The shit is that those who have lent money to others through long dated bonds lose money if inflation rises faster than expected, because bonds pay a fixed inte

The shit is that those who have lent money to others through long dated bonds lose money if inflation rises faster than expected, because bonds pay a fixed interest rate for a fixed period of time. As no one wants to lose money, they sell the bonds and bond prices crash, leading to more losses. People who can afford to lend money to others for extended periods of time are the wealthy and those with a lot of money in pension funds. So the losers' side is skewed towards the wealthier and the older. On the winning side are heavily indebted governments and corporates as well as people with fixed rate mortgages. As government spending has a redistributive effect and wages tend to rise with (moderate) inflation, the less well off, younger, working people are on the winning side as well. So there you have your political dividing lines. Newspapers who cater to those on the losing side (such as the Telegraph) are going to get hysterical at the sight of even the slightest whiff of inflation. There are global implications as well. Money flows where interest rates are higher. If interest rates rise in the US and in Europe, money will flow there from countries like India, Brazil or Indonesia. The currencies of those countries will fall versus the dollar because they are being sold, and as they are indebted in dollars, their debt load increases. In previous episodes that has lead to defaults among poorer countries. But this time, these countries are not as heavily indebted as back in the 1980s and 1990s. Some of them are under pressure from low commodity prices though.