There is a distinction between inflation and hyperinflation. An analogy would be someone saying that a modest reduction in caloric intake is healthy for most people, and you responding that it isn't, anorexics die without enough calories.
When inflation is present, but less than 3%, there isn't an incentive to hoard it, because simply sticking it in a bank account means it will be slightly less valuable a year from now than it is today. For poor people, who are spending most of their money on necessities, it won't mean much (unless their employers don't match incomes with inflation, which IS a problem). But for rich people, it offers a powerful incentive to spend today, or to invest their money with hopes that the returns will offset the inflation. A rich person's money flowing through the economy, be it through exchange for goods, or through investment, is far more valuable to society than it is sitting under their mattress.
Debts are also easier to pay off. With inflation, your debt of $X is easier to pay off in the future than it is today. Poor people struggle to pay off debt more than rich people, and governments are more likely to rack up debts to pay for public works and infrastructure, knowing the bill will be easier to pay down the line with inflation.
Compare that to deflation. With deflation, your money gets more valuable over time, not because you invested it in something useful, but simply because it exists. Now if you are rich, why do anything at all with your money other than stick it under a mattress? Why spend it, or take the risks that come with investment, when you are guaranteed it will be worth more than you have now in the future? Poor people don't have this luxury. They have to spend money on their needs today, which means they are missing out on even more value tomorrow.
Deflation is just as toxic to the economy, and especially poor people, as hyperinflation.
> For poor people, who are spending most of their money on necessities, it won't mean much (unless their employers don't match incomes with inflation, which IS a problem). But for rich people, it offers a powerful incentive to spend today, or to invest their money with hopes that the returns will offset the inflation.
The way I see this, there's a fallacy there.
The claim, that inflation won't matter much for poor people is wrong. Even if their employers compensate for inflation with accordingly increased salary (which they don't always do) then there's still the fact that poor people are treading their treadmill, unable to advance one bit. In the best case they stay right where they are (relative to others).
Rich people on the other hand have the "burden" of sitting on assets that do not suffer inflation. And any excess money they earn which they don't need to spend on everyday items, they can put into investments that again do not lose value like cash does (under inflationary circumstances).
Quite simple: rich people have opportunities to invest and earn profits, letting them improve their position relative to poor people even further. Poor people don't have these opportunities and they even have to constantly fight for compensation of inflation while having shorter levers to push everywhere in society.
If rich people weren't urged to invest money they have sitting around (by threat of inflation), they'd maybe just hoard bigger proportions of it and sometimes spend some, instead of using it to acquire ever increasing proportions of assets from poorer people who have to sell.
I'd say inflation almost directly causes wealth concentration.
In this way, inflation does indeed mean much for poor people. No, it's not totally obvious, kind of counterintuitive even. But it's true.
The current development is like a continuously happending race along a path of steadily increasing availability of pleasant goods and opportunities ... where the rich are moving significantly faster along the path than the poor. Yes, the poor do advance, but the lead of the rich continually grows larger.
Since wealth is psychologically very much a relative thing, this is bad, even if the absolute wealth of the poor is indeed increasing over time.
When inflation is present, but less than 3%, there isn't an incentive to hoard it, because simply sticking it in a bank account means it will be slightly less valuable a year from now than it is today. For poor people, who are spending most of their money on necessities, it won't mean much (unless their employers don't match incomes with inflation, which IS a problem). But for rich people, it offers a powerful incentive to spend today, or to invest their money with hopes that the returns will offset the inflation. A rich person's money flowing through the economy, be it through exchange for goods, or through investment, is far more valuable to society than it is sitting under their mattress.
Debts are also easier to pay off. With inflation, your debt of $X is easier to pay off in the future than it is today. Poor people struggle to pay off debt more than rich people, and governments are more likely to rack up debts to pay for public works and infrastructure, knowing the bill will be easier to pay down the line with inflation.
Compare that to deflation. With deflation, your money gets more valuable over time, not because you invested it in something useful, but simply because it exists. Now if you are rich, why do anything at all with your money other than stick it under a mattress? Why spend it, or take the risks that come with investment, when you are guaranteed it will be worth more than you have now in the future? Poor people don't have this luxury. They have to spend money on their needs today, which means they are missing out on even more value tomorrow.
Deflation is just as toxic to the economy, and especially poor people, as hyperinflation.