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In addition to the consumer price index being on target, the producer price index is also at 2%[1]. In general low interest rates do mean higher prices for inv

In addition to the consumer price index being on target, the producer price index is also at 2%[1]. In general low interest rates do mean higher prices for investments but when Amazon's market cap goes from a hundred billion to two hundred billion that doesn't mean that it has absorbed a hundred billion dollars from the economy. The buyers of the stock lose money but the sellers of the stock gain money and it isn't removed from the larger economy. [1]https://www.marketwatch.com/story/wholesale-prices-barely-rise-in-may-ppi-shows-and-inflationary-pressures-muted-2019-06-11 https://www.marketwatch.com/story/wholesale-prices-barely-ri...

roenxi 7y ago
The producer price index should be roughly capped by consumer prices, if it were rising faster than CPI mid-long term then all the businesses would obviously go bust. The money is going into financial assets. > when Amazon's market cap goes from a hundred billion to two hundred billion that doesn't mean that it has absorbed a hundred billion dollars from the economy Totally on board with that, but it does mean ~100 billion dollars of control have been transferred from persons unknown to someone who knows how to borrow money; because lending is the mechanism for creating new money. I consider myself an asset owner. This is all great for me short term, I'm getting wealthier relative to many of my peers because I own assets and they do not. I'm just completely mystified why anyone thinks this is a good outcome, because obviously in the long term economic control is going to transfer from capitalists who know how to make things work to financiers who found their way in front of the money hose. I don't want the reward structure to favour giving control to entities who borrow vast sums of money, I want the reward structure to favour people who manage capital responsibly. The current reward structure is obviously going to cause crises and crashes. And I don't see it as responsible for creating real wealth, so I don't think it is a good system. I mean, I understand why we do it. But that understanding hinges on the assumption that people don't trust the ability of numbers and incentives to predict the future.

roenxi 7y ago

The producer price index should be roughly capped by consumer prices, if it were rising faster than CPI mid-long term then all the businesses would obviously go bust. The money is going into financial assets. > when Amazon's market cap goes from a hundred billion to two hundred billion that doesn't mean that it has absorbed a hundred billion dollars from the economy Totally on board with that, but it does mean ~100 billion dollars of control have been transferred from persons unknown to someone who knows how to borrow money; because lending is the mechanism for creating new money. I consider myself an asset owner. This is all great for me short term, I'm getting wealthier relative to many of my peers because I own assets and they do not. I'm just completely mystified why anyone thinks this is a good outcome, because obviously in the long term economic control is going to transfer from capitalists who know how to make things work to financiers who found their way in front of the money hose. I don't want the reward structure to favour giving control to entities who borrow vast sums of money, I want the reward structure to favour people who manage capital responsibly. The current reward structure is obviously going to cause crises and crashes. And I don't see it as responsible for creating real wealth, so I don't think it is a good system. I mean, I understand why we do it. But that understanding hinges on the assumption that people don't trust the ability of numbers and incentives to predict the future.