I don't think it's that simple. Lower middle class and poor people have debt, and inflation is good for making debt less valuable in real dollars. Pensioners, maybe, but social security is indexed to inflation if I'm not mistaken? I wouldn't be surprised if many public and private pensions are as well.
This is much more a move in favor of the rich that are owed money by the poor imo.
The concept of "inflating debt away" is an assumption that wages match inflation while debt stays static. This is a fair assumption in low inflation times, but is showing some cracks these days.
One might then ask, do higher-class wages match/exceed inflation more than lower-class wages? This is debatable. But here's some interesting data from the Atlanta FED, where you can track wages by quintile, education, "skill", hourly vs. non-hourly, etc. Make your own conclusions.
They have debt, but they also have work contracts with out of date wages. But even in our sector, with the leverage that we as programmers have, companies don’t bother to match inflation. You have to make some risky or uncomfortable move to renegotiate your wage or find a new job. For many people it can be worse. So, everyone is under additional financial stress.
Inflation forces people to seek new jobs every few years. That is not necessarily a bad thing. The alternative is to have your boss decide for you when he wants to fire you.
> The alternative is to have your boss decide for you when he wants to fire you
Just for fun, I thought I’d do the math on deflationary economics:
#!/usr/bin/env raku
use v6;
multi sub deflate($n, $r, $y)
{
my $m = $n;
loop (my $i = 0; $i < $y; $i++)
{
$m = deflate($m, $r);
}
$m;
}
multi sub deflate($n, $r)
{
$n * (1 + $r);
}
sub MAIN(:$rate = 0.0225, :$years = 10)
{
my $purchasing-power = 1;
my $deflate = deflate($purchasing-power, $rate, $years);
my $output = qq:to/EOF/.trim;
After $years years of deflation at a rate of {$rate * 100}% per year,
purchasing power is {$deflate * 100}% of what it was initially.
EOF
$output.say;
}
Without inflation, your personal wealth would grow by the average inflation rate target plus GDP growth, compounding each year.
Assuming an average inflation rate target of 2% per year (per the Fed) and an average GDP growth rate of 0.25% per year, your real purchasing power would grow by about 25% per decade.
Under this scenario, you could mimic a universal basic income of $1000 per month upon saving a total of $480,307.
Bonus: your monthly “UBI” could never be shut off by your government.
Cool, but I couldn't resist rakufying your "deflate" subroutine:
sub deflate($power is copy, $rate, $years) {
$power *= 1 + $rate for ^$years;
$power * 100
}
sub MAIN(:$rate = 0.0225, :$years = 10)
{
print qq:to/EOF/;
After $years years of deflation at a rate of {$rate * 100}% per year,
purchasing power is &deflate(1,$rate,$years)% of what it was initially.
EOF
}
The innumerable dark-seeming corners of the language is part of what makes Raku so very, distinctly “Perl”. Little traits and single character sigils that change everything. I find the black magic of Perl моѕt all∪ring ∮.
Same, very surprising. I was tracking the project for a while with great interest but they lost a lot of things that made Perl actually good at its niche. I'm amazed they made Perl look worse.
Nobody is talking about typical inflation. I just found a new job with a significant increase in pay and the improvement has nearly completely evaporated in months. I am nearly open to another move. With adequate inflation, your pay is wrong in weeks or days. But surely you know all this?
Everywhere I look I see the unexamined assumption that inflation is necessarily bad for everyone. I haven't be enable to find a straight answer on who it actually benefits and who it hurts in the long run. I've found economics studies arguing contradictory conclusions. Wages, costs, debt, cash, stocks, and rent all react differently, and your experience of inflation depends hugely on what balance of these things you have.
Inflation and responses to it affect the distribution of wealth. When I hear an automatic response from "responsible" policymakers explain that some sacrifices will be needed to tame it (mostly not by them, of course), then I strongly suspect that we're headed for yet more accumulation of wealth at the top.
> This is much more a move in favor of the rich that are owed money by the poor imo.
Inflation affects the poor much more than it does the rich, which is why it's considered a "regressive tax". The Fed making a historically large rate hike is a direct attempt at fighting inflation, preferentially so over preventing a recession.
And since we're already very near to full employment, the risk that inflation poses to the poor is greater than that of unemployement, hence why it is better for the poor that inflation is brought in check even at the risk of recession.
yes I don't think it's the case that inflation doesn't hurt the lower half of earners at all, but this entire post is filled with people assuming that inflation hurts poor people the most. I don't know where that assumption comes from but it doesn't make sense to me.
Someone who could just manage to feed their family on a paycheck-to-paycheck salary before now cannot. That hurts in a way that is .. difficult to compare to when your belly is always full.
The mistake is that, most poor peoples largest expense is housing, and most poor people rent. Those who own have mortgages. Sure their $30K student loans (already on income based repayments) may benefit from inflation, but housing prices certainly not.
This is much more a move in favor of the rich that are owed money by the poor imo.