Capital in the Twenty-First Century

by Thomas Piketty

Make no mistake: I am obviously not denying that inflation can in some cases have real effects on wealth, the return on wealth, and the distribution of wealth. The effect, however, is largely one of redistributing wealth among asset categories rather than a long-term structural effect. For example, I showed earlier that inflation played a central role in virtually wiping out the value of public debt in the rich countries in the wake of the two world wars. But when inflation remains high for a considerable period of time, investors will try to protect themselves by investing in real assets. There is every reason to believe that the largest fortunes are often those that are best indexed and most diversified over the long run, while smaller fortunes—typically checking or savings accounts—are the most seriously affected by inflation.