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Comment by singleshot_ | Hacker News Reader

Well, I would assume apropos of my one economics class that the reason the average person doesn't care too much about inflation is that he has more debt than assets. If you ask me whether I want to pay a lot of taxes on my income or whether I want a big slice of my house to be free in inflation-adjusted dollars, here we would be, assuming I had no assets and most of my income went to my home loan.

(Right? What did I miss by not taking Econ 102?)

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> the average person doesn't care too much about inflation is that he has more debt than assets

What the average person forgets is that some people (and businesses) have wayyyyyy more debt, so when it gets diluted, they're a net loser on average.

Kinda like getting a $1000 stimmy cheque while large capital owners gets their equity saved by government bailout money. Everybody wins something, but winning last place isn't a win when no real wealth was created.

Hah! I spent my stimulus check before inflation!

The thing you missed is that although inflation makes the nominal of the debt less valuable in real terms the associated cost of living increase means the cost of servicing the debt can go up both in real and nominal terms. You have less left over from your paycheck to pay the interest and the interest rates go up.

For most Americans, the biggest debt we have is our mortgage and 90% of mortgages in the US are fixed for the entire duration of the loan so nominal cost stays the same and the real cost goes down.

Aah interesting. Here in the UK most “fixed rate mortgages” are actually only fixed for a few years. Fixed for the full term does exist but is definitely less common.

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