Record US productivity slump in first half of 2022 risks higher inflation

The problem with making general statements about inflation is that there are many different types and reasons for inflation and the impact is unevenly distributed. Even I made that mistake by narrowly focusing on why e.g. central banks want 2% inflation but that ignores other sources of inflation like supply shocks and other forms of cost push inflation.

Demand pull inflation generally happens when people's wages are rising, this is not very regressive, in fact it is highly beneficial for the poor and very bad for the rich as the rich derive most of their income from capital yields. People argue that any non money asset like gold protects you against inflation but it is not that simple. Gold or Bitcoin can actually go down during demand pull inflation once there is competition over employees and the real economy becomes more attractive to invest in, for your company to go up in value it must actually be productive and produce something that other people want, a useless speculative company that is not profitable or has very little revenue will become very unattractive compared to all the other alternatives that benefit from higher wages and more spending.

Of course, cost push inflation, meaning higher prices because productivity went down or resources became scarcer is bad for almost everyone but primarily the poor, the rich earn more money from capital gains than they earn from working themselves. Their living expenses are a tiny fraction of their income. Poor people often barely have enough to get by, so any increase in living expenses can result in eviction or loss of their job (the proverbial broken down car problem) or getting stuck in their current position as getting a new job entails risks that they are unable to bear. Cost push inflation cannot be a tax in any meaningful way, because the government isn't responsible for what e.g. oil companies do. If you call oil profit a tax, then almost everything is a tax. The Communists call this burden surplus value but I somehow doubt that this is what you are trying to explain.

When you consider these two types of inflation it becomes hard to make a general statement about inflation. When you consider that inflation doesn't have to be equally affect the economy, it becomes even harder to argue that any particular group gets hit hardest other than maybe by arguing that there are more poor people.

If inflation is a flat tax, it would be a tax on both liquid and illiquid assets denominated in the unit of account. A very obvious solution to this problem would be to simply get rid of inflation and replace it by a simple tax on blocking the medium of exchange, akin to an illegal parking fee. If you want to call it a tax, it could be called a tax on liquidity or be known as a negative interest rate. The obvious benefits of a negative interest rate vs inflation is that the negative interest rate applies to everyone holding liquidity equally, no unfair distribution of inflation, a predictable fee that is the same every year for everyone. Another benefit is that it is avoidable by simply investing or saving in less liquid assets. If you are not harming the economy by actively blocking the medium of exchange, then there is no reason to charge any fees whatsoever. Lower interest rates lead to lower costs of capital which in turn mean companies can lower their prices or hire more people. Soy from this perspective, inflation is just a crude old tool that served its purpose but now we have a modern economy with 8 billion smart heads, it would be better for everyone to recognize that there is a better way of keeping the medium of exchange alive.

Please don't make the brain dead argument that paying 3% on nothing somehow is worse for the poor and paying 3% on a lot is good for the rich.