Inflation’s Effects On Upper, Middle, and Lower Class

Lower and Middle Class

The lower class is by far in a way the group of citizens negatively feels the effects of inflation. This class of individuals, for the most part, has a stagnant pay. They do not have the means to earn as much money as others do. Their wages are staying relatively the same while everyday prices are on the rise. Many of the lower and middle class keep their money in the paper currency form, after all, they do not have much and want to hold onto what little they do have. As time goes on, the value of money decreases when it’s in its cash form if it is not earning interest or invested correctly. Therefore, their money’s value is going down and there is not much they can do about it from there somewhat fixed position in society.

Upper Class

The class that is receiving the bulk of the benefit compared to their counterpart is the wealthy upper class. They are not living on a small income, as a result, they have more freedom to do what they please with their money and not have too much to worry about. After all, they can probably take a financial loss due to their surplus of wealth. But how do they benefit from inflation? They have their money in bonds, investments, or some other form that gains wealth over time. It is not so much a matter of this class being benefited, as much as it is they are not being harmed as much as the lower classes. These two classes are connected in a way because “there is an unjustified transfer of income and wealth from the poor to the rich. As a result, the rich roll in wealth and indulge in conspicuous consumption, while the poor and middle classes live in abject misery and poverty.” (YourArticleLibrary.com)

Combating Inflation

Overall, it is essential for each class to anticipate the effects of inflation and try to put themselves in a position that can combat the fall in the value of money. People must change their economic behavior according to what they predict will happen with the future of inflation. As we all know, nobody can correctly predict the economy all the time, but those who can manage to anticipate what will happen correctly often, will gain and those you anticipate incorrectly will lose causing an overall redistribution of wealth.

Cite: 9 Major Effects of Inflation — Explained! (2014, March 23). Retrieved from http://www.yourarticlelibrary.com/macro-economics/inflation-macro-economics/9-major-effects-of-inflation-explained/31091