November 30, 2021

FIGHT THE NARRATIVE: No, inflation is not ‘good for you.’

“Inflation is good for you!” proclaims a headline from the Intercept. “Inflation is bad for the 1 percent but helps out almost everyone else,” the article claims.

Inflation “may be a good sign,” agrees New York Times business writer Jeanna Smialek. “Don’t panic” about inflation, says economist Paul Krugman.

Krugman believes that recent price increases are only temporary, but why would anyone think that inflation is a good thing? The Intercept article points out that, if you have a lot of debt, inflation will pay part of that debt for you. But the article implies that the 1 percent are all creditors while the other 99 percent are all debtors, neither of which are true.

If you foolishly borrowed $35,000 to get a master’s degree in puppeteering, then you might welcome inflation. The same is true if you are a transit agency that borrowed $2 billion to build light rail. But if you pay off your credit cards in full each month, rent your home, and maybe hope to buy a house someday, inflation is not your friend.

The worst part of inflation is that central banks respond to it by raising interest rates, which raises the price of housing, cars, or anything else that people buy on credit. The Intercept article claims this is an evil conspiracy by the 1 percent to keep everyone else poor. Instead, the article argues, we should just let inflation run wild.

Who you gonna believe, The Intercept or your own lyin’ bank statement?

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