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But why is general asset inflation problematic? There's a pretty clear reason consumer good inflation is bad. > Asset prices seem to have diverged from the rea
by MiroF 6y ago
But why is general asset inflation problematic? There's a pretty clear reason consumer good inflation is bad.
> Asset prices seem to have diverged from the real economy because assets are primarily funded with debt
Or maybe it's because with rising productivity, capital has become more valuable over time.
- ClumsyPilot 6y agoAsset prices going up ad infinitum means you can no longer afford a place to live. In fact it would mean that the only people who can afford assets are people who already have assets. > "Or maybe it's because with rising productivity, capital has become more valuable over time." We have 0.1% interest rates, negative in some countries, that indicates a glut of capital, not "shortage of valuable capital"
- shajznnckfke 6y agoThe CPI does include rent. And if you check the listings, you won’t find that the money supply multiplying has led to prices multiplying. It seems like it’s just supporting current prices. If prices do start to rise too quickly they can gradually pull back that support.