3 ms·

This seems obvious to me as the wealthy have ways of shielding their wealth through investment that will inflate along with the general price level. I have a n

by bko 5y ago

This seems obvious to me as the wealthy have ways of shielding their wealth through investment that will inflate along with the general price level. I have a new theory that the difference between 1970s style inflation in the US and what we would see today is that the main thing that would be inflated would be stock valuations, which also favor the wealthy. As recently as the 90s [0], slightly more than 30% of Americans owned stocks, while now that number is over 50%. I couldn't find data going back earlier , but I wouldn't be surprised if only 10% of Americans owned stocks in the 1970s. This was before ETFs and the E-Trade revolution. In the 1970s if people saw a windfall they would likely buy more consumer goods, driving up the prices. But now they will likely just but financial assets, everything from Bitcoin to GameStop to ETFs. So we're seeing inflation in asset prices, but we don't consider that inflation since its associated with a booming healthy economy. It's unfortunate that the Fed officials don't see run-away asset price inflation as a consequence of growth in the monetary base [0] https://qz.com/1700958/more-americans-own-stock-than-ever/ https://qz.com/1700958/more-americans-own-stock-than-ever/

atatatat 5y ago
They have lots of assets, seems they don't have incentive to understand it.
URSpider94 5y ago
Inflation is, by definition, an increase in price of goods. Increasing stock prices are not inflation. In fact, in an inflationary market, stocks usually suffer because people make more money by investing in loans and bonds, which will pay higher interest rates. Money flows out of stocks and into bonds. You can’t just redefine inflation to say it means inflation of stock prices.
imtringued 5y ago
>This seems obvious to me as the wealthy have ways of shielding their wealth through investment that will inflate along with the general price level. I see this repeated so often but people fail to grasp the nuance. If you buy stocks, someone else gets your money and they have the inflation problem. If that someone else is part of the middle class or below then you already won because rich people sent their money to less rich people. If that someone is another rich person, then that person will be stuck with the inflation problem. The only way you can avoid the inflation problem by buying stocks is if the company whose stock you are buying from sells you the stock, and then uses the money to do business, which usually involves hiring people and most people care more about having good jobs (i.e. a 20% raise), than seeing the rich gain 4% on their portfolio.

by bko 5y ago

atatatat 5y ago

They have lots of assets, seems they don't have incentive to understand it.

URSpider94 5y ago

Inflation is, by definition, an increase in price of goods. Increasing stock prices are not inflation. In fact, in an inflationary market, stocks usually suffer because people make more money by investing in loans and bonds, which will pay higher interest rates. Money flows out of stocks and into bonds. You can’t just redefine inflation to say it means inflation of stock prices.

imtringued 5y ago

>This seems obvious to me as the wealthy have ways of shielding their wealth through investment that will inflate along with the general price level. I see this repeated so often but people fail to grasp the nuance. If you buy stocks, someone else gets your money and they have the inflation problem. If that someone else is part of the middle class or below then you already won because rich people sent their money to less rich people. If that someone is another rich person, then that person will be stuck with the inflation problem. The only way you can avoid the inflation problem by buying stocks is if the company whose stock you are buying from sells you the stock, and then uses the money to do business, which usually involves hiring people and most people care more about having good jobs (i.e. a 20% raise), than seeing the rich gain 4% on their portfolio.