How Does Inflation Redistribute Wealth?

Inflation serves as a mechanism to transfer wealth from lenders to borrowers. But who, exactly, tends to benefit? St. Louis Fed economist and Research Officer YiLi Chien explains how, in general, inflation can redistribute wealth from richer, older households who are creditors to younger, middle-class households with fixed mortgage debt. He also explores how inflation’s impact on the real value of government debt could affect bondholders on one hand and taxpayers on the other.

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