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And as we saw, despite claims from worry warts like Ron Paul, and from gold advertisers playing pump 'n dump, there was no inflation in the US to speak of. Thr

And as we saw, despite claims from worry warts like Ron Paul, and from gold advertisers playing pump 'n dump, there was no inflation in the US to speak of. Throughout The Great Recession government bond prices remained high - which allowed the US to continue borrowing & spending without being reigned in by financial markets.

pishpash 9y ago
There is an enormous amount of asset inflation, and future inflation is just "stored" there.
- AlexCoventry 9y ago
  Do you mean inflation in financial instruments and other investment vehicles?
- jasode 9y ago
  Exactly. The following phenomenon are all related: - the record-breaking auction prices of art pieces (Picasso, etc) at Christie's & Sothebys - the vast pools of money chasing late-stage tech startups driving up late-round valuations, - the increase in student loans for college students driving up tuition prices outpacing "official" inflation metric There's also "shrinkflation"[1] which is a form of inflation but does not count in CPI calculations. Also, many homeowners complained that their house insurance went up 20+ percent even though they don't live in a hurricane or flood zone. The pundits saying there's no inflation seem to only look at the flawed CPI statistic. If the Fed's quantitative easing creates $4 trillion in new money, that has to show up somewhere in the economy. (Unless _everybody_ coordinates to hide all $4 trillion in a mattress to negate its effect.) If citizens are seeing a reduction in purchasing power in real terms, you have inflation happening. [1] https://en.wikipedia.org/wiki/Shrinkflation https://en.wikipedia.org/wiki/Shrinkflation
  - alethiophile 9y ago
    See also, the related phenomenon of a company introducing a new, notionally superior product line at a higher price than the original, then somewhat later discontinuing the original, while never reducing the price of the new one. This results in the cheapest available product becoming more expensive, without this appearing in inflation statistics. I have the most exposure to this in the realm of medical products. A family member has Type I diabetes, and so must continually buy insulin and blood testing supplies as an everyday expense; several times, he has been forced to switch products (between varieties of insulin, from purely chemical test strips to ones with an electronic reader, &c.) by the discontinuance of the older product. The new one is always much more expensive, and never reduces in price to match the old; this has resulted in a significant increase in his expenses for these supplies, despite nothing ever occurring that would appear in inflation statistics.
    - jasode 9y ago
      >, the related phenomenon of a company introducing a new, notionally superior product line at a higher price than the original, Yes, and airlines charging a new extra fees for baggage when they used to be included in the base airfare is another form of inflation. This "shrouded pricing" is used to hide price increases in various industries.
      - jacquesm 9y ago
        This is strongly related to 'unbundling'.
    - mobiletelephone 9y ago
      Another example: products get slightly smaller but remain he same price. Often packaging can hide the change.
  - jazzyk 9y ago
    Correct, but the pundits are also correct, because there are really two different economies in the US: - the "Walmart" economy - no inflation there, regular Joe Schmoes have not had a real raise in years - the "Hamptons" economy - lots of money sloshing around (thanks to the Fed), bankers, etc spending big on luxury real-estate, etc.
    - ComputerGuru 9y ago
      Inflation is measured more by price than income. The salaries being stagnant at Walmart and co don't really have much say in the CPI.
  - jacquesm 9y ago
    Don't discount real estate's potential to be a sink of excess capital virtually without limit.
    - anigbrowl 9y ago
      I'm not so sure about that. Of course they're not making land any more, but as the price of real estate increases so do rents and economic dislocation, so every rise in the cost of real estate comes with a reduction in disposable income.
  - nradov 9y ago
    False. Shrinkflation is counted in CPI calculations.

pishpash 9y ago

There is an enormous amount of asset inflation, and future inflation is just "stored" there.

AlexCoventry 9y ago
Do you mean inflation in financial instruments and other investment vehicles?
jasode 9y ago
Exactly. The following phenomenon are all related: - the record-breaking auction prices of art pieces (Picasso, etc) at Christie's & Sothebys - the vast pools of money chasing late-stage tech startups driving up late-round valuations, - the increase in student loans for college students driving up tuition prices outpacing "official" inflation metric There's also "shrinkflation"[1] which is a form of inflation but does not count in CPI calculations. Also, many homeowners complained that their house insurance went up 20+ percent even though they don't live in a hurricane or flood zone. The pundits saying there's no inflation seem to only look at the flawed CPI statistic. If the Fed's quantitative easing creates $4 trillion in new money, that has to show up somewhere in the economy. (Unless _everybody_ coordinates to hide all $4 trillion in a mattress to negate its effect.) If citizens are seeing a reduction in purchasing power in real terms, you have inflation happening. [1] https://en.wikipedia.org/wiki/Shrinkflation https://en.wikipedia.org/wiki/Shrinkflation
- alethiophile 9y ago
  See also, the related phenomenon of a company introducing a new, notionally superior product line at a higher price than the original, then somewhat later discontinuing the original, while never reducing the price of the new one. This results in the cheapest available product becoming more expensive, without this appearing in inflation statistics. I have the most exposure to this in the realm of medical products. A family member has Type I diabetes, and so must continually buy insulin and blood testing supplies as an everyday expense; several times, he has been forced to switch products (between varieties of insulin, from purely chemical test strips to ones with an electronic reader, &c.) by the discontinuance of the older product. The new one is always much more expensive, and never reduces in price to match the old; this has resulted in a significant increase in his expenses for these supplies, despite nothing ever occurring that would appear in inflation statistics.
  - jasode 9y ago
    >, the related phenomenon of a company introducing a new, notionally superior product line at a higher price than the original, Yes, and airlines charging a new extra fees for baggage when they used to be included in the base airfare is another form of inflation. This "shrouded pricing" is used to hide price increases in various industries.
    - jacquesm 9y ago
      This is strongly related to 'unbundling'.
  - mobiletelephone 9y ago
    Another example: products get slightly smaller but remain he same price. Often packaging can hide the change.
- jazzyk 9y ago
  Correct, but the pundits are also correct, because there are really two different economies in the US: - the "Walmart" economy - no inflation there, regular Joe Schmoes have not had a real raise in years - the "Hamptons" economy - lots of money sloshing around (thanks to the Fed), bankers, etc spending big on luxury real-estate, etc.
  - ComputerGuru 9y ago
    Inflation is measured more by price than income. The salaries being stagnant at Walmart and co don't really have much say in the CPI.
- jacquesm 9y ago
  Don't discount real estate's potential to be a sink of excess capital virtually without limit.
  - anigbrowl 9y ago
    I'm not so sure about that. Of course they're not making land any more, but as the price of real estate increases so do rents and economic dislocation, so every rise in the cost of real estate comes with a reduction in disposable income.
- nradov 9y ago
  False. Shrinkflation is counted in CPI calculations.