> I've heard multiple Americans say that "inflation is good for workers because it erodes debts", but they forget that wages are generally the last thing to adjust.
This seems to completely ignore bargaining power and what the corresponding state of the labour market is when inflation is about: Typically it's a tight labour market that's really good for wages, particularly low-end wages! I really like Devon's writing usually but I think this one isn't telling the whole story.
Even though wages are last to adjust, over the long term inflation is good for those with a lot of debt at fixed interest rates. Those large debts get smaller over time and eventually wages catch up.
Note the qualifacations on that though. Change any and things change. In the US real estate often does fit the specifics.
Those are a minority of all debts by total value. People won't refinacne to a higher rate, and those who get high rates plan to refinancing in a few years when rates improve (might not happen but that is the plan)
For a bit over half of Americans inflation is good for their situation over 10 years.
This seems to completely ignore bargaining power and what the corresponding state of the labour market is when inflation is about: Typically it's a tight labour market that's really good for wages, particularly low-end wages! I really like Devon's writing usually but I think this one isn't telling the whole story.