What benefits could the super rich enjoy with inflation

Looking for factual answers in how inflation could positively effect the supper rich.

Depends on how severe the inflation. If we get to a point where, akin to Germany or Zimbabwe in times past, a billion dollars can only buy a loaf of bread, then people like Gates and Zuckerberg have seen their wealth wiped out.

If you lend money, you benefit by higher interest rates. That’s one I can think of right off the bat. In turn, that means you can put more money into savings, CDs, lending, etc…and less into riskier investments.

If you’re really, really rich, it won’t crimp your lifestyle a bit; you’d just need to worry about keeping the peace with the teeming millions who either have or are looking for their pitchforks.

Except that, for the most part, what Gates and Zuckerburg own isn’t dollars. It’s mostly shares of big companies. They won’t see their billions of dollars become worth a loaf of bread; they’ll see their billions of loaves of bread become worth quintillions of dollars.

I am not an economist, but i always heard inflation is good for long term debt holders ie mortgage holders. You have $300,000 mortgage at 2.75%. Inflation increases the cost of everything but your mortgage payment. But your salary increases too due to inflation. Soon, your inflated salary makes it easy to pay your mortgage.

But inflation is usually regarded as a bad thing for everybody. I cant speak to how it affects the super rich. But if the Federal Reserve is always fighting inflation, i’m guessing that’s what the super rich want also.

As long as it’s fixed rate, yes, inflation is good for people with debt.

If we are talking Zimbabwe or Germany hyperinflation, then probably not. People don’t have any stable store of value to exchange for Amazon and Microsoft products and the stock plummets.

But, I agree that we need clarification. Are we talking high but still functional levels of inflation like 15-20 percent or are we talking hyperinflation? If we are talking just the regular old high inflation without using money for wallpaper, then generally, yes, debtors win and creditors lose in the short term.

But before anyone thinks that inflation is then good, interest rates will simply rise to meet the new inflation. If you took out a 15 year home loan for 2.75% last year, then good for you, but not so good for the next person who wants a home, and not so good when you try to sell it and hardly anyone can afford it because they have to finance at 31.75%.

Suppose the inflation were primarily in the U.S. but the super rich had holdings and interests all over the globe? I am looking for a possible incentive the super rich may have to support inflationary policies.

I agree with this. I was just pointing out long term debtors can benefit from inflation. As you and others point out, a long term debtor might have problems when they sell their house and want to buy a new one.

As for the OP, i can’t think of any reason, anyone, let alone the super rich, would be pro-inflation.

The super-rich is perhaps hard to define. In general they will be best served by stability in the financial systems. As noted above, their assets are not in the form of money. They are usually in the form of money making enterprises or property. Any economy where inflation rises above sensible levels is likely to affect the stability of their income and the value of underpinning assets.
In dollar terms there may be gains, but these are offset by higher prices. Riches based on bubbles of prices rising above sensible valuation (which can include real-estate) may find their assets plummet if inflation causes a change in market sentiment or confidence.

Also depends upon what you call an inflationary policy. Any economy where inflation drops under a couple of percent is in trouble. If there is policy that seeks to stimulate the economy some people will label this is inflationary. You could argue that the super rich do benefit, but only in so far as they are, like the rest of the economy, losing out as the economy fails, and improved economics generally mean that their assets and thus finances pick up accordingly. If nobody is spending money it is very hard to make money.
The trouble with stimulating policies is that they can only do so much. If Joe Public is stuck in an economic trap it is hard to convince them to spend money.

Even here it is hard to make a special case for the super-rich. Compared to the various money management entities playing arbitrage across the world they are minnows. You could construct a specific example of moving money at the right time in and out of the country to benefit. But that is just playing the market. You might win you might lose. But don’t try to go head to head the big players. If you have significant overseas assets, well they are making money for you there. Why would you liquidate them to turn into US dollars? You would move the money to where it makes the most money, or is minimally, the best protected.

The stock isn’t going to plummet. Apple is worth around $2T. If one day the US dollar hyperinflates so that I’m getting paid quadrillions of dollars, you think I wouldn’t buy all of Apple with my loose change? Of course I would, but so would everyone else. The stock will follow the inflation.

