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The inflation in asset values (e.g. equities / real estate / gold). People incorrectly assume inflation means "the price of everything goes up". The problem wo
by Rury 6y ago
The inflation in asset values (e.g. equities / real estate / gold).
People incorrectly assume inflation means "the price of everything goes up". The problem word here being everything.
Why? Well because prices aren't merely dictated by supply, but rather supply & demand. Simply comparing inflated money supply to the good supply is naïve, as it ignores to factor in the demand for different goods.
As so, for a dumb example, it's entirely possible to have inflated stock prices but not see inflated sock prices, if all the extra money is chasing stocks, and not socks...
- layoric 6y agoThis makes a lot of sense, thanks for the explanation!
- UncleEntity 6y ago> People incorrectly assume inflation means "the price of everything goes up". Because they've spent a few generations making sure people don't understand the difference between price inflation and monetary inflation by using the two interchangeably. This whole sub-thread is a perfect example, "the Fed has been printing money like there's no tomorrow but, look, there's only 0.44% inflation".