Inflation just is another form of tax that’s almost uniformly flat.
(Actually it affects those who hold cash and cash-nominated things more than those who mainly hold debt)
(Actually it affects those who hold cash and cash-nominated things more than those who mainly hold debt)
If you have a 30 year bond paying 2% and inflation goes up to 4%, you're making -2% on your bond. Sure, that's not as bad as -4% for cash holders. But it's not good at all if you're planning to retire someday as the compounding effects of inflation over the decades wipe out your retirement benefits.
If you borrowed $500k to buy your house at 3% and we hit 10% inflation, you look like a financial wizard pretty fast.
If you bought non-TIPS bonds during that time to finance your retirement, you may end up nearly destitute.