> I don't have it literally backwards, because that's not what happens. You do have your Hitler argument completely backward though. Weimar Germany was undergoing runaway _hyper-inflation_, not deflation.
That's a common misconception, propagated by people who want the economy to stagnate (goldbugs earlier, crypto bros now).
Germany experienced actual _deflation_ in 1929-1932 as a result of the governmental austerity. It's exactly what put Hitler in power. Deflation rose up to 12% in 1932!
Hitler then immediately started an expansionist fiscal policy, using state funds to build up the infrastructure and military. This immediately resulted in the GDP growth.
> but given that the rich rely on debt so heavily themselves
Rich people are not in debt. Their net worth is not negative. That's not the case for poor people.
Unlike microeconomics, macroeconomics is pretty simple. The total amount of debt held equals to the total amount of debt owned.
I don't think minor deflation after a period of hyper-inflation is much of an argument that deflation was the cause of Germany's woes.
I never said rich people are "in debt", I said that they use and rely on debt. In the sense meant in the argument about why inflation helps the poor, the advantage also comes to the rich, if I even concede that it's true, which I do not, because rising interest exists specifically to counteract the long term effect of inflation.
Rich people's wealth is protected from inflation, while the working classes' wealth is not, that is the key difference. That is precisely inflation's alleged reason detre, that it incentivises people, in effect, those with more wealth, to use their money in ways that protect its value.
You can't have the macroeconomic argument for inflation driving growth and then simultaneously allege that rich people are just as affected by inflation as wage earners, the former relies on the idea that there is a way to use excess wealth through investment that will protect its value.
You can claim that wages should grow with inflation, but not only is that self-evidently not what happens when you look around, but the stickiness of wages is so well recognised that it's treated as almost apriori in macroeconomics, which is why I take it to be a either a feature or accepted consequence of inflation that it is regressive, depending on the specific policymaker.
There's no such thing as a "minor deflation". And yes, it was the proximate cause. And keep in mind, it was not a month, it was 4 years.
Quite simply: you can't have noticeable economic growth with deflation. You _can_ have robust economic growth even during hyperinflation.
I lived through one myself.
> I never said rich people are "in debt", I said that they use and rely on debt.
It mostly means that they _own_ debt (usually indirectly), not that they are _in_ debt.
> Rich people's wealth is protected from inflation, while the working classes' wealth is not, that is the key difference.
That is the opposite of the actual history. Rich people are the ones who suffer the most from inflation. Hyperinflation wipes all debts nominated in the currency, and more importantly, it forces people to invest in risky enterprises.
Workers, in general, simply don't have a lot of savings and instead rely on the constant stream of income from salary.
That's why the ruling classes are so obsessed with the inflation.
>Quite simply: you can't have noticeable economic growth with deflation. You _can_ have robust economic growth even during hyperinflation.
I'm not really arguing against either of those positions, though I'd push back against the first more strongly. I'm arguing that inflation as a driver of economic growth comes at greater expense to wage earners than the wealthy, that it's regressive.
>It mostly means that they _own_ debt (usually indirectly), not that they are _in_ debt.
Dude, enough nitpicking my specific language, you know exactly what I mean, this isn't productive or interesting.
>That is the opposite of the actual history. Rich people are the ones who suffer the most from inflation.
No they don't.
>Hyperinflation wipes all debts nominated in the currency
Nobody benefits from hyper-inflation, wealthy people don't want it, working class people don't want it, nobody wants it, except maybe a kleptocratic government. This is why interest rates track inflation, albeit with some lag.
>more importantly, it forces people to invest in risky enterprises.
I agree, although with the caveat that the wealthier you are, the more you can insulate yourself from risk. Again, I agree that the incentive to drive economic growth works, I just don't agree with your assertion of who actually pays the bigger price on aggregate.
>Workers, in general, simply don't have a lot of savings and instead rely on the constant stream of income from salary.
Correct, exactly why they suffer/lose the most wealth from the effects of inflation. Their wages are devalued while remaining sticky, and their capacity to save enough wealth to make investments that protect their wealth is curtailed by inflation eating its value.
>That's why the ruling classes are so obsessed with the inflation.
Obsessed with a "healthy" rate of inflation, find me evidence that a substantial number of people with their hands on the levers of wealth or power advocate that we should have no inflation? They don't.
That's a common misconception, propagated by people who want the economy to stagnate (goldbugs earlier, crypto bros now).
Germany experienced actual _deflation_ in 1929-1932 as a result of the governmental austerity. It's exactly what put Hitler in power. Deflation rose up to 12% in 1932!
Here's the table: https://www.gabriel-zucman.eu/files/capitalisback/T271 (sidenote, seeing scientific notation on the CPI chart is scary).
Hitler then immediately started an expansionist fiscal policy, using state funds to build up the infrastructure and military. This immediately resulted in the GDP growth.
> but given that the rich rely on debt so heavily themselves
Rich people are not in debt. Their net worth is not negative. That's not the case for poor people.
Unlike microeconomics, macroeconomics is pretty simple. The total amount of debt held equals to the total amount of debt owned.