Sunday, October 30, 2016

The Disaster Of Inflation--
For The Bottom 95%
"Central banks are obsessed with boosting inflation, but the 'why inflation is good' arguments make no sense for households being ravaged by inflation. The basic argument is that inflation makes it easier for debtors to service their debts. But this is only true if income rises along with costs. If income stays flat while costs rise, households lose ground--debt remains a burden as the purchasing power of income plummets .. There is not one inflation rate or median household income, there are completely different classes of inflation and income. Americans in the top 5% with little exposure to the soaring big-ticket expenses of rent, healthcare and higher education are doing great, as their income/purchasing power is rising while their household budget is protected from 25% increases in rent, healthcare premiums, etc .. Rising inflation crushes the purchasing power of the bottom 95% whose incomes are not rising along with double-digit cost increases in big-ticket expenses. Central banks seeking to boost inflation are waging financial war on the bottom 95% of households."
- Charles Hugh Smith*
LINK HERE to the essay

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