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Source link: http://archive.mises.org/7290/who-benefits-from-inflation/

Who benefits from inflation?

October 10, 2007 by

Temporarily, just organizations and individuals that owe truckloads of debt, namely the US government (although, the debt still exists).

Unfortunately in his interview with Wallstrip, Paul Kedrosky does not mention some of the larger demographic groups that suffer due to monetary malfeasance. Apropos Robert Murphy, the latest infusion of credit will result in price inflation due to the declining value of the dollar.

For instance, here is a short list of others who are particularly hit hard:

- anyone with a savings account (even a CD/MMA is hit by it)
- anyone on a fixed income (retirees, disabled vets)
- individuals on long-term contracts
- anyone paid in cash (restaurant workers, day laborers)
- anyone selling a product at a fixed price (authors, publishers)

What is the one organization that is responsible for this misfortune? The Fed. It is the same institution that individuals like Mises and Rothbard have criticized, and it is the same firm that statesmen like Ron Paul have tried to dissolve.

Interestingly enough, Kedrosky himself is hit by the negative effects of a declining dollar, as are all venture capitalists that hold any amount of cash in the bank. [Note: you'll probably like his Longs/Shorts towards the end]


Jason Ditz October 10, 2007 at 10:47 am
  • Holders of Dollar Denominated Bonds
  • Lottery Winners
  • Homeless people who collect cans for the deposit

Robert M. October 10, 2007 at 11:25 am

Well the homeless person could take the cans to an aluminum recylcing plant, because base metal prices go up with inflation as well. Then they’d perhaps even benefit from inflation.

On the list of who it benefits, don’t forgot the politician who has more money printed to build a playground in his area so that he’ll get elected. Sure, the kids will have an unstable, devalued currency when they grow up, but they get a playground now! Sounds good to the ignorant masses

Stranger October 10, 2007 at 11:51 am

We can simply define the losers to inflation as “anyone who has cash-denominated assets.”

Jason Ditz October 10, 2007 at 1:25 pm

I’m thinking more of the states where there is a state mandated deposit on cans (like Michigan) that’s dramatically higher than the market rate.

These poor guys are being coaxed into the bags of cans in a rusty shopping cart industry by artificial government subsidies, now the government is destroying the dollar and their livelihood.

Bill October 10, 2007 at 1:48 pm

The biggest loosers are the ones that own dollars or their equivalents. We call these folks investors and lenders.

The beneficaries are the opposite or debtors. These folks have negative assets.

The government and its money machine, the Fed benefit the most as they get to control rate of “RESERVE” actually it is the rate of ANTI-RESERVE or the devaulation rate of the dollar.

Andrew October 10, 2007 at 2:02 pm

That is why this country, from a nation of savers, has become a nation of borrowers.

Robert M. October 10, 2007 at 2:43 pm

Ah I see, we dont have deposits on our cans here in Texas so our homeless people just sit on the sidewalks begging. Though I did see a funny sign the other day, “Why lie? I need a beer.”

Contrarian Investors' Journal October 10, 2007 at 7:21 pm

In How to secretly rob the people with monetary inflation?, it says,

The common people on fixed salaries and who do not own any ‘assets’ will have to bear the brunt of price inflation. In Shanghai, the rural migrants are one of the most susceptible groups. What is the end result of this? A redistribution of wealth from the last ones in the queue [of receiving the newly printed money] to the first one in the queue! Usually, the latecomers are the most vulnerable members of society.

Fundamentalist October 10, 2007 at 9:43 pm

Who benefits from inflation? What about financial institutions who get the new money first? Is it any wonder that the financial services industry pays the highest salaries and most MBAs want to work in it? Who get’s hurt? Manufacturing, because depreciation of equipment never keeps up with inflation, while the company has to pay taxes on inflated dollars.

Anthony October 10, 2007 at 9:49 pm

Why can most authors not realize that the state is the problem, and not some red herring called “greed”4?

TLWP Sam October 10, 2007 at 10:04 pm

So throughout sh1tkickers are last in line, what’s the big deal? I have have thought if it were new business startups were suffering then there’d be a problem.

TLWP Sam October 10, 2007 at 10:06 pm

So throughout history . . . I would have thought . . . startups that were . . .


TripleX October 11, 2007 at 4:20 am

If the dollar is worth 4cts, then monopoly money is not much less worth. And don’t forget fractual banking, the run on England’s North…, was helped by the BoE, and to hide the way your money really works within the system. And if it is a private corp., should it not be included like all corps, audits, anti-trust, etc? If anyone can explain. Thanks

temelac October 11, 2007 at 2:36 pm

First time poster!
Great site very very informative.

Who benefits?
1) The government is the main beneficiary mainly for financing wars and conquests with inflation. Those behind the scenes tend to benefit also, some might say even more than the government itself.
2) Countries with a high inflation rate such as Russia who’s money supply stands at 50% or Europe with 15% that are re-arming themselves, and acquiring assets around the world.

Who stands to loose?
The people, the average Joe, who slips by unnoticed, ignorant of the facts of inflation, and completely devoted in support of his political party, all while he, himself, has to pay more for his favorite soup.

Buster October 11, 2007 at 3:12 pm

Outside of certain government employees, is anyone getting rich in Zimbabwe, I wonder?

Buster October 11, 2007 at 4:06 pm

HAHAHAHA – Mugabe: “Every farmer has the right to a tractor to produce.”

“Ten white farmers appeared in court in Zimbabwe yesterday accused of growing crops on their land–in a country where millions of people will need food aid within the next few months.”
“Outside the court, the scruffy shops of Chegutu were empty of basic foods, and street vendors sold small, sour oranges. They came from a once-prolific citrus farm in the district now devastated after it was seized by Bright Matonga, the deputy information minister, earlier this year. ”

Vice President Joseph Msika: “The shortage of sugar in the country is simply because of greedy businesspeople and producers who are choosing to export the commodity leaving the local market starved of key basic commodities like sugar and this emanates from greed and, nothing else.”

This is so messed up:
“Private flour imports may be permitted only if Government puts in place a workable strategy that would help determine equilibrium prices, and not speculation-driven prices.”
“Speculative pricing helped push annual inflation above 7 360 percent.”

“Zimbabwe: Harare – the Ultimate Golf Tourist’s Paradise”
Somehow I don’t think so…

Black marketers and frinds of Mugabe might be making money, but is there anyone left who is doing it legally?

arizona auto insurance October 14, 2007 at 9:44 am

Yes, the Fed is reponsible for most of our woes and ills and unfortunately they have themselves covered by fabulous health insurance plans and wealthy pension. One thing our founding fathers did wrong was allow our elected leaders take care of themselves without subjecting them to the same rules they make for us.

Cathy Cuthbert October 15, 2007 at 4:11 am

Who benefits? Casinos, including the ones on Wall Street and in Chicago. Inflation makes savers chumps and thrift a fool’s errand. The Fed has forced everyone into the choice of becoming a speculator or losing out. As time and inflation march on, the speculation becomes more intense. So, in my parents’ generation, investing was the respectable form of speculation, while gambling was for low-lives and trading for the impetuous. Now, few people I know look down upon gambling and gamblers. And I don’t know anyone with a large bank account. Or do I just know the “wrong” people…

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