Inflation Added $14K to Median Household Net Worth Over 36 Years by Reducing Debt Burden, But Poorest Lost Half Income
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Inflation added $14,300 to the median household's net worth between 1983-2019 by reducing the real value of their debts, according to new research.
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Inflation erodes the value of money, but it also diminishes the value of debt, boosting net worth if heavily indebted.
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Inflation reduced median incomes by $28,400 but added $42,700 to median wealth by inflating away debt over 1983-2019.
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Wealthy households benefited from inflation but the bottom 40% lost $19,300 in real wealth, equal to half their income.
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The researcher concluded inflation is a net benefit to the middle class but the poor get "clobbered" by it.