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this post was submitted on 24 Dec 2023
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Doesn't that mean that deflation is favorable to the rich however, and inflation is favorable for the working class?
Deflation makes what we already have more valuable, so people who have the most would see their net worth go up the most. In contrast however, inflation means the people hoarding wealth would see their net worth go down. The purchasing power for the wealthy only gets higher in deflation.
This would suggest that inflation is actually to the benefit of consumers when it's kept within check. The money they earn is more valuable relative to their net worth. Or rather, they don't have as much of a loss to their assets.
No no no. People who have wealth in our inflationary system are forced to invest to preserve their wealth. This means that all asset prices are artificially inflated, including housing. That doesn't benefit the working class at all.
That you write "kept within check" seems to suggest that you believe the "2% inflation is good" myth. For starters, the 2% are a lie. Our economy is deflationary, every progress leads to lower cost of production, there are various estimates, the most plausible seem to be 2%-3% per year. So your 2% per year is really 4%-5% per year. This becomes clearly visible when you see that the customer basked (CPI) raises by 2%, but housing and the stock marked go up 5%. The inflationary system favors the rich and makes it much harder for the working class to build wealth.
Deflation would make money more valuable. You're close to realizing it though. Wouldn't it be wonderful if everybody's net worth went up? With inflation the poor suffer the most because they don't have non-monetary assets.