[gofigure]

There's also an element here people don't talk: Covid created insane amounts of hard-to-repay debts. If interest rates go up quickly, the Govrermnent will suddently have to spend a lot of its budget on interest - expected, of course, but not something they are used to.

In NYC, many restaurants and property owners survived thanks to debt which will eat into their profits for years to come and may even bankrupt them down the road.

What is the answer to overwhelming debt? Inflation. Inflation makes the principle that you owe a lot cheaper and if you have borrowed in fixed interest rates, it makes the interest payments cheaper as well.

It would help both the government and the businesses mostly affected by Covid to run high inflation for a few years. This may or may not be part of the Fed calculation but I don't understand why nobody talks about it.

[hajile]

Inflation is NEVER the answer.

Inflation taxes money, but not hard assets.

The poor have their week's worth of money that then gets taxed an extra 10-30%. The middle-class may sell some assets and be partly hit as a result. The wealthy will just hold their assets until the market settles down and lose nothing.

This is the exact opposite of a good economic solution.

[iso1631]

The poor owe a fortune in debt to the wealthy, inflation wicks this away

As long as wages increase with, and they have to. If the poor can no longer as a whole afford to pay $1k in rent because the money goes on food, then they won't, and rental prices will have to come down because the demand for rental at $1k crashes (as nobody can afford it)

[Invictus0]

> This is the exact opposite of a good economic solution.

The system is built by and FOR the wealthy. The system is working exactly as designed: to hold down the middle and lower classes, giving them just enough to be happy but not enough to emerge from the rat race.

[gofigure]

GDP per person in the US is around $50K. Some of the GDP has to go to investment and the government, so at best people can consume on average $30K worth of products/services per year.

Would you be happy consuming just $30K/year? I didn't think so.

The ratrace is not a matter of absolute numbers, it's because everyone wants to have more than their neighbors have and more than what their parents had. Also, everyone seems to want to spend 20% more than what they are making hence most people in the country are in (consumer) debt. Government is no exception and mirrors the behavior of the citizen.

This whole thing about the rich not giving enough money to the poor to keep them working is BS.

[gnicholas]

> It would help both the government and the businesses mostly affected by Covid to run high inflation for a few years.

The government is screwed if interest rates are high. They roll over their debt on an ongoing basis, and if interest rates go to even just ~5 percent then a huge chunk of the annual tax revenue will go to just repaying interest on the debt. The government (read: the people) cannot afford to have that happen unless drastic spending cuts accompany it. Recent events show that most legislators are interested in ramping up spending, not ramping down, which basically means that inflation would have serious consequences for the budget and economy.

[maxwell]

Exactly, inflation is a detriment to those with lots of dollars, those who have lent out dollars, and importers/consumers of foreign goods.

But it can also benefit owners of physical assets, borrowers of dollars, and exporters of domestic goods.

[vallard]

I’ve been hearing people call this a soft default.