|
|
|
|
|
|
by imtringued
2646 days ago
|
|
|
If someone invests $10 million in stocks and loses 2% of potential growth through inflation this amounts to $200,000. The poorest members of society with $10,000 or less in their bank accounts are going to lose at most $200 per year. So tell me how does this affect the poor more than the wealthy? Those price increases you mentioned don't happen in a vacuum. They are caused by higher wages. |
|
|
Because the $10 mil in stocks also appreciated by the roughly 7% average annual S&P 500 returns, meaning the rich person's wealth still increased 5% after 2% inflation.
The $10,000 in a current account earned 0.5%, making the poor person 1.5% poorer after inflation.
It's a textbook case of 'the rich getting richer, and the poor getting poorer'.
The poor do not have the flexibility to allocate their capital to higher yield assets that allow them to 'escape' inflation.
I am not advocating a fringe position. In fact, the first three papers I found investigating this issue came to the same conclusion: inflation actually increases poverty:
[1] "Inflation and the Poor" https://www.jstor.org/stable/2673879?seq=1#page_scan_tab_con...
[2] "Poverty, inflation and economic growth: empirical evidence from Pakistan" https://mpra.ub.uni-muenchen.de/34290/1/MPRA_paper_34290.pdf
[3] "Has Inflation Hurt the Poor? Regional Analysis in the Philippines" https://www.adb.org/sites/default/files/publication/28370/wp...