The downside of inflation is that is screws the poor and redistributes wealth to the already rich. The former is evidenced by our need to continually increase the minimum wage and the latter occurs because the middle class is pushed into investments to beat inflation, socializing business risk while leaving the gains to the already wealthy.

Inflation punishes people who assets. Poor people only suffer when their nominal wages don't grow to match inflation -- but that's exactly the same as their employers lowering wages in an inflation-free environment. Inflation is only superficially related to the problem of real wage reductions.

> Poor people only suffer when their nominal wages don't grow to match inflation.

That is exactly the policy intent of inflation.

http://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hig...

"..in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis."

In other words there is this aggregate value called "employment" that it's politically expedient to optimize, and the way to do that is to tweak the markets to screw the poor and transfer that wealth to the rich.

Well, yes, if you create a moving wage treadmill that forces people to work harder or fall off, you will get higher employment rates.