Does person A have a home? Then A, 100%. Regular citizens can get non-inflation-indexed, heavily-government-subsidized loans at leverage ratios[1] institutional investors could never dream of. And that's a better inflation hedge than almost anything. The home value inflates but your mortgage payments stay the same for decades.
The inability of people, even otherwise smart HN commenters, to reason about how inflation works has been really shocking to me.
[1] Literally 5x their net worth, or "20% down" in the local jargon
I do, yes. A quick google shows 65% of US households are occupant-owned (with most of those being mortgaged, though I'm too lazy to do a full accounting). I think the point about "regular" people and inflation is apt and I stand by it.
I have a strong suspicion that you aren't actually making an economic point.
Maybe but either way, person A CANNOT set the price of anything because a house is not a productive asset, it does NOT produce anything that you can attach a new price to. The rich asset owners can, they can drive prices up and gain from both ends of the inflation scam.
> The home value inflates but your mortgage payments stay the same for decades.
Literally untrue for variable mortgages that are now the rule. More importantly, it's absolutely irrelevant at any scale for the reasons cited above and because inflating house prices don't protect from inflation - you pay a huge tax on housing for just being there, which isn't the case for the rich asset owners. Sales taxes are separate.
Then if the house goes up in price and you sell it, old and depreciated, you will have to buy another one at an inflated price, or go homeless, or live in an moldy old hose again that'll cost you a lot more for medical bills.
> The inability of people, even otherwise smart HN commenters, to reason about how inflation been really shocking to me.
The inability of people, who otherwise think themselves smart at economics, to reason about anything has never been shocking to me, it goes way back in history. Their "reasoning" amounts only to lame gaslighting attempts and they can never get out of that mode of thinking.
You never mentioned anything about the income curves by decile - inflation is a redistribution tool, it results in increasing income inequality which we observe. I gave you the explanation for that correlation.
> Literally untrue for variable mortgages that are now the rule.
This is incorrect. 92% of US mortgages are fixed-rate [1].
> Then if the house goes up in price and you sell it, old and depreciated,
How can a house go up in price and become depreciated? If your home value goes up and you need to make repairs to it, you can take out a loan on the surplus value of your home also known as a reverse mortgage.
> You never mentioned anything about the income curves by decile - inflation is a redistribution tool, it results in increasing income inequality which we observe. I gave you the explanation for that correlation.
Yes this is largely because lower income deciles tend to hold more cash than assets [2] and inflation affects the purchasing power of cash directly while asset prices are "secured" by the value of the asset itself. Because the richer tend to hold more in assets they eat less impact with inflation.
Now that home ownership rates are so low among folks younger than 40, a big source of inflation-decoupled assets is unavailable. Though there's a greater question around whether it's even possible for homes to both appreciate and be affordable at the same time.
Honestly this discussion could use more sources and less pontificating.
> Yes this is largely because lower income deciles tend to hold more cash than assets
That's true, but it's important to point out that this is because the bottom of the income curve simply doesn't have meaningful assets at all. So what they have tends to be cash, and subject to inflation. But they don't have much, so the impact is very low. Their wages, however, do inflate along with the rest of the market.
And that's a problem that there's no wealth accumulation available to the bottom of the income curve! But it's not remotely a problem with monetary policy and "fixing inflation" isn't going to do anything for these people.
And in particular, trying to characterize inflation as a "tax" on them is voodoo nonsense.
> Honestly this discussion could use more sources and less pontificating.
That's absolutely true, it's nice to have. Maybe one day we'll have participants from the circle of people who are in positions to make meaningful decisions, hopefully that would be motivating enough for me to do better.
You have person A - who cannot set inflation and with severely limited opportunity to invest anywhere.
You have person B - who can invest in anything and also happens to influence the level of inflation.
Guess who is going to get ahead here.