Also, it is non-linear. The amount of reserve cash you need as an individual human approaches a limit much faster than total wealth, so the portion of your assets which must remain exposed to inflation grows smaller as a fraction of the whole. This is our western legacy of aristocrats and landed gentry in a nut shell.

Also, when you have lots of assets, you can assume that lines of credit are available whenever you might ask for them. You are less likely to tap into emergency reserves, and may also set a lower target for those reserves if you know they only need to address the most dire scenario where you might have to abandon some of your augmented lifestyle.

Finally, with large wealth you have an opportunity to diversify into many independent assets and firewall them from one another, e.g. with limited liability structures. Having one of your investments implode is qualitatively different from having your whole wealth implode. This is the entire premise of VC investment and I would have thought obvious to this audience...

Sure there are exceptions but inflation is (1st order) zero sum. People with a negative net worth clearly benefit and someone has to take that loss as someone is owed money. Yes there will be rich people who benefit (and more than any poor person in this scenario), but as an aggregate it will be a reduction in wealth inequality.

But the wealthy have more assets than debt, so they have more losses than gains from inflation. Sure, they may gain $100,000 on their house, but they lose $1 million on their bond portfolio.

It would take a pretty unusual asset allocation to result in the numbers you just threw out there.

But inflation also implies economic growth which generally raises the value of equity holdings. The impact of inflation is dependent upon asset allocation.

> But inflation also implies economic growth

Inflation does not imply growth in real GDP, no.

> which generally raises the value of equity holdings. The impact of inflation is dependent upon asset allocation.

Ceteris paribus, inflation hurts debtholders (who, incidentally, tend to be wealthy), and it helps debtors (who, incidentally, tend to be poorer).

Inflation hits prices before wages. Wage increases due to inflation always lag the price increases of the food/shelter/etc people need to buy.

Is this controversial?

No, it's not controversial. However, it also doesn't seem to respond to anything chimeracoder said. You sound like you think you're arguing with chimeracoder, but I don't see which point you're responding to.

From a few posts up:

>"This is backwards. Inflation destroys the value of debt. Poor tend to be borrowers and rich tend to be lenders, so inflation is an equalizer."

chimeracoder seemed to be agreeing with this "equalizer" position by saying:

>"Ceteris paribus, inflation hurts debtholders (who, incidentally, tend to be wealthy), and it helps debtors (who, incidentally, tend to be poorer)."

All true. But I fail to see how your point about raises happening after price increases refutes the point that inflation destroys (reduces) the value of debt.

Now, true, if you're a worker who owes money, and inflation kills your cash flow (because raises come later than price increases), it may not matter to you that the value of your debt decreased, because the cash flow problem is going to bankrupt you before the debt erosion helps you. But it's still a separate effect.

I just don't think the fact that there is debt erosion has much impact on the gap between rich and poor. I'm talking about an income that ten years ago would get you a full one bedroom apartment now gets you living in a converted closet. Meanwhile the pay for the same work has gone from 12 $/hr to 15 $/hr.

Also, this is ignoring that anyone sane issuing debt plans for inflation and accounts for this somehow (interest rate schedule, etc)...

Edit:

Another thing, this "inflation helps the poor idea" seems to be a version of trickle down economics.