Let me talk macro down to micro for the sake of arguement for a second so I can talk to my crazy in-laws this holiday season. Let's say you buy a house, 30 year fixed mortgage, $1000 a month payment, and you bring home $2000 a month at a good steady job with COLA adjustments that keep pace with inflation. You spend the whole remainder of your paycheck after the mortgage on food, entertainment, and whatnot. Now if the gov't engineers a nice steady 10% inflation per year, you are going to come out great in the end. Of that $2000 you make per month in the first year, $1000 goes to the house payment and the other $1000 goes to the rest of your expenses. The 2nd year, you get a 10% raise to $2200. Your house payment doesn't go up because you were smart and got a fixed mortgage, so you are left with $1200 after you send that check. Now the rest of everything went up 10% (or $100), to $1100. You buy all the same stuff and have $100 left at the end of the month, to spend or save. Now we can infer a few things: Real estate (or anything else with actual intrinsic value) is an excellent investment. It's a great way for the gov't to raise taxes without raising taxes. Your rising paycheck will continue to bump you into a higher tax bracket. You're not just paying 10% more in tax because your income went up 10%. You're paying 11% more because of the progressive income tax rates in the US. With the same scenario, it becomes easier for the gov't to pay off it's long term obligations (to China, et al.) with these cheaper, inflated dollars. My big question is, what is China going to do about it?