Inflation isn’t prices growing faster than wages, it’s just prices growing in general. Don’t let anyone tell you that gentle inflation is bad for poor people.
Debtors gain from inflation because they pay their fixed debts with currency worth less. When interest rates are low, refinance or borrow at low fixed rates. When inflation rises, your fixed debt costs go down in real terms.
If you want wages to increase, support a higher minimum wage.
This isn’t just inflation over 50 years. This is divergence in the inflation of wages and core inflation. So prices over all have risen by 137 points more than wages have risen. This isn’t the talk about inflation vs deflation vs death spirals. This is everything slowly becoming less affordable over time. And it really doesn’t matter if the money is worth less when the interest rate on the loan is far beyond inflation in the first place. You either pay it back quickly (monthly on a card) or watch it spiral out of control rapidly because adjustable rate loans work off of inflation and your wages didn’t go up to match. So now you have that much less money a month to buy food.
Theoretically inflation is good for borrowers. In practice you need a certain base of money for that to be true. If you can’t cover increased costs over the life of the loan then inflation is going to take you behind the shed.
Inflation isn’t prices growing faster than wages, it’s just prices growing in general. Don’t let anyone tell you that gentle inflation is bad for poor people.
Debtors gain from inflation because they pay their fixed debts with currency worth less. When interest rates are low, refinance or borrow at low fixed rates. When inflation rises, your fixed debt costs go down in real terms.
If you want wages to increase, support a higher minimum wage.
This isn’t just inflation over 50 years. This is divergence in the inflation of wages and core inflation. So prices over all have risen by 137 points more than wages have risen. This isn’t the talk about inflation vs deflation vs death spirals. This is everything slowly becoming less affordable over time. And it really doesn’t matter if the money is worth less when the interest rate on the loan is far beyond inflation in the first place. You either pay it back quickly (monthly on a card) or watch it spiral out of control rapidly because adjustable rate loans work off of inflation and your wages didn’t go up to match. So now you have that much less money a month to buy food.
Theoretically inflation is good for borrowers. In practice you need a certain base of money for that to be true. If you can’t cover increased costs over the life of the loan then inflation is going to take you behind the shed.