If money should never become an asset worth holding, how can inflation be better than deflation for the working class?
It’s deflation that turns money into an asset worth holding and thus slows down economies. Too much inflation isn’t good either, for different reasons. A slight and stable inflation is the sweet spot.
Proportionately, the rich hold a lot more money assets than the poor, who generally don’t hold any or very little.
Indeed, the rich do proportionately hold a lot more money than the poor, but it isn’t much. The rich mostly have shares in corporations, bonds and real estate.
Inflation is generally worse for workers than for the rich because the latter have more pricing power. If both your living expenses and your income after taxes increased by 20%, you’d even end up with more money than before, assuming your living expenses were a fraction of your income. Unfortunately, prices haven’t risen equally; the cost of living increase has generally outpaced real wage growth. The rich have been able to set higher prices; workers haven’t been able to extract high enough wage raises.
Neither high inflation nor deflation are good for workers. What workers need is pricing power through strong unions and political support.
It’s deflation that turns money into an asset worth holding and thus slows down economies. Too much inflation isn’t good either, for different reasons. A slight and stable inflation is the sweet spot.
Indeed, the rich do proportionately hold a lot more money than the poor, but it isn’t much. The rich mostly have shares in corporations, bonds and real estate.
Inflation is generally worse for workers than for the rich because the latter have more pricing power. If both your living expenses and your income after taxes increased by 20%, you’d even end up with more money than before, assuming your living expenses were a fraction of your income. Unfortunately, prices haven’t risen equally; the cost of living increase has generally outpaced real wage growth. The rich have been able to set higher prices; workers haven’t been able to extract high enough wage raises.
Neither high inflation nor deflation are good for workers. What workers need is pricing power through strong unions and political support.