Inflation is also a mechanism for paying off debt. This is one of the reasons why governments abhor deflation - it makes paying off publicly held debt more difficult.

Yeah, I should have been more specific. Raising taxes lets you pay off debt, often by hitting the rich harder. Inflation lets you devalue debt, making it easier to pay it off, by hitting the poor harder.

In both cases, debt is accrued mostly by paying middle class bureaucrats and already-rich contractors to perform the "functions of government".

If you inflate, you are sneakily transferring wealth from the poor to the rich. So, why stop?

Governments have the right to print money.

Inflation actually hurts the middle class.

The poor are much more likely to be in debt, which actually means debt becomes less of a problem as inflation occurs.

The rich tend to have diversified non-cash assets (investments, property, etc) that are immune to inflation.

The middle class -- Joe and Sally with a savings account -- actually have a significant amount of their net worth in cash and that's who suffers.

The reason it hurts the middle class is that the size of their mortgages are the first to be affected by inflation, whereas their wages are among the last.

Mortgage holders are stakeholders in inflation, hoping for appreciating property prices.

This makes no sense. Mortgages give you a fixed monthly price locked in at closing time. With inflation this payment has less and less real cost, and your home value goes up.

Asset inflation is not the same as wage inflation.

Consider the relative size of new mortgages to wages. Since asset prices are typically leveraged on wages (through mortgages), assets will inflate faster than wages (unless the interest rate is set to counteract this.)

But inflation is only beneficial to /new/ buyers if wages inflate faster than assets. Otherwise the relative debt of all mortgage holders increases over time.

Whether asset inflation is beneficial to a home owner is debatable, since all properties appreciate at the same rate. "Moving up" still means increasing the relative size of the mortgage.

Not necessarily true. If you have a fixed mortgage you might be privileged.

Even adjustable rate mortgages do not change the value of the principal.

>The rich tend to have diversified non-cash assets (investments, property, etc) that are immune to inflation.

This is not strictly true. It's a matter of how money enters the economy. Right now money enters the economy on the supply side through assets which means assets experience inflation. If that money was actually entering through jobs programs or some other demand side mechanism then inflation would happen at the demand side first and on the supply side later.

It's actually the opposite. Consumer inflation is bad for the wealthy. It means wages are catching up and making the amassed wealth less valuable. If Bill gates is worth 100 billion and you go from 20k to 40k yearly wages then the purchasing power of his wealth has halved.

The only way his wealth can keep up with inflation is by employing workers which means he has to pay the increased wages. So he ends up worse off than if we had deflation and he could just sit on money.

That's very naive. Do you think bill gates net worth is tied up in dollars? By contrast. If you go to bayview hunters point and look around the houses, what do you think the net worth of any given person around you is going to look like?

Also, inflation is explicitly a policy designed for wages NOT to keep up. I don't know where you got the idea otherwise.

https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi...

I don't really see how this is true. inflation primarily hurts creditors (when it rises unexpectedly) and people who hold large amounts of cash. cash is a small fraction of my net worth (compared to what I would expect for a poor person), but I also have way more cash in my checking account. if you only have <$1000 cash buffer that you routinely run down to pay for emergencies, it doesn't much matter whether inflation is 0% or 5%.

One typical scenario; (rich people) take loans to buy assets. The loan itself causes inflation, and asset prices will rise. Then wages and cash savings have less relative value. Wages won't be affected until the firms can increase prices, which might happen much later.

The wealthy have access to low interest credit, not the poor (both directly and indirectly via options, derivatives, forex, etc). When the poor have access to credit it's usually in very short term high interest vehicles (credit cards or loansharks), which are not as benefitted by inflation as you think.