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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Knighty Tin who wrote (9538)7/20/2004 10:37:56 AM
From: Perspective  Read Replies (4) of 116555
 
Paul also lies when he says that inflation hits the poor the hardest. On the contrary, inflation is the working debtor's friend, chewing away at real debt loads while increasing the pay for labor in the present.

While inflation ultimately is a bad thing, it is certainly not because it hits the working poor the hardest. Of course, I suppose that the absolute best environment for the poor is one with inflation to eat away the real burden of existing debt, plus negative real interest rates that eliminate the real cost of borrowing money.

In the end, it makes the whole system break, of course, due to massive misallocation of capital resulting from incorrect market signals to those deploying capital to increase the capital equipment stock beyond what can be sustained by aggregage demand.

BC
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