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> Inflation is a tax on poor already It's a common trope but no. "The poor" don't live / operate on savings. "The poor", kinda by definition live by earning a

by creer 1y ago

> Inflation is a tax on poor already It's a common trope but no. "The poor" don't live / operate on savings. "The poor", kinda by definition live by earning a paycheck or receiving subsidies and spending it all. As long as you have a stable situation (say, fixed x% inflation day in, day out) then what currency that paycheck is denominated in, is totally irrelevant. Money in minus money out equal still no savings in any dodgy currency. (It's different when there is the chaos of hyper-inflation - where the paycheck of one week cannot buy the groceries of the next.) Inflation is a tax on people with savings and investments. Not on the poor but on everybody else. Poor retirees, yes.

NalNezumi 1y ago
This argument feels slightly strawman, by redefining poor to the absolute lower edge of a group of people. In reality, most poor people I know does manage to save a tiny, miniscule amount each month. What they can't afford, is investing. Because the amount saved is so tiny, many investment apparatus doesn't apply to their tiny savings (fees just gobble up any gains made on that tiny amount) and they often desperately need the liquidity for their ever unpredictable life circumstances. These factors are ofc made worse in country like US where liquidity is your safety net, not social safety nets. So, whatever small, tiny amount of savings they have is disproportionately being obliterated by inflation. Because unlike middle class that can throw it in a fund that can keep it above inflation rate, their savings are often cash, taking direct, unmitigated hit of the inflation
- creer 1y ago
  Sure. And in the US there is a noticeable class with little savings but not "poor": Particularly noticeable when they have clearly not low income - but cannot manage to accumulate savings or have no interest in accumulating savings. They like more expensive cars than necessary, and homes, vacations, eating out, whatever. Little savings but can't be described as "poor". And for them also, inflation is not a significant factor. Their savings are low compared to income. Still: inflation not a tax on the poor but a tax on anyone with savings and investments. Some of which are poor, yes. One might say "liquidity" savings are particularly difficult to protect - but really, many investments are not a great defense either. Defending any investments against inflation is difficult. Among which, "throwing it in a fund" might keep it a little above official inflation numbers - but also might not provide serious return above that, and exposes emergency funds to volatility. So, to me, that doesn't solve the problem of inflation - poor or not. A tool, not a solution.

by creer 1y ago

NalNezumi 1y ago

This argument feels slightly strawman, by redefining poor to the absolute lower edge of a group of people. In reality, most poor people I know does manage to save a tiny, miniscule amount each month. What they can't afford, is investing. Because the amount saved is so tiny, many investment apparatus doesn't apply to their tiny savings (fees just gobble up any gains made on that tiny amount) and they often desperately need the liquidity for their ever unpredictable life circumstances. These factors are ofc made worse in country like US where liquidity is your safety net, not social safety nets. So, whatever small, tiny amount of savings they have is disproportionately being obliterated by inflation. Because unlike middle class that can throw it in a fund that can keep it above inflation rate, their savings are often cash, taking direct, unmitigated hit of the inflation

creer 1y ago
Sure. And in the US there is a noticeable class with little savings but not "poor": Particularly noticeable when they have clearly not low income - but cannot manage to accumulate savings or have no interest in accumulating savings. They like more expensive cars than necessary, and homes, vacations, eating out, whatever. Little savings but can't be described as "poor". And for them also, inflation is not a significant factor. Their savings are low compared to income. Still: inflation not a tax on the poor but a tax on anyone with savings and investments. Some of which are poor, yes. One might say "liquidity" savings are particularly difficult to protect - but really, many investments are not a great defense either. Defending any investments against inflation is difficult. Among which, "throwing it in a fund" might keep it a little above official inflation numbers - but also might not provide serious return above that, and exposes emergency funds to volatility. So, to me, that doesn't solve the problem of inflation - poor or not. A tool, not a solution.