The media tell us that governments are doing everything possible to tame inflation. Really? Like all borrowers and bond issuers, governments are the biggest beneficiaries of inflation. They repay all debts with money of lesser value. In addition, as the price of goods and services goes up due to inflation, so does the goods and services tax that the government collects.
So governments repay all debts with money of lesser value while collecting more revenue. What’s not to like?
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Inflation |
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Winners |
Losers |
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Borrowers |
Savers |
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Corporate and government bond issuers |
Retirees living on a fixed income |
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Owners of houses, land, physical assets |
Workers on fixed income |
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Companies and governments paying fixed income salaries |
Everybody because of general economic uncertainty |
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Exporters |
Importers |
There are several ways to protect ourselves from inflation.
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