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inflation would not be a problem if wages went up as well.
And then you think about it and you're like "If inflation goes up X% and all wages need to go up the same amount in order for people to keep up, why is inflation necessary again?"
There's an economic argument for steady inflation as a counterweight against compound interest and debt.
Inflation creates an economic incentive for productive investment. I'd rather own a $20 machine that generates $1/year of new valuable goods/services than a $20 bill in a vault, because the goods/services will inflate in value while the cash will not. And if I don't have $20, I'll be willing to borrow it if the value of the debt declines over time while the value of my annual production rises.
When wages match inflation rates and surplus cash can be productively invested, each new participant in the economy has an opportunity to grow their personal fortunes over time.
However, when wages lag inflation, only the early adopters get to see the benefits of new productivity. Old money compounds faster than new wage earn investment enters the pool. And eventually you get a Berkshire Hathaway / Goldman Sachs / Blackrock / Citadel style superfund that owns a significant percentage of virtually everything.
The same thing happens in deflation. People with access to cheap credit or liquid currency (banks, mostly) can horde capital while wages contract. And then, again, you end up with an economy in which a handful of feudal aristocrats hold the titles on all the properties.
But when wages grow faster than inflation, you see the reverse. Earners can buy into property at a steady discount, while investment of new properties promise higher yields than simply sitting on old capital stock indefinitely.
There's an economist named Thomas Piketty who breaks it down thoroughly in Capitalism in the 21st Century, detailing why you want the economic growth of your national economy (G) to exceed the rate of return on investment (R) if you care about reducing overall economic inequality.
That's fine and all, and I wish it were so. We just live in an economic reality that has been steadily increasing the inequality with consequences such as unaffordable housing, healthcare, and education.
Inflating the debt away is advantageous only if the TCO keeps up. In this case the wealthy get the lion's share of inflationary increases while many people only see modest cost of living offsets that for two years fell behind inflation. We seldom see years where employers give a cost of living adjustment above the current inflationary rate beyond the current year index, to make up for prior years where they didn't.
E.g. I see a job posting from 2007 that advertised 65k/year, in the same company with the same role they currently only compensate that same role at about 73k. $65k from 2007 equates to approximately $97k in today's money. If things were truly equitable and commensurate, and I realize this is an isolated data sample, but it appears to be a common trend across the country.
For the numbers, that's $24k of income that would be really great to have today.
I absolutely agree. And I'm willing to bet that the profit at that same firm has only grown over time. So here we have a classic case in which profit margins have outpaced the real volume growth at this firm, making it less efficient and more expensive to operate as a result.
Oh sure. Numbers get even worse when you consider how that $24k of income is buying even less housing, health care, and utilities than it did in 2007, and for all the same reasons.
As profit margin eclipses real growth, the real economy is subsumed by fictitious assets.