[roenxi]

Heh, you noticed. I was being a bit sneaky in my word choice [0] there - the commonly used measure is the CPI [0] which doesn't include wages - so in practice it would often measure "deflation" which is really just prices going down due to technology improvements and people becoming better off. Think what has been happening in the tech world for however long. If not for pro-inflationary policy the overall economy would tend to stable prices except for massive drops in the cost of tech goods, leading to measured "deflation" (not really deflation but error in the measure) and people getting wealthier.

That was why I said "prices go down" instead of "deflation" - because the measure in practices is a price basket which doesn't directly include wages.

> But if your wealth is in capital, that capital should fluctuate with the currency, and inflation doesn't devalue that.

In the abstract, yes. In practice, after you factor in the interactions with capital gains tax it actually means there is a wealth tax (transaction tax? Extra tax on the principle, anyway) which is relatively punishing to anyone trying to save for their old age.

EDIT [0] With benefit of 24 hours hindsight, it would have been more proper to say "consumer prices" to distinguish the CPI from inflation.