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One of the biggest fallacies I see when talking about inflation in terms of savings debasement, and in particular, focusing on how it disproportionately hurts the lowest percentiles of income earners, is the fact that the lowest percentiles have no savings. That's what being poor is. If they had excess income, they'd have savings and assets. But they don't. And the poor never have! So the only meaningful way to judge if the poor are being disproportionately affected by inflation, is to compare their income across time, to prices across time.

When we look at income data from the past few years, it actually turns out, that the poorest Americans saw their incomes grow by over 20% since the pandemic.

The massive rise in wages for low-skilled workers was actually one of the major self-reinforcing drivers of inflation.

Phillip Leslie 2y ago

there’s no monetary inflation in the system. Consumer price increases are from pandemic supply chain disruptions. Wage raises in response to consumer price increases are not only *not* inflationary, but are deflationary and will result in either wage decreases (as Walmart has already done) or cutting jobs via layoffs and reducing full time to part time as the worsening economy impacts employers.

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Discussion

Mike Brock 2y ago

Low-skill wages disproportionately rising is a definitely inflationary from a median frame of reference. It's a major form of cost-push inflation.

Phillip Leslie 2y ago

Exactly- it pushes costs so high no consumers can buy and because wages are so high whatever does sell yields no profits. Job loss at best and business closure at worst. Deflationary.

Phillip Leslie 2y ago

Or if wages get too high- bye job , hello robots