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Investopedia is using just one type of inflation there. The truth is, money printing and/or government spending beyond tax revenue is the source of inflation.
by BirAdam 5y ago
Investopedia is using just one type of inflation there.
The truth is, money printing and/or government spending beyond tax revenue is the source of inflation. Every loan a bank makes in fractional reserve systems will be inflationary, and every time money is printed for the government it will be inflationary. Due to the cartel structure of banking in the modern world, the inflation will first hit things like stocks, bonds, land, and other asset classes. It takes time for that inflation to leak into all other things, but it does. As businesses expand, as people move, they are then forced to pay these higher prices, and this drives up the price of goods produced and bought.
- danuker 5y agoIf inflation occurred constantly and smoothly, I would assume the relative prices stay in sync. If you see crazy swings that have occurred during the pandemic - real estate crashing in central business districts while going up for industrial areas [0] - that has nothing to do with government money printing and everything to do with pandemic restrictions. [0] - https://www.pwc.com/us/en/industries/asset-wealth-management/assets/etre2022-graphic-7-commercial-property-price-index.svg https://www.pwc.com/us/en/industries/asset-wealth-management...
- BirAdam 5y agoThat is true. You must keep long term in mind tho. Long term all real estate prices have gone up and up with short term crashes. This is people needing to park money, which will eventually backfire when no one can afford the prices anymore.
- chii 5y ago> will eventually backfire when no one can afford the prices anymore. future people will be expected to be more productive than the past, and thus is able to afford the higher prices - at least that's the bet.