Right. That, of course, is the case with *unexpected* inflation. If inflation is expected and fairly constant, interest rates and long-term plans will incorporate it and people will be back where they started, mostly.
Unexpected inflation makes it easier to buy a house (by paying it off in smaller dollars) and makes it easier to pay off student loans (which is probably going to be a big issue in 10 years, when a lot of the population will be burdened with them).
But it is basically a tax on the *middle* class. The upper class has investments that are inflation-proof. The lower class doesn't have savings. Inflation attacks people who are building up savings and are on the threshold of achieving some financial security.
See Ben Bernanke's book, _Inflation Targeting_. He argues that (1) there should be measurable goals of monetary policy (so we can tell whether policies are successful), and controlling inflation is the most obvious one; (2) deflation is worse than inflation, but neither is very good; (3) to avoid deflation, and for another reason I'll get to, the CPI inflation rate should be about 2.5%.
The other reason is that the Consumer Price Index doesn't take account of shifts in lifestyles. Typically, when some goods become more expensive while others become cheaper, people change what they buy. E.g., we now buy a lot more telecommunications, and less fancy clothing, than people did 50 years ago. The Consumer Price Index does not take these lifestyle shifts into account, at least not very rapidly, so Bernanke argues that 2.5% CPI inflation equals no real rise in cost of living.
This is the first time we've had a Fed chief who came with documentation, so to speak. Prior to taking office, Bernanke had already written books saying exactly what he thought out to be done. I wish all politics worked this way.
ObTelecom: How about an FCC chief?