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You got me thinking about inflation as a tax on the wealthy but after thinking about it some, I quickly realized that most wealth is stored in real estate or st
by socialist_coder 12y ago
You got me thinking about inflation as a tax on the wealthy but after thinking about it some, I quickly realized that most wealth is stored in real estate or stocks/bonds- not cash. Future business earnings would also scale up with inflation.
The only people losing out are those who store their wealth as cash, and really, who does that?
- loup-vaillant 12y agoOops, good point. Still, even without inflation, more bargaining power means less money for the other party: more money would go to the workers, and less would go to the capitalists. This is even more direct than this inflation stuff, I should have mentioned it right away. As for how people store their money… I believe many rather important financial "products" are sensitive to inflation. I'm not a specialist, but here is an example: insurance. You give an insurance company something (money, bonds, debts…), and ask for money in return. Not now, but later. If that sum is not indexed to inflation somehow, it will be sensitive to it. One also need some cash to exchange all those bonds and stocks and what have you. By reducing the money supply, inflation may reduce the fluidity of the market, which may have effect on the market value of stocks.