One of the odd things about periods of inflation is that they are practically the only time that people far up the income distribution express solidarity with the poor en masse. Whenever inflation rears its head, we hear that it “mainly hurts the poor” since their incomes are low and they are more affected by price rises. This is at best half the story because inflation is perhaps better thought of as a class-specific tax. When “too much money” chases “too few goods”—an inflation—it benefits debtors over creditors since the greater the inflation, the less real income is needed to pay back the debt accrued. Since there are usually more debtors than creditors at any given time, and since creditors are by definition people with money to lend, democracy has, according to some, an inflationary bias. The politics of cutting inflation therefore take of the form of restoring the “real” value of money by pushing the inflation rate down through “independent” (from the rest of us) central banks. Creditors win, debtors lose. One can argue about the balance of benefits, but it’s still a class-specific tax.

Mark Blyth, Austerity, loc. 46