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I’ve got a bit of a hypothesis about why we’ve seen a decade+ of near-0 rates with virtually no inflation. It’s all about the wealth disparity. The wealthiest
by the_gastropod 6y ago
I’ve got a bit of a hypothesis about why we’ve seen a decade+ of near-0 rates with virtually no inflation. It’s all about the wealth disparity.
The wealthiest already have huge amounts of money saved and invested in the markets. Adding to the money supply primarily benefits those who already have the most money. So something like 80% of new money winds up in the hands of the top 1%, who save it, consume no extra (aside from stocks), and have no impact on the basket of goods.
I think this also partly explains the high P/E ratios we’ve seen over the past decade+.
Nothing in economics is that simple. But this feels reasonable to me. Anything I’m missing?
- leetcrew 6y agothe basic cause of inflation is more money chasing the same amount of real goods/services. so it stands to reason that which goods/services inflate depend on who is getting the new dollars. of course, things are always more complicated in macro.
- xikrib 6y agoI'm by no means an economist, but I think the same. I understand inflation to be the shifting reference point of purchasing power per unit of currency. So without an increase in pay for the lower class in the U.S., it actually prevents prices from moving up.
- mixmastamyk 6y agoThere’s been plenty of inflation. Lunch and rent have doubled here in ~15 years. Education and healthcare are up much more than that. Sure consumer items get cheaper but it is small consolation.
- rrrrrrrrrrrryan 6y agoGiant megacorps that pay their workers minimum wage (i.e. Walmart) have done a tremendous amount to put downward pressure on inflation as well.