What Groups Really Are Affected By High Inflation?

The Washington Post found another op-ed contributor who has no business writing about a topic that only reflects his ignorance about the topic. Thankfully, Dean Baker explains how inflation affects different segments of society. Those living on fixed incomes suffer from inflation because prices go up, and their income does not. However, wages usually adjust to inflation. Baker shows that wages increases are highly correlated with the inflation rate. That is bad news for the writer of the op-ed who argues that inflation is bad for workers. Those who lose the most from inflation are creditors. They purchase bonds or lend money at fixed interest rates. Those assets become less valuable with inflation.  Most workers have mortgages. Inflation is good for them because they can pay back their debt with dollars that have less purchasing power. That is true, as well, for countries with sovereign debt. Inflation enables them to pay back their debt with cheaper currencies.

Most of what Dean Baker writes about inflation is taught in introductory economics. The Post seems to prefer op-ed writers who reflect the positions of its editors. Many of them would get an "F" in economics 101.  The editors of the Post want to protect creditors from inflation, by appearing to defend the interests of ordinary American's.