Wouldn’t do anything to wipe out the debts of the working class. Inflation doesn’t translate to increased wages, as we can clearly see from the last few years. It would wipe out the debts of the rich, though. China’s currency is sort of artificially pegged against the dollar, a devaluation of the dollar could cause them a lot of problems also, as they’d be forced to devalue their own currency to maintain its peg.
Except we did see the working classes wages keep pace with and even outpace inflation in the last few years? Inflation has always been primarily a threat to the rich, who by the common definition make their money off of their savings, and so are directly affected by those savings diminishing in real value.
Similarly depts are nearly always denominated in the local currency and so are directly 1 to 1 diminished by the inflation of that currency. For example if you owe two hundred thousand on your mortgage and you see fifty percent inflation then you have effectively just been handed a hundred thousand in real value directly out of the pocket of the person who lent you that money.
None of this is to say that very high inflation is good in an economy where people need to save money for retirement, but it does have some silver linings for the poorest who already have depts rather than savings and who are generally paid in real value.
In a very high inflation scenario where the US was intentionally trying to devalue its currency I expect China would abandon its peg against the dollar, and everyone would likely try and reduce their dependency on the dollar, which would in turn probably lead to a feedback loop that would exacerbate the issue.
I would not expect anyone to come out of the almost certain gobal ressecion better off, except maybe Russia given how little they are tied to the gobal economy and how they’ve run down their forex reserves, but I imagine that unless every economist in China and the Eurozone takes the decade off they will come out of it a lot better off than the US would.
Firstly, I would generally roll the rise during the pandemic into the effects, as that’s when a lot of the inflation that would later be messured actually got going, and in this scenario you would likely see a similar effect to the whole, but I will consede that you likely much in the way in gains, especially given the effects such a recession would have across the board.
That does not have an effect on my main point, which is that a sustained very high inflation/hyperinflation during a loss of confidence crisis is going to do far, far more damage to people who’s source of income is earning a return on their assets and investments. In that earlier fifty percent inflation example you would need working class real wages to nearly half to have a similar effect.
Wouldn’t do anything to wipe out the debts of the working class. Inflation doesn’t translate to increased wages, as we can clearly see from the last few years. It would wipe out the debts of the rich, though. China’s currency is sort of artificially pegged against the dollar, a devaluation of the dollar could cause them a lot of problems also, as they’d be forced to devalue their own currency to maintain its peg.
Except we did see the working classes wages keep pace with and even outpace inflation in the last few years? Inflation has always been primarily a threat to the rich, who by the common definition make their money off of their savings, and so are directly affected by those savings diminishing in real value.
Similarly depts are nearly always denominated in the local currency and so are directly 1 to 1 diminished by the inflation of that currency. For example if you owe two hundred thousand on your mortgage and you see fifty percent inflation then you have effectively just been handed a hundred thousand in real value directly out of the pocket of the person who lent you that money.
None of this is to say that very high inflation is good in an economy where people need to save money for retirement, but it does have some silver linings for the poorest who already have depts rather than savings and who are generally paid in real value.
In a very high inflation scenario where the US was intentionally trying to devalue its currency I expect China would abandon its peg against the dollar, and everyone would likely try and reduce their dependency on the dollar, which would in turn probably lead to a feedback loop that would exacerbate the issue.
I would not expect anyone to come out of the almost certain gobal ressecion better off, except maybe Russia given how little they are tied to the gobal economy and how they’ve run down their forex reserves, but I imagine that unless every economist in China and the Eurozone takes the decade off they will come out of it a lot better off than the US would.
Workers adjusted real wages have not caught back up to where they were Q1 2021, and have begun declining again…
Firstly, I would generally roll the rise during the pandemic into the effects, as that’s when a lot of the inflation that would later be messured actually got going, and in this scenario you would likely see a similar effect to the whole, but I will consede that you likely much in the way in gains, especially given the effects such a recession would have across the board.
That does not have an effect on my main point, which is that a sustained very high inflation/hyperinflation during a loss of confidence crisis is going to do far, far more damage to people who’s source of income is earning a return on their assets and investments. In that earlier fifty percent inflation example you would need working class real wages to nearly half to have a similar effect.