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> The group of people that can least deal with inflation Inflation in the cost of goods and services = wages go up. If you're involved in any economic activit

• SilasX 11y ago
  >Inflation in the cost of goods and services = wages go up. In theory, yes. In practice, the poor also have higher job-switching costs (because of higher uncertainty that they'll find another one), which means their wages can be inflation-sticky upward as well. Also, what little savings they have tends to be in cash and they find it harder to store it in inflation hedges. >If you're involved in any economic activity beyond hoarding cash, inflation isn't a bad thing. Hold on -- all usage of money involves some kind of hoarding, in the sense of "store money in liquid form for some unknown future need". But that's the entire freakin' point of money in the first place: that you don't have perfect knowledge of your future needs. (The coincidence of wants problem by itself doesn't include this -- far more important -- role of money.) You can see this role during hyperinflation -- people are no longer able to indefinitely defer choosing where to spend their money, but must spend it immediately on something else that will hold some of its value or which sates a current need, and they bear a tremendous cost in having to choose this way. Monetary policy must strike a balance between "no one spends ever" vs "everyone must spend now", and leaning toward one or the other bears some of the downsides of the extreme cases. Spending too soon and too late have their own costs. It's not as simple as "any storage/hoarding of money should be discouraged".