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Inflation distorts relative prices. Is the inflation general or specific? This also leads to menu-costs- the reprinting of prices. But societies have addressed this problem. Lastly, inflation creates some uncertainty in decision-making — investments and retirements. Who benefits from unanticipated inflation (winners)? Borrowers- anyone who owes money, which is the vast majority of Americans, mature thumbnail galleries benefits because they mature thumbnail galleries are paying off loans in devalued dollars. In other words, earnings increase with inflation, while loan obligations are usually specified in mature thumbnail galleries the past. Those with price-setting power- they can alter their prices quicker than other and benefit. Firms- inflation makes it easier for firms to raise their prices and validate their past expenses/debts. Why does the Fed usually raise interest rates?
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