> How do you distinguish between true value creation and simple asset inflation? Low interest rates cause soaring asset prices, which can create an illusion of

> How do you distinguish between true value creation and simple asset inflation? Low interest rates cause soaring asset prices, which can create an illusion of "value creation", but I don't see it actually increasing the value much. This is exactly the problem with inflation. It creates all sorts of distortion of what people value, by fucking with our concept of what cash is worth. Do keep in mind that "value" is not some sort of objective thing. Everyone values things differently. Someone who is allergic to peanuts, may have a negative value for peanuts, someone who thinks peanuts will give them immortality might have an unreasonably high value for peanuts. And capitalism just doesn't care. Live and let live. Important thing is that it's not just true for things, it's also true for money. (note that value is not price, though often times it's rhetorically convenient to conflate the two). So the phrase "value creation" does not refer to some sort of intrinsic improvement in any given thing. What it means is, say the peanut allergy guy comes into posession of peanuts somehow, and he exchanges to peanut immortality gal for a wad of cash. This created VALUE for the allergy guy because he values cash more than the peanuts, and created value for immortality gal because she values peanuts more than (that amount) of cash. Moreover, using amount denominated in money to track value creation is dangerous (note I didn't say necessarily wrong, I said dangerous), because it assumes that money is equally valued by everyone. That's not really true, and we probably shouldn't, in policy, implicitly judge people in one way or another for having different values for money.