Also, when you have lots of assets, you can assume that lines of credit are available whenever you might ask for them. You are less likely to tap into emergency reserves, and may also set a lower target for those reserves if you know they only need to address the most dire scenario where you might have to abandon some of your augmented lifestyle.
Finally, with large wealth you have an opportunity to diversify into many independent assets and firewall them from one another, e.g. with limited liability structures. Having one of your investments implode is qualitatively different from having your whole wealth implode. This is the entire premise of VC investment and I would have thought obvious to this audience...
Inflation does not imply growth in real GDP, no.
> which generally raises the value of equity holdings. The impact of inflation is dependent upon asset allocation.
Ceteris paribus, inflation hurts debtholders (who, incidentally, tend to be wealthy), and it helps debtors (who, incidentally, tend to be poorer).
Is this controversial?
>"This is backwards. Inflation destroys the value of debt. Poor tend to be borrowers and rich tend to be lenders, so inflation is an equalizer."
chimeracoder seemed to be agreeing with this "equalizer" position by saying:
>"Ceteris paribus, inflation hurts debtholders (who, incidentally, tend to be wealthy), and it helps debtors (who, incidentally, tend to be poorer)."
Now, true, if you're a worker who owes money, and inflation kills your cash flow (because raises come later than price increases), it may not matter to you that the value of your debt decreased, because the cash flow problem is going to bankrupt you before the debt erosion helps you. But it's still a separate effect.
Also, this is ignoring that anyone sane issuing debt plans for inflation and accounts for this somehow (interest rate schedule, etc)...
Edit:
Another thing, this "inflation helps the poor idea" seems to be a version of trickle down economics.