This is much more a move in favor of the rich that are owed money by the poor imo.
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.
It also myopically focuses on household debt. But household debt is significantly lower than either corporate debt or government debt [1].
The biggest debtors benefit the most from inflation — quantitatively speaking, the debts of ordinary people aren’t very big.
[1]: https://www.mckinsey.com/~/media/McKinsey/Industries/Financi...
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;
}
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 $480,307.
Bonus: your monthly “UBI” could never be shut off by your government.
sub deflate($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 ∮.
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.
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.
inflation is a monster that destroys the low and middle class. the rich and powerful have tools to profit and dance around it.