Is good for the bottom 50-75%, in part because they tend to be the debtors. Inflation reduces the value of debt, leveling the playing field somewhat (at the expense of bond holders, who tend to be wealthy). Inflation also tends to correlate with a weaker dollar, which has been better for those working in fields subject to heavy cost-based competition abroad.

Arguably the worst environment with regard to the wealth gap is the one we’ve been in for most of the last 18 months: low inflation, relatively strong dollar, and massive liquidity driving up asset prices (the assets are held by the top 5%). Interest rates near zero are also not good for poorer folks on the asset side of the ledger, as they tend to put the money they have on savings accounts.

These conditions tend to appear in countries with reserve currencies after decades of debt buildup. The USD has been the global reserve currency in the postwar era, which for long periods, has kept the dollar higher than it should be on the basis of trade alone. Debt is also hovering around an all-time high, though some of it has moved from consumers and business to government recently due to the crisis. Some inflation (and probably erosion of reserve currency status) may be needed to reset the system.


[Post edited by TomGlansAski at 11/26/2021 09:17AM]