I've been mulling over for a long time the fact that there is a huge "inflation lobby" in this economy--folks who have an incentive to promote inflationary policies because they have a lot to gain from impairing the value of money. That would be, in particular, all those underwater homeowners who would love to pay back their mortgage debt in little teeny inflated dollars. We've seen it before: my generation bought our homes in the 60s. Through the 70s we howled about inflation. But the fact was that our salaries usually grew with inflation while our mortgage payments did not--which is to say, in purchasing power terms, our mortgage payment shrank every month.
Reading Leo Kolivakis' horrific account of the looming pension crisis, my first thought was: there is only one feasible way to solve this problem, and that is to inflate the currency so completely as to destroy the value of all that fixed-income wealth. Hey, it's happened before--think of all those 16-stone babushkas selling Mars bars outside Moscow subway stations (and recall these folks).
But then it struck me: no, it just might work the other way around. The cohort of pensioners, aggrieved and soon-to-be-aggrieved, may prove to be an anti-inflation (a deflation?) lobby, ready scratch and grab to prevent the currency from depreciating, to preserve precisely the (unfunded) advantage they (= we) enjoy so far.
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