Tomorrow we get data on consumer price inflation in October. It's useful information on our economic recovery, but the totals obscure the many differences across families.
It is depressing that so much of the discussion of inflation (except here, of course) takes as a given that the pandemic is over. The deaths of 100,000 people in the US over the past two calendar months is going to impact economic indicators and the upcoming wave will do so as well. To quote Bill Gates from last spring, ''You can't ignore the pile of bodies in the corner and return to normal."
With a very broad brush, inflationary forces hurt people on fixed incomes, retirees; and also, working-people who have little debt, but keep their assets in Working-Capital, like cash, or inventories of goods & supplies that are used regularly.
Also, people working at institutions, whereby, the structure of the job, there may be little bargaining-power in the hands of the worker to ask for, and get, a cost-of-living increase.(non-organized labor situations)
It is important to note those people who benefit by inflation over the longterm. Those are people who hold long length-to-maturity debt such as fixed-mortgages, some business-loans, student loans....and hold little cash, these folks will see the Real cost of their monthly loan payments, and also the Real value of the principal that they owe, inflated away over time.
Depending upon how the Fed and other financial regulatory authorities handle inflation, will determine the length and depth of its impact on the groups effected the most.
This was a very useful exposition, and explained things I didn't know. But the title of your piece made me think it might be about rentiers (though the first line made it clear that it was about consumers). This piece is about the purchaser side of inflation, but there is also the income side to consider. I think the inflation bugaboo gets support from both sides, and while I understand not wanting to pay more, I don't understand the lender side.
It is depressing that so much of the discussion of inflation (except here, of course) takes as a given that the pandemic is over. The deaths of 100,000 people in the US over the past two calendar months is going to impact economic indicators and the upcoming wave will do so as well. To quote Bill Gates from last spring, ''You can't ignore the pile of bodies in the corner and return to normal."
With a very broad brush, inflationary forces hurt people on fixed incomes, retirees; and also, working-people who have little debt, but keep their assets in Working-Capital, like cash, or inventories of goods & supplies that are used regularly.
Also, people working at institutions, whereby, the structure of the job, there may be little bargaining-power in the hands of the worker to ask for, and get, a cost-of-living increase.(non-organized labor situations)
It is important to note those people who benefit by inflation over the longterm. Those are people who hold long length-to-maturity debt such as fixed-mortgages, some business-loans, student loans....and hold little cash, these folks will see the Real cost of their monthly loan payments, and also the Real value of the principal that they owe, inflated away over time.
Depending upon how the Fed and other financial regulatory authorities handle inflation, will determine the length and depth of its impact on the groups effected the most.
This was a very useful exposition, and explained things I didn't know. But the title of your piece made me think it might be about rentiers (though the first line made it clear that it was about consumers). This piece is about the purchaser side of inflation, but there is also the income side to consider. I think the inflation bugaboo gets support from both sides, and while I understand not wanting to pay more, I don't understand the lender side.