I disagree that the correct term is 'dodge'. One argument against inflation detractors is that Inflationary growth of the money supply helps those who have debt the most. However, that doesn't end up being the working class, the rich are much more heavily leaveraged into assets that are protected against inflation.
Inflation ends up being a wealth transfer from the working class to the rich.
> Inflation ends up being a wealth transfer from the working class to the rich.
Absolutely, and while my use of the word "dodge" might have been sloppy writing, your analysis of it is spot on.
But also, it is almost universally agreed that inflation in the 3-4% range is healthy for an economy, the eventual effect of governments printing money to pay current obligations and/or securities to "prop-up" Wall Street is a much larger rate, like 20%-30% per year
Just read the histories of South American government defaults or look at Greece now for a primer on the eventual endgame for out of control debt.
Deflation ( or low inflation ) works for the rich moreso because who do you think holds all that debt? Mild inflation "ages out" the stock of debt.
We think 4% is a good rate of inflation for a recovery ( if a bit low ) but we're unable to maintain even 2%. This is incredibly strongly correlated with wealth inequality.
>Deflation ( or low inflation ) works for the rich moreso because who do you think holds all that debt?
The...US Government. I do not agree at all 'deflation' works better for the rich. I think you missed the part about being leveraged into assets. That's huge.
>but we're unable to maintain even 2%
Going by CPI? Take a look at the Dow and RE and tell me inflation is less than 2%.
No, you're right - the principal benefactor is the government, but that's pretty weird and unsustainable. Not to mention a massive conflict of interest.
Yes, by CPI. I think the rise in real estate is caused by the deflationary nature of the rest of the economy. The Dow? That's just our standard bellwether now.
Inflation ends up being a wealth transfer from the working class to the rich.