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Or maybe conditions in the world have changed that make assets more valuable... If the currency was "debased" it would show up everywhere.
by MiroF 6y ago
Or maybe conditions in the world have changed that make assets more valuable... If the currency was "debased" it would show up everywhere.
- Rury 6y ago>If the currency was "debased" it would show up everywhere Not necessarily. Prices are dictated by supply/demand - and different goods have different amounts of supply/demand. As so, it's theoretically possible to continually print money into existence, and use it all to buy Tesla stock, until there are no more shares of Tesla stock left for sale. Under such a hypothetical scenario, INFLATION would only happen in Tesla's Stock price - as all this extra money spurred DEMAND for Tesla stock and wasn't accompanied by an increase in SUPPLY of Tesla stock. However, the price of shirts would remain the same - as none of this money changed the SUPPLY/DEMAND of shirts. As so - inflation doesn't necessarily have to happen everywhere. Note, this is mainly why CPI is a bad indicator of inflation - as it doesn't track the inflation that is happening around us - inflation in assets like stocks / real estate. This also explains why prices of real estate in certain cities are way pricier than others, and also why the stock market can be way overvalued when the economy is doing bad.