As discussed elsewhere it has the effect of allocating the other (real) inflation between powered-up and non-powered-up investors such that powered up investors pay a bit less and non-powered up investors pay a bit more.

It has an economic effect. We could argue whether that effect is desirable or not. I would probably be in favor of simply eliminating it, but not in shifting it out to 'real' inflation, which would have the effect of increasing the latter.