Cooprider14: Your idea of inflation is that every price goes up except salaries. That may be true in the short term, but once inflation gets much higher than the 3%-6% range, nominal salary increases are the norm.

Were you around in the 70s? Once the expectation of future price increases gets generalized, nominal wages go up.

High nominal incomes/salaries are not a cause for celebration in an inflationary environment: sure, an engineer who used to make $80K in 2005 may make $120K in 2011, but that’s of little or no help if food, clothing, rents, insurance premiums, etc., are also 50% higher.

A $400K house in the year 2001 got inflated to $800K in 2005 b/c of the bubble. By 2008 that house is still ridiculously overpriced at $620K. However, if inflation shoots up, by the year 2011 $620K may not be overpriced any more if gasoline is $5.00 a gallon, milk is $6.50/gallon, fish tacos are $10 and a cheap shirt is $35 (and not $20 as in 2005).