Nothing that person said made sense. Inflation isn’t good for wealthy people, it’s good for debtors.
Wealthy people hate inflation because they have lots of money and it makes their money worth less. That’s the simple explanation. In reality, they have their money mostly in bonds and stocks. But bonds are paid off in inflated currency which is worth less. So they are affected negatively by inflation.
Basically if you are a net debtor (student loans, home loans, etc.) inflation helps you as long as your income rises too. If you are a net lender (retired, wealthy, own your home with no mortgage) inflation does not help / may hurt you.
Maybe I am growing insane, maybe I am not, for sure I am not the best person to explain this (/communicate my thoughts).
“That’s the simple explanation”
This does not cut it for me, I want to know what these processes truely entail.
If you “own your home with no mortgage” Inflation does NOT do anything, since the worth and the money numbers are not the same. If you own a Housing complex in Brazil or Venezuela or whatever and suddenly the inflation jumps up 3’000% per month. Your assets arent suddenly the equivalent of an egg from Walmart. After the Shake-up has calmed down, you will ve able to raise the rent back up to a similar level as before and as such extract a similar worth from those poor Venezuelans.
The money number may be entirely different, maybe even in another currency, but the worth should stay the same.
Nothing that person said made sense. Inflation isn’t good for wealthy people, it’s good for debtors.
Wealthy people hate inflation because they have lots of money and it makes their money worth less. That’s the simple explanation. In reality, they have their money mostly in bonds and stocks. But bonds are paid off in inflated currency which is worth less. So they are affected negatively by inflation.
Basically if you are a net debtor (student loans, home loans, etc.) inflation helps you as long as your income rises too. If you are a net lender (retired, wealthy, own your home with no mortgage) inflation does not help / may hurt you.
Maybe I am growing insane, maybe I am not, for sure I am not the best person to explain this (/communicate my thoughts).
“That’s the simple explanation”
This does not cut it for me, I want to know what these processes truely entail.
If you “own your home with no mortgage” Inflation does NOT do anything, since the worth and the money numbers are not the same. If you own a Housing complex in Brazil or Venezuela or whatever and suddenly the inflation jumps up 3’000% per month. Your assets arent suddenly the equivalent of an egg from Walmart. After the Shake-up has calmed down, you will ve able to raise the rent back up to a similar level as before and as such extract a similar worth from those poor Venezuelans.
The money number may be entirely different, maybe even in another currency, but the worth should stay the same.