Fear the Inflationary Spiral

Source: Commentary
by John Steele Gordon

“Inflation is a self-fulfilling prophecy. What drives it is the expectation of inflation. If people see prices rising, they begin to demand pay raises. As payroll costs go up, so do the prices of the products the company produces, and inflation spirals upward. But it is Wall Street’s expectations that are the most important. Inflation erodes the value of debts that have fixed interest rates, such as most home mortgages. And so, creditors increase interest rates to protect themselves. The beneficiaries of inflation, of course, are those in debt. Just consider the biggest debtor of all, the federal government.” (06/03/21)

https://www.commentarymagazine.com/john-steele-gordon/fear-the-inflationary-sprial/