Inflation generally doesn't hurt the value of stocks in a 401(k). You still own the same percentage of the underlying public corporations. Inflation only hurts your bond holdings. This is one reason why it's best to keep at least some of your retirement fund assets in stocks even as you approach retirement age rather than shifting entirely too bonds.

TIPS also provide a way to hedge against inflation in retirement funds.

Inflation does hurt the underlying companies, and thus stocks are not immune.

Except in cases with extremely high inflation most contracts are not inflation adjusted. By the time a company is paid the merchandise sold is worth significantly more in fiat terms. In high inflation an entity is loathe to trade assets for dollars and so the economy will slow.

Your point is generally false as long as inflation remains at a reasonable level (no hyperinflation). You can chart out stock market index returns versus inflation if you don't believe me.

I was speaking of relatively high inflation (>10%). The fed has been extremely good at keeping inflation stable so we have not seen this in a long time.

This is not a criticism of current fed policy with respect to its relatively low inflation targets. While the effects I mentioned still occur, they are vastly outweighed by other concerns at low inflation levels.

But the working poor don’t see their hourly wage rise automatically as a consequence of inflation, so unless the government mandates higher minimum wage, or unions negotiate it, or there’s a shortage of low-wage workers driving up wages, their income drops in real terms and they are worse off.

Both your comment and the parent comment are right. How so?

Two things:

* Poor means less access to more expensive debt. Rich means more access to cheaper debt.

* Rich means one can use debt leverage to grow one's assets. How does that influence the value of necessities for the less rich...?

But it also deflates the value of assets that generate monetary profits. If the value of cash goes down, then the value of cash-generating assets also goes down.

When the value of today-money goes down, the value of tomorrow-money goes up relatively. That explains why tech companies and speculative investments do well during expansionary monetary policy. It aslo explains why advertising and brand become so important. Because if the value of money goes up in the future, then the value of each customer will also go up; even if you have to make a net loss today to pay for advertising to get those customers.