Inflation isn’t a bad thing.
The people trying to scare everyone about inflation are the ones who the poor people owe the big pile of cash, and they have a very large megaphone.
Can you point me to some middle class people who are just sitting on a huge pile of cash? I'm a pretty standard middle class person and the vast majority of my net worth is tied up in a 401k, and if it wasn't there it'd be in a house that would be seriously outpacing inflation.
Also, to your earlier point:
> Poor people don't have standing debts but rather revolving ones, and so their debt scales with inflation.
So at worst that's a wash.
[1] https://abcnews.go.com/US/10-americans-struggle-cover-400-em...
Now I agree having all the benefits from productivity gains going to the people who aren't working for them is some bullshit, but that's not the same as wages going down when you account for inflation.
To a college kid with savings from teenage jobs, it is.
To people who's wages didn't go up, it is.
For your 1 year old, it's not a problem if that $1000 is invested in say an S&P fund
If you hold a mortgage, it can potentially be good...
Often mortgage rates are based on the interest rate set by the central bank ("prime"). So if inflation is rampant and the central bank increases the prime rate to try to reduce inflation, variable mortgage interest rates will also increase. In the US, however, it's possible to get 25 year fixed rate mortgages. With the prime rate being so low, these can be had for 2-3%. This is very low! If many on HN are to be believed regarding a coming inflationary crisis this kind of mortgage will be hugely advantageous to those that have one because the debt will be massively devalued by rampant inflation.
The banks take the current interest rate from the Fed into account and base the mortgage rate on that. They can try to project out and add some percentage for risk + inflation but if they add too much then there are 100 other banks ready to undercut them.
So you get a fixed-rate mortgage based on the current interest rate from the central bank. And the amount of money that your mortgage covers (basically the price of your house) doesn't change. Which means that every year, as inflation causes wages to go up, you are paying for a house that cost whatever it cost when you bought it.
But! Most people shop for houses based on what they can afford as an all-in payment. To put it another way, people can afford $x/month on housing, and it doesn't matter to them really how much is going to the price of the house and how much is going to interest. If interest rates rise (which happens along with inflation) then that means the percentage of someone's monthly payment that goes to the price of the house goes down, which has a depressing effect on housing prices. So your house payment becomes more affordable but the amount you can expect to get when you sell your house goes down (or rises more slowly).
This is on the back of many companies having a wage freeze in 2020 due to the pandemic
This is also why you will see alot of companies having a turn over crisis as switching employers will not be more profitable for employee's than every before. I see every limited signs that the HR dept's at most companies even recognize this problem currently, and the few that due are powerless to stop it because it seems many companies just refuse to give large annual raises to current staff but will happily replace them at high rates.
This is with out even getting started on the Time bomb of SocSec, as they also have not kept payments up to meet inflation largely because they can not. there is no money to fund it. So if your retired depending on SocSec income for your survival you are screwed, better hope you have family you can live with
>If you hold a mortgage, it can potentially be good...
Hold debt is only good if you wages go up more than inflation. While sure you may pay less for the home itself, you repair and maintenance expenses are going up... Right now, some repair and maintenance cost for home ownership are leading inflation by ALOT
In the 1970's when the US had stagflation, S&P inflation adjusted returns from ~1968 to 1982. If you bought in 1968 you wouldn't really show gains until the early 1990s.
https://www.macrotrends.net/2324/sp-500-historical-chart-dat...
Actually, it would cause the debt to GDP ratio to go up as taxable income shrinks. See Greece.
Paying off debt while everyone and their dog is saving money like crazy is foolish.
Inflation is going to make that $1000 worth less unless your 1 yr old is a great investor. If they have any tips, pass them on. I some cash and no freaking idea how to protect the value.
To a college kid with savings from teenage jobs, it is.
See above inflation is tough on savings. Might be good for a young adult with college debt that can be paid back with inflated dollars.
To people who's wages didn't go up, it is.
Only if wages rise faster than prices. Wages often trail prices in high inflation environments. In extreme scenarios, prices can go up in restaurants and stores every day, but wages may only go up after a pay period, or after yearly review.
The question is if it is controlled and the tradeoffs worthwhile.
> An increase in the cost of living is generally never a "good" thing.
Inflation is only an increase in nominal, not real cost. If I give you a dollar more and charge you a dollar extra, then you haven't lost any purchasing power.
https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
https://www.marketwatch.com/story/despite-wage-growth-the-av...
https://www.forbes.com/sites/patrickwwatson/2018/09/25/real-...
https://ca.finance.yahoo.com/news/aftertax-income-is-barely-...
If you want to talk about consumer price inflation as distinct from wage inflation, do so, but be specific.