4 ms·

Not for long.

OscarCunningham 7y ago
What makes you think that? People said similar things in late 2008 when the Fed greatly expanded its balance sheet, and then inflation went negative for the next year.
- lifty 7y ago
  There was great inflation in financial assets, for the whole decade leading up to the current crisis. So there is a good chance the same thing will happen again, now that the central banks have taken the big guns out. I keep hearing that the FED (and other CBs) our out of bullets, but I think they have unlimited bullets. If you inject enough liquidity even a dead horse will bounce back; and for an example of that, you can check out the Venezuelan stock market (https://tradingeconomics.com/venezuela/stock-market https://tradingeconomics.com/venezuela/stock-market).
  - OscarCunningham 7y ago
    So you're making the opposite prediction to the person I originally replied to? Investments will gain value faster than the cost of living?
    - lifty 7y ago
      Inflation is a loaded term, so I replied to mention that asset inflation was high, even though that is not reflected in the reported inflation numbers. As for you second question, I think the answer is yes, because for now I see CBs injecting money through the financial system. If the CBs start handing out checks directly to people, then we might see the CPI going high as well, in a more correlated manner with investments.
  - mindslight 7y ago
    Yeah I really don't get how people can uncritically repeat that inflation is low. There is a massive asset inflation bubble as you've said. And consumer goods should have been naturally going down in price, from all the outsourcing and cost cutting. Instead tons of manufacturing jobs went to Mexico/China, making items of lower quality (eg disposable rather than repairable), while all the purchasing power benefit of this was erased by policy. The price inflation is clear when you compare domestically produced goods, good quality tools, non-GMO produce, food from local farms, commercial equipment, etc - quality we used to take for granted now costs a hefty premium. The Fed kept interest rates artificially low for the past decade such that everyone could dance around a stock market bubble, and now they've backed themselves into a corner. Rather than let interest rates naturally rise as the bond market is currently signalling, they're making further moves to suppress them. Fundamentally they're continuing to undermine the distributed decentralized economy, and reshaping it into a centrally planned one revolving around who gets access to newly created money.

Not for long.

What makes you think that? People said similar things in late 2008 when the Fed greatly expanded its balance sheet, and then inflation went negative for the next year.

lifty 7y ago
There was great inflation in financial assets, for the whole decade leading up to the current crisis. So there is a good chance the same thing will happen again, now that the central banks have taken the big guns out. I keep hearing that the FED (and other CBs) our out of bullets, but I think they have unlimited bullets. If you inject enough liquidity even a dead horse will bounce back; and for an example of that, you can check out the Venezuelan stock market (https://tradingeconomics.com/venezuela/stock-market https://tradingeconomics.com/venezuela/stock-market).
- OscarCunningham 7y ago
  So you're making the opposite prediction to the person I originally replied to? Investments will gain value faster than the cost of living?
  - lifty 7y ago
    Inflation is a loaded term, so I replied to mention that asset inflation was high, even though that is not reflected in the reported inflation numbers. As for you second question, I think the answer is yes, because for now I see CBs injecting money through the financial system. If the CBs start handing out checks directly to people, then we might see the CPI going high as well, in a more correlated manner with investments.
- mindslight 7y ago
  Yeah I really don't get how people can uncritically repeat that inflation is low. There is a massive asset inflation bubble as you've said. And consumer goods should have been naturally going down in price, from all the outsourcing and cost cutting. Instead tons of manufacturing jobs went to Mexico/China, making items of lower quality (eg disposable rather than repairable), while all the purchasing power benefit of this was erased by policy. The price inflation is clear when you compare domestically produced goods, good quality tools, non-GMO produce, food from local farms, commercial equipment, etc - quality we used to take for granted now costs a hefty premium. The Fed kept interest rates artificially low for the past decade such that everyone could dance around a stock market bubble, and now they've backed themselves into a corner. Rather than let interest rates naturally rise as the bond market is currently signalling, they're making further moves to suppress them. Fundamentally they're continuing to undermine the distributed decentralized economy, and reshaping it into a centrally planned one revolving around who gets access to newly created money.