How does inflation make the rich richer?
The rich who get richer don’t have their money in cash. They use leverage to buy hard assets (property, business capital, shares).
Inflation decreases the real value of the loan while inflating the value of the asset. They use the profit to borrow more money for more hard assets.
In essence inflation over time causes the devaluation of money and the rich make money on the spread – the difference between the devaluing loan (money) and the inflated hard assets.
Anyone who borrowed money for property investment in the late ’90s has made a huge profit at the expense of everyone else.
Middle class people with a mortgage on their home can’t afford to invest like this. You need surplus money and income to get on the inflation gravy train.
Paying down a loan during inflation is a form of saving. When you save money during inflation the value of your savings get whittled away.
