7 ways inflation benefits the owning class

We often hear about how inflation affects the working class, but it affects the owning class, too.

Just not in the same way.

In contrast with the working class, who see real wages drop when inflation outpaces raises, the owning class actually benefits from inflation.

Here are several reasons why the owning class loves inflation:

First, inflation reduces the real value of fixed-rate debt over time.

As a result, the owning class sees their debts erode—relative to inflation—as prices and incomes rise.

This then makes it easier to repay loans with “cheaper” money.

Second, inflation often drives up asset prices, such as stocks and real estate.

Because the owning class holds significant holdings in these assets, their wealth grows as the nominal value of their investments increases.

Third, businesses with pricing power (especially in monopolistic or oligopolistic markets) can increase prices faster than the rise in input costs, leading to expanded profit margins.

They can disguise such increases as pressure from suppliers.

Fourth, because inflation can suppress real wages, the owning class wins out by reducing labour costs relative to overall revenue.

So if revenue increases, as indicated previously, they’re even further ahead.

Fifth, inflation erodes the value of savings, particularly for the working class.

The owning class, with access to inflation-protected assets (such as real estate and inflation-indexed bonds), sees relative wealth increase as the purchasing power of cash savings diminishes.

Sixth, central bank policies often aim to combat inflation by curbing demand.

These policies tend to favour financial markets, stabilizing or boosting asset prices, which disproportionately benefits the owning class.

Finally, inflation creates opportunities for speculative investments in commodities, currencies, and financial derivatives.

The owning class, with access to capital and expertise, can profit from these speculative markets.

Is it any wonder the owning class doesn’t seem too concerned when inflation increases?