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He is referring to QE not causing inflation. The truth is that it did cause inflation, but in asset prices not consumer goods.
by corporate_shi11 7y ago
He is referring to QE not causing inflation. The truth is that it did cause inflation, but in asset prices not consumer goods.
- bildung 7y agoBut gains in asset prices are not inflation. Inflation is per definition the rise of prices in consumer goods.
- corporate_shi11 7y agoThe CPI inflation metric certainly does exist, but the idea of inflation can apply to any basket of goods.
- bildung 7y agoBut is have to be consumables that are put into the basket. Inflation/deflation doesn't make sense otherwise. If an asset gains in nominal value, that means nominated in that asset, the consumables fell in price, i.e. we observe deflation. If the valuations of housing and stocks rise, this isn't inflation: If I owned them then I can sell these and buy more consumables than before, not less.