8 ms·
Nominal cash flows can be expected to go up in an inflationary environment
by mxschumacher 6y ago
Nominal cash flows can be expected to go up in an inflationary environment
- MiroF 6y agoWe're not in an "inflationary environment."
- mxschumacher 6y agoBut we might enter one...
- MiroF 6y agoWe're not even close to hitting an inflationary environment - we've been consistently under inflationary targets for like a decade.
- mxschumacher 6y ago"it hasn't been true in the recent past, therefore it won't be true in the future" isn't a strong line of argument. Huge QE and extremely low interest rates can of course result in considerable inflation in the coming years.
- MiroF 6y agoNo the argument is that long-term inflation moving averages are determined by what has occurred in the past (because they're moving averages), so a much higher inflation now would actually be good. Due to a collapse in AD, that's not going to happen.