Economist Kenneth Rogoff, no liberal, is arguing for a higher inflation target:
If the Federal Reserve raises its target inflation rate by several percentage points - up from around 2 percent, where it’s been for the past decade, to somewhere in the neighborhood of 4 to 6 percent - and injects new money into the economy until it gets there, then debtors will get some relief and the wheels of the economy will once again start to turn.
One of the biggest propaganda victories of the 20th century was convincing the middle class that inflation is the worst possible thing that can happen to them. High inflation sucks, to be sure, but people tend to forget that inflation also reduces the real value of one's debts.
We also hear a lot about the "elderly who live on a fixed income." Except that most elderly people depend on Social Security for the bulk of their income, and SS is inflation-protected via COLAs.
However, there is one class of people for whom inflation is in every and all cases an unmitigated disaster: bondholders, a.k.a. the owning class. These are the folks who make money from money. As Rogoff, an inflation hawk, notes, tolerating higher inflation will result in a transfer of income from financiers to workers, (or as he puts it in less class-war terms: from creditors to debtors). That's exactly right. All economic policy is a question of the distribution of income.
Cross-posted at Cheeze Blog.