> The debasing of fiat currency is a "stealth" redistribution of wealth, regardless of the pretenses for it.

The "debasing of fiat currency" reduces debt burdens, and I would think that middle- and low-income folks are probably more likely to have debt (student loans, mortgages). A low-inflation or even deflationary environment is probably a worse thing for the non-rich.

>and low-income folks are probably more likely to have debt (student loans, mortgages).

Source? For student loans at least, the amount of debt held is positively correlated with household income, not negatively like you suggest. https://www.urban.org/sites/default/files/styles/optimized_d...

The theory at least:

> If wages increase with inflation, and if the borrower already owed money before the inflation occurred, the inflation benefits the borrower. This is because the borrower still owes the same amount of money, but now they more money in their paycheck to pay off the debt. This results in less interest for the lender if the borrower uses the extra money to pay off their debt early.

* https://www.investopedia.com/ask/answers/111414/does-inflati...

(The article mentions some benefits to lenders too.)

> reduces debt burdens

Not really, because inflation causes interest rates to go up correspondingly.

Which is not relevant to most consumer debt, where the interest rate is set at the start and locked in for the life of the loan.

Quite a lot of consumer debt is variable rate (credit cards, ARMs, ...), or nominally fixed rate, but rolls over somewhat frequently (car loans, mortgages as people move or refinance, pay later spending, etc).

Fixed rate debts interest are set to accommodate the current inflation rate plus higher values to accommodate the risk of inflation increasing.

Lenders are not fools when it comes to inflation.

By that definition, every price change is a redistribution of wealth (which is technically true).

The question is whether it's intentional, and it's impossible to imagine the people in charge of every world government would be enraging their citizens by creating inflation.

Simpler: people saved money during the pandemic at the same time as supply chains were disrupted, leading to high prices.

Every government in the world has the same problem.

How is it redistributing wealth? From who to who?

To those controlling interest rates from those who don't have any access to low risk investments.

> from those who don't have any access to low risk investments

Treasuries, the lowest-risk dollar investment, are the first to lose value with inflation. And everyone has access to Series I bonds.

From creditors to debtors.

Simply put, from the poor to the rich. It's a major cause of wealth centralization.

From whoever is furthest to money creation to whoever is closest.

Ever wonder why record stock buybacks and record ceo pay are happening right when QE is happening?

Why stock markets and PE ratios are at record highs? Why there are record amounts being invested by VCs? Why commodity prices have been rising?

It’s not because of evil capitalism. It’s because those people are closest to where money creation happens. The 1% aren’t getting richer because of the exploitative nature of capitalism, but because they have access to new money.

>From whoever is furthest to money creation to whoever is closest.

Precisely! You might also want to mention that there's a name for that, the Cantillon Effect.

[Ed. Fixed spelling according to sparkie's correction.]

Cantillon has 1 i in it.

Right, thanks! I actually did check first, but adamsmith.org encouraged me in my mistake (first hit on duckduckgo, same typo "Cantillion").

Redistribution from creditors to debtors is good. And it's not that stealth given we're talking about it.

It doesn‘t look like it as it appears that inflation is contributing to wealth inequality. Do you have any sources for your claims?

That's precisely it. Inflation distributes wealth from those who have cash-backed savings, earn fixed wages, or have property leased under fixed rents, to the privileged who gain earliest access to the newly produced money.

When the stock of money is increased, it gets to be spent at face value that the money has at that time by those who are first to receive it. As the new money works its way through the economy, prices rise in response to the increased availability of this 'easy money'. The end result is that the people who are last to receive the new money get to spend it after the price of everything has already increased. If they already had savings prior to the increase in the supply, their savings now buy less than they would have prior to the supply increase. Since in most cases, people laboured to obtain this money, their time of labour is effectively being pilfered by those who have the ability to produce new money.

It is known as the Cantillon Effect, after Richard Cantillon described it in his Essay on economic theory[1]. Although it was known long prior to Cantillon's explanation, his is the earliest work which explains the process by which this happens.

Where Cantillon says "Mr. Locke lays it down as a fundamental maxim that the quantity of goods in proportion to the quantity of money is a regulator of market prices," I believe he is referring to 'Further considerations concerning raising the value of money,' a letter by John Locke[2].

[1]:https://mises.org/library/essay-economic-theory-0 [Part 2, Chapter 6].

[2]:https://avalon.law.yale.edu/17th_century/locke01.asp

Most people have none of these things.

The core argument of a reactionary anti-inflation position always pretends that money doesn’t matter in real terms. “Your debt is worth less, but…”

So when a few years of 7% inflation doesn’t trigger hyperinflation, but does reduce the real value of my debt by 40%, that’s good for the debtor, bad for the creditor.

We’ve seen the results of decades of monetary policy that ignored factors like unemployment and soley focused on inflation. That is, a plutocracy where almost a third of GDP is medical care, transportation, and military spending. Time for something else.

Inflation makes saving money a losing proposition because it literally rots away in your bank account. How is some one supposed to save for college, a house or to start a business if they are constantly losing money?

Meanwhile rich people don't care because their immense wealth lets them ride out inflation easily. In fact, in some situations it may be to their advantage because the value of other assets they hold (real estate, metals, art, etc) often increase in value during inflation.

You save for things that are 5+ years away by investing at least a portion of it in equities. Investments for goals that are 20+ years away should be over 80% in equities, IMO.

Those who can afford to put 80% of their savings away for 20 years are those who are least vulnerable to the effects of inflation.

The people most affected are those who have most of their assets in cash or cash equivalents. The low and minimum wage earners who can't afford to invest in stocks. Those who are attempting to enter the property ladder who need to save a deposit for a mortgage and see that their savings are declining by 7.5%/year.

At an inflation rate of 7.8%, it takes only 9 years for the price of everything to double. That minimum wage earner now has had half of his hard work amount to nothing, but the house he wanted to buy is now twice as expensive.

In other words, the only remaining way to “save money” is to buy assets largely owned by the rich and further drive up the inflated values of those assets.

Said differently: investing in ways similar to how the rich invest seems like a generally sound strategy, all else being equal. (They don't keep much money in passbook savings accounts.)

Sure, but really the reason we should invest like the rich isn’t that it’s sound for rational economic reasons, but that the rich will use their influence on politics to ensure their investments do not decline as much as they would without interventions.

Equities are not largely owned by the rich. They are mostly owned by pension funds. The "rich" do not own majority of the assets (though, of course, they own very disproportionate amounts of them, relative to their numbers, as that's what the word "rich" means).

Hmm, this article seems to say they are.

"The wealthiest 10% of Americans own a record 89% of all U.S. stocks"

https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-...

Somewhere I read that the top 1% owns about 50% of stocks.

And then whenever any policy that would reduce the profits from stock trading is floated, it's shouted down on the basis that "it'll hurt your retirement". A very cunning trap.

Exactly. It’s how any corrupt system is maintained. A dictator puts some inner circle of favored people under him, and then a larger layer but still small as a percentage beneath that, and so on all the way down, so that every layer has an incentive to support him and suppress the layers beneath. Add to that disproportionate influence through control of the military, police, and or media and even a 1/5 or less population can suppress the rest. Obviously our economy isn’t run that way but the same principle applies. We align the incentives of each person to act or vote in ways that benefit the already rich.