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Karl Smith:

Reihan Salam has written a bunch of stuff I have been meaning to respond to but haven’t. The only point I want to address because its real quick is that inflation does not erode savings. It only erodes cash and the value of long bonds taken out before the inflation set in. However, the Fed is buying long bonds and propping their value. The only thing that is eroded in this scenario is cash.

Back in days of old, poor farmers loved inflation because it allowed them to pay back their loans with cheaper money. Rich Wall Street bankers hated inflation for the same reason. From this came populist demands for free silver at 16:1, crucifying mankind on a cross of gold, etc. etc. But none of this really matters any longer because interest rates all react to inflation: in the long term interest rates generally move up and down with inflation expectations and in the short term they’re keyed to LIBOR or the prime rate or some other inflation-sensitive variable.

But there’s one exception: fixed-rate loans. In particular, fixed-rate home mortgage loans, of which there are still quite a few. So for existing homeowners with traditional 30-year fixed-rate mortgages, higher inflation would be great. And for the bankers and investors who hold those loans, it would suck. Inflation may not erode savings, but it does erode the value of a fixed-rate mortgage, which means this whole argument isn’t quite a dead letter yet — and bankers and the common man are still on opposite sides. Right?

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is the first thing despots go after. An unwavering commitment to it is probably what draws you to Mother Jones' journalism. And as we're seeing in the US and the world around, authoritarians seek to poison the discourse and the way we relate to each other because they can't stand people coming together around a shared sense of the truth—it's a huge threat to them.

Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

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