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So my pet theory is: All conventional wisdom on inflation deals with the assumption that all money is equal. But we've come into an unprecedented situation whe

So my pet theory is: All conventional wisdom on inflation deals with the assumption that all money is equal. But we've come into an unprecedented situation where a lower and lower share of overall money is actually used in transit instead of being parked. You don't really notice all that invisible money, because in practice, inflation is really only tangible on the circulating part, that's why the overall supply increase doesn't _feel_ like inflation. That circulating part of money already has shrunk further and further, now probably down to single digit percents. What will happen if a big fish actually tries to cash in a large chunk of that invisible money for goods and services? No clue. We're in completely uncharted territory.

N1H1L 5y ago
Economics does take that into account. Look up velocity of money. One of the easiest ways to increase money velocity is to have progressive taxation BTW
pydry 5y ago
Why would there be a major cash in event? If history is any guide this wealth will be kept locked up and passed down to the next generation in perpetuity. And so on and so on, until a war destroys the capital base, kicking off a new cycle, or a revolution takes place (exceedingly unlikely, despite how much people talk about it). People talk about this level of wealth inequality as if it's unusual and destabilizing, but the gini coefficient of the Roman empire was frequently higher and it lasted for well over a thousand years. Indeed, I think it's quite likely that we're simply nearing the end of an anomalous period of history starting with WW2 where movement between social classes was unrestricted.