle to buy food.

TimTheTinker 4y ago
Any change at all from the ideal will disproportionately negatively affect the poor, marginalized, disadvantaged, etc. This is true in any sphere of life, not just economics. That's why "love your neighbor as yourself" is indispensable. No policy or variable tweaking can take the place of simply caring for others.

datadata 4y ago

A good chunk of the debt (~9 trillion) is owned by the Fed itself. When the bank finances a mortgage for example, because it is a fractional reserve system the bank is lending only a small fraction of its own capital. The bank simply borrows from the fed either directly or indirectly by selling. The bank's profit is that the mortgage interest rate on the mortgage (and risk) is higher than that of the risk free borrow rate.