Sunday, March 27, 2011

Inflation Rocks

One of the great triumphs of elites was convincing people that inflation is a really really really bad thing. And, yes, if it's too high it can be a bad thing, and in the shorter term wages adjustments are probably unlikely to keep up so it will feel like a bad thing for a lot of workers, but the truth is for a lot of people inflation is a good thing. Basically anyone with a nominally denominated debt with a fixed interest rate, like a 30-year mortgage, is going to benefit from a bit of inflation. It was the big boogeyman in the 70s, but once the economy finally turned around a lot of people woke up and discovered that their mortgage payments were a pittance.

It's the people we owe the money to who don't like inflation, and they've convinced us that we shouldn't like it either.