Consider a simpler example: you own a bread factory. You could try to put a dollar value on that, but there’s a simpler method: it’s worth one bread factory. Since inflation doesn’t change the population or their caloric needs, the value of a bread factory also doesn’t change (much). Only its denomination in dollars changes, but that has nothing to do with wealth.

Zimbabwe-style hyperinflation affects everyone, but it still affects the hyper-rich less than it does regular folks, since they have a large supply of non-inflationary assets, and a lot of business in the sane rest of the world. And all of the other folks suffering losses are opportunities for gain. In a hyperinflationary society, a lot of smaller businesses are going to go under, and someone with the resources could buy them for a pittance. If you then have enough assets from elsewhere to keep the business afloat until sanity is restored and the business is again profitable, you now own an additional profitable business.

I disagree. To address your second example first, people will need necessities like food, so the food stores and bakeries won’t take as large of a hit as luxury stores, but you still have issues. Supply chain: are people going to supply your bakery with the necessary ingredients to make bread? Are workers going to show up for pay that will be worthless tomorrow? Even if you work through that, you will be constantly losing money as you can’t keep up with the hyperinflation. You charge $2 for a loaf of bread and that $2 is worth $1 tomorrow and 5 cents in a week. So you keep raising prices to keep real value, but you never can do it enough because your raising of the prices is fueling the hyperinflation. So even the necessities are losing their shirts.

But non-necessities like Amazon and Microsoft? In a time of national calamity, I don’t think many people will be ordering air fryers and gourmet coffee presses on Amazon, and that is in addition to the massive amounts of money they are losing for the same reason as the baker times a million. I would agree that a Bezos or Gates whose wealth might drop from $100 billion to $2 billion in “real” dollars is still doing much, much better than the average person, but it wasn’t a benefit.

All this will continue until a stable store of value is found. IIRC, Zimbabwe just started using the US dollar to stop it. IOW, the value of “one bread factory” is now less because its income stream was wiped out.

This is probably the closest answer. The rich have assets, not just Scrooge McDuck piles of cash. They likely own them outright.

As others mention, those with fixed interest loans make out best. The real question is how hard and how fast inflation hits. If inflation builds, then as loans come due, interest rates - rising wwith inflation - will rise commensurately, so everything will stay roughly equal. If inflation suddenly climbs to 200%, then the ones with longer term loans win. Also note, the super rich are usually the ones playing leverage games - their assets are used to borrow more money, so suddenly those debts are easier to pay off. The bankers lose. (Assuming the interest terms are fixed) A lot of high finance is a fancy juggling act, assets and debt. Which one wins in a major disruption depends on the terms of the loans and incomes.

Another important point is anticipation - why is inflation climbing? Do people see it coming? When inflation was close to 10% a year in the late 70’s (thanks to the oil shock) it was built into everything - union wages, pensions, government bonds, etc. all had clauses allowing for a COLA (cost of living allowance) increase to match inflation. Prices were adjusted regularly.

(old Argentinian hyperinflation joke - what’s cheaper, the bus or the taxi? A: the taxi, because you don’t pay until the end of the ride.)

Another important point is the super rich have lots of money and assets. So if you’re a multi-billionaire and suddenly you have to get by on the equivalent of today’s, say, $50M - life will be hard without the second Learjet, but you’ll manage. It sure beats the guys trying to figure out if they can afford enough potatoes for the rest of the week. Plus, you can sell some stuff - the extra three Rolls Royce’s - for enough to get you by for a while.

The big question will not be inflation, it will be “what does this do to the economy?” After all, Apple is worth a ton (megaton?) of money because people buy iPhones. If most people still have jobs, they just get paid 50% more each month than previous month, then they still buy iPhones. The only change is increased software development demand to change all the accounting programs to accept numbers over $100M. If the problem relates to severe economic mismanagement and supply chain disruption, and half the population is suddenly out of work, then perhaps owning a bread factory is better than owning an iPhone factory. People will generally choose eating over updating their phone.

