6 ms·

Definitely an interesting read but I'm surprised he doesn't even approach the notion of asset price inflation being the primary form of inflation from all this

Definitely an interesting read but I'm surprised he doesn't even approach the notion of asset price inflation being the primary form of inflation from all this money printing that's been going on.

alejohausner 5y ago
Oddly enough, gold is one asset whose price is flat to down over the past few years. This ain't the usual kind of inflation, where people start to buy gold because too much money is being printed. These days gold prices seem to be driven by fear: gold tends to spike up on market crashes, as a flight to quality. I think people aren't afraid enough yet; they're still feeling greedy.
- Guest42 5y ago
  I think crypto took a lot of money that would've gone to commodities, along with the speculative money.
  - zivkovicp 5y ago
    I'm inclined to agree with this.
- Grimburger 5y ago
  The problem with investing in gold is that there's actually a lot of it to dig up, it's just expensive to do so, there's always a lot of natural ceiling pressure on the market, if the price goes up enough we'll be extracting trace amounts from seawater.
boppo1 5y ago
I don't think most people do. For the howver many years of QE I remember that critics were met with finger-pointing to flat PCI and CPE. Few outside of finance seem to recognize summary P/E growth as inflation.
- dragonwriter 5y ago
  > Few outside of finance seem to recognize summary P/E growth as inflation. Because it's not “inflation” as that term is used without modifiers, which is increase in the nominal price of final consumer goods and services. Asset inflation is a different thing than general inflation and it makes no sense to conflate them.
  - hedora 5y ago
    Agreed, but, in fairness, the inflation numbers that are currently being used by the press explicitly exclude the real cost of housing, which is an asset that has definitely increased in nominal price. Instead, they’re using “non market rent” or some such nonsense to estimate housing costs. Measured as it was then, our current inflation rates are significantly higher than they were at the end of the seventies, even though they’re reported as being lower. Inflation has been redefined to exclude asset prices, and that directly broke its traditional relationship with the actual cost of living. Given that, I’d argue it’s fair game to point at asset prices as evidence of out of control inflation. This situation is textbook Orwellian Doublespeak: Rational conversations about inflation are now nearly impossible to have, since all the useful vocabulary has been sabotaged. Instead of talking about inflation, we get tripped up on vocabulary and semantics.
    - dragonwriter 5y ago
      > housing, which is an asset No, it's not. Residential real estate is an asset, housing is service. Imputed rent (the cost of rent forgone as a result of choosing to reside in the property you own rather than renting it out) is the cost (the money given up in exchange for) that service, for homeowners choosing to reside in the home they own. > Inflation has been redefined to exclude asset prices, Inflation has generally excluded asset prices for the entire 102 years for which the US has measured it, as the fundamental concept has always been measuring final consumer goods and services prices, not assets. The exception, for a 30 year period in the middle (starting in 1953 and abandoned in 1983) was homeownership costs, which was a clumsy way of dealing with the fact that only counting direct rent, as had been done from 1919, was completely of ignoring housing costs for the growing group of homeowners. The switch to the owners equivalent rent method in 1983 returned the measure of inflation to it's core purpose, while not excluding homeowners actual costs of housing.
smat 5y ago
I think he does though. He mentions that many assets are priced on a level that is only realistic if interest rates remain on the current level for decades.

Definitely an interesting read but I'm surprised he doesn't even approach the notion of asset price inflation being the primary form of inflation from all this money printing that's been going on.

alejohausner 5y ago

Oddly enough, gold is one asset whose price is flat to down over the past few years. This ain't the usual kind of inflation, where people start to buy gold because too much money is being printed. These days gold prices seem to be driven by fear: gold tends to spike up on market crashes, as a flight to quality. I think people aren't afraid enough yet; they're still feeling greedy.

Guest42 5y ago
I think crypto took a lot of money that would've gone to commodities, along with the speculative money.
- zivkovicp 5y ago
  I'm inclined to agree with this.
Grimburger 5y ago
The problem with investing in gold is that there's actually a lot of it to dig up, it's just expensive to do so, there's always a lot of natural ceiling pressure on the market, if the price goes up enough we'll be extracting trace amounts from seawater.

boppo1 5y ago

I don't think most people do. For the howver many years of QE I remember that critics were met with finger-pointing to flat PCI and CPE. Few outside of finance seem to recognize summary P/E growth as inflation.

dragonwriter 5y ago
> Few outside of finance seem to recognize summary P/E growth as inflation. Because it's not “inflation” as that term is used without modifiers, which is increase in the nominal price of final consumer goods and services. Asset inflation is a different thing than general inflation and it makes no sense to conflate them.
- hedora 5y ago
  Agreed, but, in fairness, the inflation numbers that are currently being used by the press explicitly exclude the real cost of housing, which is an asset that has definitely increased in nominal price. Instead, they’re using “non market rent” or some such nonsense to estimate housing costs. Measured as it was then, our current inflation rates are significantly higher than they were at the end of the seventies, even though they’re reported as being lower. Inflation has been redefined to exclude asset prices, and that directly broke its traditional relationship with the actual cost of living. Given that, I’d argue it’s fair game to point at asset prices as evidence of out of control inflation. This situation is textbook Orwellian Doublespeak: Rational conversations about inflation are now nearly impossible to have, since all the useful vocabulary has been sabotaged. Instead of talking about inflation, we get tripped up on vocabulary and semantics.
  - dragonwriter 5y ago
    > housing, which is an asset No, it's not. Residential real estate is an asset, housing is service. Imputed rent (the cost of rent forgone as a result of choosing to reside in the property you own rather than renting it out) is the cost (the money given up in exchange for) that service, for homeowners choosing to reside in the home they own. > Inflation has been redefined to exclude asset prices, Inflation has generally excluded asset prices for the entire 102 years for which the US has measured it, as the fundamental concept has always been measuring final consumer goods and services prices, not assets. The exception, for a 30 year period in the middle (starting in 1953 and abandoned in 1983) was homeownership costs, which was a clumsy way of dealing with the fact that only counting direct rent, as had been done from 1919, was completely of ignoring housing costs for the growing group of homeowners. The switch to the owners equivalent rent method in 1983 returned the measure of inflation to it's core purpose, while not excluding homeowners actual costs of housing.

smat 5y ago

I think he does though. He mentions that many assets are priced on a level that is only realistic if interest rates remain on the current level for decades.