For example, if I have a debt of $250k for a house worth $250k and inflation is causing a net benefit on my asset of 1%, then sure I'm gaining from the inflationary regime.
But what of the wealthy that have billions in assets and maybe even billions in debts?
The two situations belie a completely regressive tax. The billionaire gains net 1% on their billions and I as a peasant gain net 1% on $250k.
How can you argue this doesn't generate wealth for the wealthy?
Consider further that 1% is a modest number for the net benefit of asset backed debt.
>The two situations belie a completely regressive tax. The billionaire gains net 1% on their billions and I as a peasant gain net 1% on $250k.
It's a regressive tax in that the person with $250k gains less in absolute terms than the billionaire. But that's just capitalism. But so what? Everyone's still better off than they were yesterday.
This also ignores the spending effects and money velocity increases inflation brings. This is why the Phillips curve is a thing. People are encouraged to spend money. Higher inflation->lower unemployment. Lower unemployment, more bargaining power, more wages, the marginal person is better off.
There's a reason why low inflation is correlated with the Regan era of corporate takeover. The wealthy today don't actually own physical assets, by and large. They own financial instruments. They'd like to be able to sit on them. They don't want to have powerful labor. Stagflation is what happens when there's an exogenous shock to the labor supply by the opening of the world combined with the oil crisis. Now you don't need more people to produce more stuff.
For example, if I have a debt of $250k for a house worth $250k and inflation is causing a net benefit on my asset of 1%, then sure I'm gaining from the inflationary regime.
But what of the wealthy that have billions in assets and maybe even billions in debts?
The two situations belie a completely regressive tax. The billionaire gains net 1% on their billions and I as a peasant gain net 1% on $250k.
How can you argue this doesn't generate wealth for the wealthy?
Consider further that 1% is a modest number for the net benefit of asset backed debt.
reply