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Huh? It hurts those who save a lot more than those who live paycheck to paycheck. The poor don't have to worry about the eroding effects of inflation caused by QE since they don't have any substantial savings to erode.
Increase in price of food, gas, rent, etc. will hurt the poor the most. Paychecks or gov. handouts will always lag behind price inflation
The point of inflation as practiced by the financial industry is to devalue the money they borrow, such as your savings, while charging more for the money they loan. Greatest deal in the world is to pay interest less than inflation while charging 30+ % for credit card loans.
Yup...but gold and silver is SO old fashioned....now that paper money,or even better a piece of plastic,THAT is true wealth....
There's a slight snag in that argument. If the world had stuck with a gold-based currency, an ounce of gold would not buy the same amount of stuff. It would buy much more.
Because while we can make more stuff, we can't make more gold. (Fixed money supply.) In other words, when there's only so many dollars to go around, but people keep making things (and other people), there'll be fewer dollars per person and per amount of stuff - hence each dollar will buy more over time.
"Great", I can hear people say, "we just need to hold on to our gold-backed money, and it'll become worth even more! What can go wrong?" That's the snag. If people can stack their money under their mattress and have a guaranteed return, they'll get seriously risk-averse as regards business and investments. They'll hoard money, not invest it.
Now, this is very much not good for the economy. We want people to spend and invest.
Of course, if the market responds instantly, wages and prices drop instantly to counter the reduced money supply - yet there's no lack of examples of prices and wages being very slow to react. When that happens, we're faced with a situation where both labor and goods are overpriced.
Less laborers are hired, less goods are consumed. More people get worried about affording the necessities and hoard their money. The cycle has begun.
A fixed money supply is a sure-fire hedge against inflation, but it comes with built-in deflation in any expanding economy. And sometimes that is worse.
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