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View Diary: Historical data suggest inflation hurts the rich more than the poor (24 comments)

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  •  Depends on Assets Held (0+ / 0-)

    Whether inflation helps or hurts a particular tranche in the demographic pile depends heavily on the forms in which they might hold those assets.  If one holds cash, bank accounts, or other fixed-income debt instruments (bonds, basically) then accelerated inflation will kill you.  If one holds income-producing assets (a business, corporate stocks) then more inflation doesn't hurt your asset value so much as threaten your revenue stream.  If one holds long-term fixed assets (real estate, most residential) the assets will likely track inflation with a time lag for inflation's diffusion into the general economy.  Price rises in rapidly replaced commodities (food, fuel, etc.) will hurt everyone, but those who spend a disproportionate share of their income on them will be hurt slightly more.  The folks who get killed in hyper-inflation are lower-middle and middle-class segment of society.  Those are the people who were devastated by the hyper-inflation which wracked Weimar Germany during the middle 1920s and who became the main supporters for the NSDAP.

    "Love the Truth, defend the Truth, speak the Truth, and hear the Truth" - Jan Hus, d.1415 CE

    by PrahaPartizan on Mon Aug 15, 2011 at 08:55:20 AM PDT

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