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Brace yourself, inflation could create a ‘giant wealth transfer’ from lenders to borrowers

·5 min read
Brace yourself, inflation could create a ‘giant wealth transfer’ from lenders to borrowers

Higher prices for rental cars, airplane tickets and uncooked beef roasts have economists and consumers wondering whether we’re living through the start of an inflationary period. If the latter holds true, at least one demographic could benefit from the trend: anyone, including consumers and governments, that holds fixed-rate debt. “Inflation could be this giant wealth transfer,” from lenders to borrowers, said Kent Smetters, the faculty director of the Penn Wharton Budget Model, which analyzes public policy proposals’ impact on the budget and economy.