Only if wage inflation doesn't keep up with price inflation. If wage inflation keeps pace, it's actually a fairly progressive result since debt loses value relative to wages.
For people without income or assets it's a disaster.
Very true. And, unfortunately, thus far, the wage growth we saw earlier on in the pandemic has not held, because it was largely the result of lower paid people becoming unemployed. Wages have barely budged relative to inflation since 2019, even if you only consider employed people. We're definitely in the "very not good" scenario here.
Minimum wage is always going to lag way behind inflation. In practice, almost all wages lag behind inflation. But "people without income or assets" is my definition of "poor" and ...yeah, inflation basically takes a meager $1200/mo government check and makes it worthless. they're already on the brink of starvation.
> I do think defining poor as unemployed is way too narrow.
Definitely. You floated the idea that inflation would be progressive if the creditors have to pay higher wages (if wages rise in sync) while their loan portfolios in "old dollars" become essentially a worthless write down. There's a beautiful, even just economic logic to that. The trouble is that the lag itself becomes wealth under inflation. Normally, TTL between promising a worker a check and sending it gives a nominal value for holding that money as long as possible in an interest bearing or inflation-proof asset. Under inflation that time differential goes wild. Sometimes within a day or two, the value of the payment is gone by the time it gets to the employee. This is before it even enters the system as purchasing power.
Time becomes the most crucial element of profit and control, under inflation.
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"rich in cash"? No. Just those without other assets. Are you rich in cash if all $100 you have is in cash?
Inflation is the most regressive tax possible on the poor.
Only if wage inflation doesn't keep up with price inflation. If wage inflation keeps pace, it's actually a fairly progressive result since debt loses value relative to wages.
For people without income or assets it's a disaster.
Very true. And, unfortunately, thus far, the wage growth we saw earlier on in the pandemic has not held, because it was largely the result of lower paid people becoming unemployed. Wages have barely budged relative to inflation since 2019, even if you only consider employed people. We're definitely in the "very not good" scenario here.
See https://www.pewresearch.org/fact-tank/2021/09/07/despite-the...
Minimum wage is always going to lag way behind inflation. In practice, almost all wages lag behind inflation. But "people without income or assets" is my definition of "poor" and ...yeah, inflation basically takes a meager $1200/mo government check and makes it worthless. they're already on the brink of starvation.
I don't disagree with the overall point that it's likely that inflation will hurt a lot of economically vulnerable people.
I do think defining poor as unemployed is way too narrow. There are plenty of people who are employed and also poor.
Definitely. You floated the idea that inflation would be progressive if the creditors have to pay higher wages (if wages rise in sync) while their loan portfolios in "old dollars" become essentially a worthless write down. There's a beautiful, even just economic logic to that. The trouble is that the lag itself becomes wealth under inflation. Normally, TTL between promising a worker a check and sending it gives a nominal value for holding that money as long as possible in an interest bearing or inflation-proof asset. Under inflation that time differential goes wild. Sometimes within a day or two, the value of the payment is gone by the time it gets to the employee. This is before it even enters the system as purchasing power.
Time becomes the most crucial element of profit and control, under inflation.