Never mind if real inflation of the USD (and friends) is coming or not. You can set the "likelihood" to whatever value you want. Let's just stop and think about some of the implications.
If income earners get "richer", in terms of numbers, in USD (that is, income numbers go up, due to inflation), then many income earners are going to be edging upwards towards higher tax brackets; the hated rich.
Baring some adjustments to that whole bowl of spaghetti that determines all these things, [if inflation] you will soon be enjoying the income of the rich and paying the taxes of the rich.
Say this out loud and see how you like the sound of it:
The IRS is aware of this possibility, and will simply adjust all the necessary numbers in a timely manor.
Do you just file a 1040 easy like before or do you have different form thingies because the numbers are bigger?
At the peak of its hyperinflation in the 1940's, Hungary's prices were doubling literally by the day: A pack of Kools costs 1 pengö today, and 2 pengö tomorrow.
Let's say in a much less severe example, the prices of goods and the income of workers double every year.
Let's suppose you make $50k/yr now. Next year you make $100k. The following year you make $200k, the year after that you make $400k. Remember, this is a big fat number, but it is entirely to make up for the big fat numbers at the grocery store! Roughly speaking, your income has remained flat.
In three years your salary will put you in the 35% tax bracket. And many tens of millions of Americans (in this case) will have the same problem. Times are hard; government gets a big raise.
What if somehow the numbers don't get adjusted. Forget 35%, you could still find yourself paying N% more next year even with mild inflation. Are you near the top of one of these brackets? Can you see yourself paying a higher tax rate only because your employer is paying you more now to compensate for the price of gas and tuna fish? Same shitty job, same effective wage, higher tax bracket. "Fuck!"
But don't worry. You are rich now and can use all the rich guy tricks to wiggle out of that. You scoundrel.
Of course the world's a lot sloppier than that. If I was a government money guy, I would find lots of ways of sweeping this situation under the rug. Not intentionally, of course. It's just that I want to give my boss a good report on how I made the numbers good last year. A little bias sneaks in here and there…a little window dressing.
Which sounds to me like something that's going to make a "bang" noise some day, rather than all that embarrassing hyperinflation that only shithole countries have.
Do you have a mortgage? Well congratulations on achieving the American dream. Further, congratulations on that thing seeming more and more like no big deal. After all, the number is right there in the paperwork. You still owe $400k. Well that's just one year's salary. You can pay that mofo off!
What could go wrong, eh? Everyone gets a free house; is there a downside?
Meanwhile you hear more and more about these people who own one Mercedes and one Bitcoin. Who the fuck are these people and why are they so goddamn cheerful?
And finally, do they still teach scientific notation in public schools?
