The poor may have some cash, if only $100 in the bank. They certainly have no bonds, stocks, or real estate.
If they have no cash and only draw a salary, it will still hit them badly, as salaries are not inflation adjusted, and any pay increase requires negotiations with the employer - who may decide to increase the wage by only a fraction of the inflation.
Said differently: all people who don't have wealth in inflation proof assets (stocks, real estate etc) suffer from inflation.
What about debt is relevant? Sure, if you’re in debt then a sense you “owe less”, in that the units you owe are now worth less. But practically speaking, if you’re an hourly or salaried employee that’s too poor to own significant securities or real estate assets and your wages don’t keep pace with inflation (wtfhappenedin1971.com), that’s a totally meaningless ivory tower economics point. You’re just further priced out of those assets, are paying more for the consumer goods you need to live that are now inflated, and you’re still paying the same dollar amount on your debt.
The fact that you are demanding him to mention debt shows you've a short-sighted view of the world, seeing only what happens close to home from what appears to be a privileged point-of-view.
Not everyone in the world has easy access to credit like you imply. You're the one pushing an agenda here.
if you insist on mentioning the debt to support your argument, you exclude and dismiss those who do everything to never live off debt. Those are not rich, they are hard working people who try desperately to bring economic stability into their families and to get into a lower middle class.
inflation is typically priced into interest rates. unexpected changes in inflation can benefit either creditors or debtors, but a constant rate of inflation is a non-factor.
Salaries are always adjusted to the inflation if there's a free market.
Depending on how hard is the inflation, you receive yearly, semi yearly, monthly, weekly or in extreme cases daily adjustments. Your salary updates also include the expected inflation.
That's of course when the economy is performing well. If the economy is slowing in an inflationary environment, you may easily end up on the wrong side since every update is actually a salary renegotiation and in a slowing economy your job might receive pay cuts in real terms.
annual losses from inflation on $100 are pretty trivial though, somewhere around $3/yr. the stickiness of wages is the bigger issue for the poor re inflation.
also people with assets are not totally protected from inflation. suppose I bought a $10k asset in 2001 that, for whatever reason, perfectly tracked inflation. if I sold it today, I would owe 15% tax on a nominal gain of 50%, resulting in a real loss.
I can't believe you were downvoted for saying the truth.
It's sad engineers making even $200,000 or more can't understand how even $100-1000 in the bank can change lives forever for many people in poor countries.
It's even sadder when some of them come from places that had hyper inflation, and can't see the big picture.
The point is that this is a terrible argument for "we should switch to gold" or "we should have 0% inflation". Losing $2-$20 to inflation annually is trivially handled with tax credits or whatever.
He's claiming that people who go into their overdraft and credit cards every month have $100 in their bank. They don't, most people live paycheck to paycheck, their bank balance just before payday is $nothing
this is definitely not true. the median US household has several thousand dollars in their checking account. they might be living paycheck-to-paycheck in the sense that their net cashflow is close to zero, but they don't have nothing in their bank account just before payday. you would have to go deep into the 20th percentile to find households like you describe.
Great. Let's make minimum wage automatically adjust to inflation, force businesses to provide CoL increases, and provide a tax credit for the poor against savings loss.
In my experience, the libertarian community that hates inflation so much uses the poor as a rhetorical cudgel rather than an actual primary concern.
If they have no cash and only draw a salary, it will still hit them badly, as salaries are not inflation adjusted, and any pay increase requires negotiations with the employer - who may decide to increase the wage by only a fraction of the inflation.
Said differently: all people who don't have wealth in inflation proof assets (stocks, real estate etc) suffer from inflation.