Inflation promotes wealth equality. "Price stability" safeguards inequality

[cthulu2016]

That is not theory or prediction. It is observation. Nobody *likes* prices of things we buy going up, but there are reasons that the defeat of inflation in the Reagan era ushered in the generation of working people getting it hard in the neck.

Inflation inflates commodities and deflates money. Rich people are rich today and inflation erodes their existing piles of money.

Labor, however, is a commodity, the same as gold or oil or land, and working is a hedge against inflation. To keep inflation low we keep unemployment higher than it ought to be, and raises to a minimum. Hammer down wages and there will be no "wage/price spiral," a classic description of inflation.

The rich are very, very concerned about inflation. Always. And they dupe ordinary people worried about getting by into their role of inflation-concerned political cannon fodder for the interests of the super rich.

Doctor Krugman revisits the 1970s, the decade conservative doctrine requires must (for any of their theory to make sense) have been the low point in human existence...

the 70s... weren’t good — but the really bad times for ordinary working families were the big recessions, which took place under Reagan, to some extent under Bush I, and above all after the financial crisis. Think about how weird it is, given this history, for people in 2010 or 2011, amid the wreckage, to be saying “Watch out — if we’re not careful this could turn into the seventies!” (cue ominous soundtrack).



But there were some people for whom the 70s really were the worst of times — namely, owners of financial assets. Here’s the ratio of financial assets held by households to GDP versus the core inflation rate:



And who cares a lot about financial assets, not so much about labor income? The 0.1 percent, who according to the Piketty-Saez database “only” get about 4 percent of total wages but have more than 20 percent of the wealth and surely a larger share of financial assets...

http://krugman.blogs.nytimes.com/2014/04/06/oligarchy-and-monetary-policy/

[1000words]

1. There will be growth in Spring ...

[PoliticAverse]

2. Inflation helps conceal from the middle class that they are getting screwed. They think they are

doing well because they are making more money but in reality, once inflation is taken into account,
they are doing worse.

And don't take any price index seriously that excludes 'food and energy'.

[Taitertots]

3. Getting the non-rich to fear inflation is another way the rich continue to get richer

Economists from Krugman to Friedman have consistently shown that expansionary fiscal policy is the best way to end a recession. Milton Friedman suggested (albeit jokingly) that we throw a trillion dollars out of a helicopter if the country experiences events similar to the last 7 years.

Rich people convincing the masses to fear inflation is nothing but a cloth pulled over your eyes to blind you to the truth that they don't want you to see.

[cthulu2016]

4. "pulling up the drawbridge"

Having accumulated my stack, capital preservation turns out to be the only thing that matters.

[PoliticAverse]

5. "Inflation May Hit the Poor Hardest"

http://fivethirtyeight.com/features/inflation-may-hit-the-poor-hardest/

[cthulu2016]

6. Unemployment and low wages also hit the poor the hardest. Everything hits the poor the hardest.

We typically have an economic choice between high employment and wage expansion, or controlling inflation. (The Fed's dual mandate of full employment and no inflation is understood to be an impossible state, thus the balancing act nature of the dual mandate.)

Asset bubbles and grotesque inequality are products of too much anti-inflation policy.

Inflation is a product of high employment, high wage policy.

One choses one's poison. And policy should never be extreme in either direction.

But shading the balance more toward the inflation side provides the best net for the poor and working class, and probably middle class.

And shading policy toward the anti-inflation side is a reliable boon for asset traders and folks with lots of cash and bonds.