Corollary: lets all take a pay-cut to keep inflation in check!

Yeah because the immense cost of hiring back 10 million worker that business owners laid off can't fall on business owners.

Can you blame them for thinking the workers would be desperate to come back for wages that were already too low to cover exploding housing and healthcare costs?

And don't you dare tell me the businesses are the ones raising the prices, they are not. The prices that other businesses publish are what causes prices to go up and business owners are powerless.

You know what stops inflation at its root?

Governments stopping to print or lend money they don't have.

The monetary fiat model is broken. Inflation is basically a tax the government can levy and increase as they wish, without democratic due process.

Worse part of it? The poorer you are, the more heavily taxed you get through inflation.

This is very wrong. Supply shocks also create inflation and governments can do little about that. The alternatives to fiat money such as gold standard currencies convert growth into deflation which is economically and socially devastating.

> This is very wrong

You mean governments stop printing and borrowing money indiscriminately does not stop inflation?

> Supply shocks also create inflation

I did not say indiscriminate money printing by governments is the only source of inflation.

You answered your own question - if money printing is not the only source of inflation, then inflation will continue even if printing stops.

Most money is created by private banks, and velosity of money affect inflation more than money supply does

The working poor are generally the biggest beneficiaries of inflation. Their salaries go up, and they don't have any assets that lose value due to inflation.

Non-working poor like pensioners do often get hit hard by inflation.

> assets that lose value due to inflation.

most ppl in usa have their net worth tied to homes which have outpaced inflation.

Working poor will never ever be able to afford these again dooming them to permanent poverty for generations. So yea they are aren't really benefiting from inflation even if their salaries kept pace with inflation( which hasn't been the case).

What assets are losing value because of inflation? I thought cash is the only thing losing due to inflation, and debt is one that wins.

I swear the things you read about macroeconomics is all just contradicting each other.

The stock market has a fairly direct reverse correlation with interest rates. So when interest rates go up, the stock market goes down.

The p/e ratio is a measure of earnings per dollar of capital. If you invert it to the e/p ratio you can directly compare to interest rates. So a 5% interest rate is comparable to a p/e ratio of 20. So when the interest rates goes up, the "natural" p/e ratio for stocks goes down, thus deflating the stock market.

Isn't that because using leverage to buy stocks becomes more expensive?

I think the OP was talking about real assets like houses, land, cars, etc. Those don't go down in value

No, this is a flawed thinking in many levels.

Salaries take months, if not a full year to follow inflation. A salary is always behind the curve and devalued.

Besides, employees frequently fail to secure inflation adjustment to their salaries, especially in blue collar trades, where an individual worker is easier to replace.

Even when salaries are adjusted, it follows an average rate determined (more appropriate to say manipulated) by the same government which created the inflation.

Most likely the rate of inflation for your family's consumption basket is significantly higher than this "official" index.

Just like comments to the original poster, low wage people get pay bumps by bouncing jobs. And in this tight job market, that's happening.

The biggest benefit the working poor are receiving is the low unemployment rate. The working poor are much better off with a low unemployment rate and high inflation than they are with high unemployment and low inflation since it is usually the working poor that fill the unemployment ranks.

What? I thought inflation helped the middle class the most, since inflation inflates away their large amounts of debt (houses)...

> You know what stops inflation at its root? People thinking that there won’t be inflation. Absent supply shocks businesses often raise prices to get out ahead of their competitors or to more gradually raise prices so consumers won’t notice compared to a sudden increase. After a supply shock it can take for prices to stabilize because people expect inflation.

>Worse part of it? The poorer you are, the more heavily taxed you get through inflation.

Only if you're one of the "good poors" that does smart things like living within your means and not taking on debt.

Yes this is the real problem.

If salaries tracked inflation in an environment without money printing, I'd expect you wouldn't observe an increase in inflation.

Inflation is the invisible tax to pay for all the printed money.. and we printed a lot in the last two years.

and on top of that we printed record amounts of money for defense. We are flooding military contractors with money further driving demand for labor and materials.

My goal as a someone who works isn't to reduce inflation. It's to maximize my salary. This fact has zero weighting in my actions.