who gets hurt by inflation?
Quote from laskerfan12 on 08/06/2020, 7:41 AMI kinda believe inflation hurts poor people the most as they can't afford the cost of living to go up. You seem to think congress should run high deficits as a stimulus to help people get through the pandemic, which should be inflationary. Doesn't this end up hurting poor people? What am I missing?
I kinda believe inflation hurts poor people the most as they can't afford the cost of living to go up. You seem to think congress should run high deficits as a stimulus to help people get through the pandemic, which should be inflationary. Doesn't this end up hurting poor people? What am I missing?
Quote from Zach on 08/06/2020, 8:43 AMin the usa, the poorest people have debt, which inflation would naively help ameliorate. However if all the money flows into housing/assets and none into wages... well presumably even if wages don't go up they are perhaps prevented from going down by money printing, but my personal opinion is our economy (tax system really) does have structural problems that result in new credit going to real estate mostly (which often translates directly into stock prices or the price of college, etc.).... land value tax when?
in the usa, the poorest people have debt, which inflation would naively help ameliorate. However if all the money flows into housing/assets and none into wages... well presumably even if wages don't go up they are perhaps prevented from going down by money printing, but my personal opinion is our economy (tax system really) does have structural problems that result in new credit going to real estate mostly (which often translates directly into stock prices or the price of college, etc.).... land value tax when?
Quote from Lars Svensen on 08/07/2020, 12:05 PMThe government stimulus is designed to help the poor the most by providing them with income they wouldn't otherwise have. But so far it looks like the stimulus will disproportionately help the wealthy.
The government stimulus is designed to help the poor the most by providing them with income they wouldn't otherwise have. But so far it looks like the stimulus will disproportionately help the wealthy.
Quote from Cullen Roche on 09/04/2020, 9:11 AMIt's all about trade-offs. The alternative to having spent trillions of dollars in the first half of this year is that millions of poor people would have lost their jobs. That's on top of the millions of poor people who lost their jobs. So, would we rather have the govt temporarily support these people and create some inflation or should we inflict deflation on the entire economy? In the inflationary outcome the rich end up essentially subsidizing the poor because the poor would otherwise have no income.
So yeah, you could argue that inflation hurts the poor the most. But you could also argue that deflation hurts the poor the most.
It's all about trade-offs. The alternative to having spent trillions of dollars in the first half of this year is that millions of poor people would have lost their jobs. That's on top of the millions of poor people who lost their jobs. So, would we rather have the govt temporarily support these people and create some inflation or should we inflict deflation on the entire economy? In the inflationary outcome the rich end up essentially subsidizing the poor because the poor would otherwise have no income.
So yeah, you could argue that inflation hurts the poor the most. But you could also argue that deflation hurts the poor the most.
Quote from James Charles on 09/16/2020, 3:53 AMThe 'rich' have benefited?
“Since the outbreak began, things have changed:
1. The rich have cut back on their spending in response to the economic shutdown.
2. This has stopped the flow of wages to working people, which means they cannot pay for their essentials.
3. In order to replace this income, central banks have given money to investors who have lent it to the government (taking a cut), who in turn have given it to working people. ?
4. Working people are now using this money to pay rents, mortgages, food and bills.
5. As before, money ends up with the owners of housing, the underlying lenders on loans, and the owners of corporations.
Who are the winners and losers here? Working people receive their incomes from the government, although they lose out a bit as their incomes are not fully subsidised. The rich also end up with the money they would have received anyway via rents, interest and corporate incomes. Crucially, however, the spending of the rich has decreased massively. This means that the rich end up profiting as their income has stayed the same but their outgoings have fallen.
At a basic level, the government has created new money to replace the lost spending of the rich, so that working people can continue to pay their bills to the rich. The new money that has been created by central banks ends up accumulating in rich individuals’ bank accounts, as shown in the diagram below.”
https://www.opendemocracy.net/en/oureconomy/following-coronavirus-money-trail/
The 'rich' have benefited?
“Since the outbreak began, things have changed:
1. The rich have cut back on their spending in response to the economic shutdown.
2. This has stopped the flow of wages to working people, which means they cannot pay for their essentials.
3. In order to replace this income, central banks have given money to investors who have lent it to the government (taking a cut), who in turn have given it to working people. ?
4. Working people are now using this money to pay rents, mortgages, food and bills.
5. As before, money ends up with the owners of housing, the underlying lenders on loans, and the owners of corporations.
Who are the winners and losers here? Working people receive their incomes from the government, although they lose out a bit as their incomes are not fully subsidised. The rich also end up with the money they would have received anyway via rents, interest and corporate incomes. Crucially, however, the spending of the rich has decreased massively. This means that the rich end up profiting as their income has stayed the same but their outgoings have fallen.
At a basic level, the government has created new money to replace the lost spending of the rich, so that working people can continue to pay their bills to the rich. The new money that has been created by central banks ends up accumulating in rich individuals’ bank accounts, as shown in the diagram below.”
https://www.opendemocracy.net/en/oureconomy/following-coronavirus-money-trail/