Why Are Rich Americans the “Biggest Loser” of Rising Inflation?

In economics, inflation (or less frequently, price inflation) is a general rise in the price level of an economy over a period of time.

When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.

Read more: Why Inflation Grows as Recipients Earn Fat Paychecks?

Inflation reduces the purchasing power of each unit of currency, which leads to increases in the prices of goods and services over time.

Inflation can be beneficial to everyday consumers and harsher to richer Americans.

One reason is that credit card interest rates, which largely aren’t fixed, have shot up this year to an average of 17.13%, just under the all-time record high of 17.14% that was reached in 2019, according to the Federal Reserve.

Read more: Social Security COLA Strategies That’ll Protect Your Benefits Despite High Inflation

People living on a fixed income, such as retirees, who aren’t benefiting from wage increases that people in the labor force are seeing, are feeling extra pain as prices go up.

People with exposure to government bonds can expect to be affected as well. That’s because those bond holders, who are essentially lending money to the government, will be paid back in money that has less purchasing power.

One in four people surveyed said inflation has worsened their living standards. And half said they expect inflation to wipe out whatever wage gains they were given over the past year.
“My sense is that people are exhausted by the level of chaos that we have, and inflation is a symptom,” said Wendy Edelberg, a senior economics fellow at the Brookings Institution.
“So we have the economy surging, but how long is it going to surge for, and who is it surging for? And is it surging in a healthy way? Is it surging in a non-healthy way?”
Stay updated for more news here at the East County Gazette. 
Leave A Reply

Your email address will not be published.