I’ll try to answer the OP coming from a different direction: if inflation was a benefit to the super-rich we’d likely see it happen much more often.

The historical examples of hyperinflation can all be blamed on something other than the desires of the super-rich:

  • The Weimar Republic was dealing with the aftermath of WW I and reparations.
  • Hungary (1945-46) was recovering from WW II. There is some evidence that Communists were purposefully inflating the Pengo to foment instability.
  • Yugoslavia (1990’s): again, war.
  • Zimbabwe - the government confiscated land and gave it to cronies (corruption) and then tried to pay debts by literally printing more money.

I’m not as familiar with the hyperinflation in South America (e.g. Brazil and Argentina) so maybe the super-rich had influence but I doubt it.

I would say you’re conflating inflation with other kinds of economic disruption. The inflation itself doesn’t cause any issues, and if it were a known quantity, it could be planned for. People would move all their assets into something other than cash, and systems would arise so people could pay for things with those assets.

Of course, hyperinflation is associated with economic collapse, but it’s more of a symptom than a cause. Currencies hyperinflate because the government prints a bunch of money, which they do because they’ve lost their other means for generating revenue, which has happened because the economy as a whole isn’t big enough to support the cost of running the government.

But the inflation by itself is ok. In fact we have examples of planned inflation: stock splits. A stock split happens when a company decides their shares are too costly. They cut the price by a factor of 2 (or some other number), and give everyone twice the shares that they had. Instead of owning a single $100 share, I now own two $50 shares. The shares are worth less individually, but as a fraction of the company they are the same.

So nothing changes and there’s no disruption. Stock price graphs even “lie” about the past prices so that they look continuous, without big jumps. And people that loan stock even ask that they get paid more shares if the stock splits. In short, it’s all highly planned out and affects no one.

The same could be done for a currency, though there’s no point. So hyperinflation only arises for some other reason.

It depends on the goals of those super-rich. If they’re looking to gain power over a population, it might not be a bad method. Destroy the economic power of the lower classes while retaining wealth yourself in less-affected assets. You’ve destroyed the economy but what you do own is now a larger share. Cycle a few times to increase the fraction.

On the other hand, if you view wealth as a means to an end (say, running a space program), then your fraction of the pie doesn’t matter so much. What you want is the most productive use of the assets you do own, and that’s probably not going to be helped by destroying the economy.

The OP was asking about much lower levels of inflation, indeed even just “inflationary policies”. Why would the super rich support an inflationary policy?

Inflationary policies come in two forms:

  • A pejorative term used by the political opposition for anything an incumbent does because inflation is always bad.
  • A clearly defined policy that has the goal of increasing economic activity by increasing the money supply.

Clearly the second can fall under the first as well.

As always there are the usual fallacies:

  • if a lot is bad a little must also be bad,
  • if a little is good more must be better.

In conversation with one relative it is almost impossible to get her to understand that a healthy economy requires some level of inflation. She has a mindset that remembers the 70’s of inflation, and refuses to believe that any level of inflation other than zero could possibly be good. Political invective labelling any policy as “inflationary” finds a fertile ground with people with these memories.

If the effect of a policy is to put more money in the hands of Joe Public it will probably be inflationary. But if the is goal is to stimulate a poorly performing economy, or an area of the economy, done right everyone wins. Including the super-rich if their riches are based on selling goods or services.
But one might make a case that the stock market itself can be an inflation driver. Stocks that are increasing in value faster than the economy with no underpinning fundamentals are by definition inflated. Policies that encourage that are clearly inflationary, and any policy that encourages a market bubble is both inflationary and benefiting those that have a large stock holding in those companies. You don’t see the stock market as part of the cost of living directly, but as stocks rise faster than the fundamentals, especially as people leverage themselves into the market, it devalues money.

If we’re just looking for a motive for why rich people might support this, then we don’t even need the rich people to benefit. We just need them to think they’ll benefit. Not everyone who’s rich is financially savvy; some are just lucky. Some of them might incorrectly think that inflation benefits them, even if it doesn’t.