Yes that's a great point, as long as debt interest rates are fixed, inflation is good for people in debt. It's especially great for most home owners, but home ownership is largely a middle-class luxury.
But that said a lot of the really bad debt that poor people have is variable rate anyway (and usually outrageous) like credit cards, payday loans, etc.
Re wages: they tend to be sticky. Wages will get bumped up but it's almost always after the fact as a result of government reported inflation rates. So people have been feeling the inflation for a while by the time wages "catch up." And the government inflation rates are notoriously underestimates so in reality wages tend to stagnate and "drop" (they are the same number but buying power has dropped) until market pressures force them to rise.
It would definitely be interesting to hear about past examples where income inequality improved under inflation. In Weimar and Venezuela that doesn't seem to have happened. The poor there end up starving and using leaves for toilet paper. The really wealthy have access to international investing so they're protecting against inflation.
> Yes that's a great point, as long as debt interest rates are fixed, inflation is good for people in debt.
Variable interest rates should be illegal anyway. How can you commit to paying next year a sum that you cannot know? It works somewhat as long as everything is stable, but is a significant fragilisation factor once things go awry. Which they are bound to do, eventually. The answer to that is not to create even more instability in the form of speculative cryptocurrencies; it’s to have better regulations.
> Re wages: they tend to be sticky. Wages will get bumped up but it's almost always after the fact as a result of government reported inflation rates.
Also, wages in real terms haven’t gone up for 40 to 50 years now. Inflation is a tax on savings, so it still penalises the wealthy, but it is not as helpful for the middle class as it once was.
> It would definitely be interesting to hear about past examples where income inequality improved under inflation.
Piketty’s book has a couple of them. The gist of it is that most high inflation events reduce inequality by burning money. People who don’t have any are not burnt. Of course it does not mean that it is pleasant for them, or that the wealthy end up starving. But it does reduce inequality.
A total war is a good example as well, because then the state is going to take the money where it is, i.e. in well stuffed bank accounts, and an existential threat is important enough to make it politically feasible.
But that said a lot of the really bad debt that poor people have is variable rate anyway (and usually outrageous) like credit cards, payday loans, etc.
Re wages: they tend to be sticky. Wages will get bumped up but it's almost always after the fact as a result of government reported inflation rates. So people have been feeling the inflation for a while by the time wages "catch up." And the government inflation rates are notoriously underestimates so in reality wages tend to stagnate and "drop" (they are the same number but buying power has dropped) until market pressures force them to rise.
It would definitely be interesting to hear about past examples where income inequality improved under inflation. In Weimar and Venezuela that doesn't seem to have happened. The poor there end up starving and using leaves for toilet paper. The really wealthy have access to international investing so they're protecting against inflation.