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Since for moderate levels of inflation (ie low double digits), stocks are inflation proof, if this actually improved competitiveness of American firms, moderate
by xyzzyz 6y ago
Since for moderate levels of inflation (ie low double digits), stocks are inflation proof, if this actually improved competitiveness of American firms, moderate inflation would be a boon for stockholders. Big losers would be wage employers, who’d see their pay not catch up with growth of prices: this is in fact one of the core reasons we even target positive inflation in the first place, to counteract the effect of sticky wages that do not go down when necessary.
- cko 6y agoLow double digits is not considered moderate levels of inflation, if you're talking annually. In the 1970s in the US there were years of double digit inflation and real returns were negative. https://www.multpl.com/s-p-500-historical-prices/table/by-year https://www.multpl.com/s-p-500-historical-prices/table/by-ye...