I'm not sure the distinction you are making here. A flat tax is called that because it is flat in percentage not in nominal value. Yes, debtors will benefit more than creditors, but that doesn't mean it isn't a flat tax. Also it doesn't just impact cash which should be obvious from the last sentence. If inflation decreases the real amount owed by debtors, it also decreases the real amount that is owed to creditors, and therefore decreases the value of their investments.
> If inflation decreases the real amount owed by debtors, it also decreases the real amount that is owed to creditors, and therefore decreases the value of their investments.
I'm sure that's upsetting for wealthy people with investments
For the mom working 3 jobs at Macdonalds, as long as Macdonalds continues to pay an inflation linked salary, her debts being whittled away, that's great news.
Now if Macdonalds can cut salaries relative to inflation, that's a whole other problem.
I think you are projecting a moral or political argument into my comments. That wasn't my intention. My point is that there are more powerful levers in the government than the inflation rate.
Sure, having your debt reduced by 6% or whatever is good, but the government could also easily forgive all federally owned college debt and 100% reduction is certainly better than 6%. Increasing the minimum wage is another example. That would more directly benefit that mom with 3 jobs more than inflation.
Whatever your political goals are, there is likely a much more powerful tool to accomplish them than nudging the inflation rate up or down a few percentage points.
>It's a negative tax on debt, which poor people tend to hold. It doesn't apply to assets.
Thank you!! This is the first time I've heard someone acknowledge this since the "inflation crisis" started. Inflation is good for student debt holders.
Could be, but it makes a lot of assumptions and is loose with terminology. Monetary inflation does not equal price or wage inflation necessarily. We are definitely seeing price inflation which no longer seems to be transitory. There does seem to be wage inflation, but that is not guaranteed. So while if wage inflation keeps up for those holding debt, then yes. I wonder though if those in the position of student debt have the least leverage to take advantage of the wage inflation.
The other thing is that costs go up. The impact of this is much greater if you are poor which could also affect your ability to actually pay the loans. One has to eat after all.
So imho, it's a lot more complicated for an individual. Sure for a corporation that borrows tens of millions for a new capital expenditure it makes debt cheaper. But that may or may not translate to someone that is poor and paying off debt.
Their student debt might go down but so does their chance of ever owning a home.
They hoodwinked an entire generation of children into going six-figures in debt, made the high school diploma worthless etc.
Before:
-HS degree
-no debt
-immediately start a factory job that makes enough for an average home, 2 cars, and a spouse that doesn’t work
Now:
-4 year degree, delaying income in prime years
-graduate with a small house-worth of debt, with no house
-your new job’s earnings in real terms is barely enough to rent
-your spouse has to work too
-have to make one car work
The American people have been robbed of their prosperity and sold a bucket of lies.
Flat tax on cash holdings, which poor people don't have.
It's a negative tax on debt, which poor people tend to hold. It doesn't apply to assets.
Now if wages don't keep track with inflation, that's not a tax, it's an employer reducing wages.