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> Deflation is good for people that have most of their net worth in cash and bad for people that ... don't I don't think the poor or middle class have much net
by dragontamer 2y ago
> Deflation is good for people that have most of their net worth in cash and bad for people that ... don't
I don't think the poor or middle class have much net worth in anything.
In particular, my mental model is that the middle class will get wrecked by their student loans or car loans if you purposefully deflated the dollar.
The rich have enough money to prepare for all circumstances, be it inflation or deflation. It's a loss if you're trying to prevent them from gaining more money by simple means like this. In times of deflation they will hoard cash (even international trades like the the carry trade: taking advantage of the difference of inflation between national currencies and economies).
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In any case: increasing the cost of everyone's debt burdens is almost obviously the wrong move.
- ffsm8 2y agoYou're right, they don't have a lot of savings - but doesn't that make it even worse for them, because that means their income is basically all their wealth. And this is objectively even more impacted by inflation as I said before, because it keeps getting worse with every year, because most workers do not get raises equivalent to inflation. And I think you'd agree too that assets become more valuable by inflation (because that's kinda the definition of the term), and that consequently means that if your net worth is mostly assets, as every rent seekers portfolio is - you really do like inflation. Even if you're right that the people heavily in debt also gain by having it devalued via inflation: I don't think it'd have enough impact to offset their depreciated wage and the additional cost of living though - but that's just my personal expectation