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> If asset prices do not decrease in a rising rate environment, then inflation cannot be controlled the asset price could remain stable, if the jobs that servi
by chii 4y ago
> If asset prices do not decrease in a rising rate environment, then inflation cannot be controlled
the asset price could remain stable, if the jobs that service those mortgages aren't removed.
Inflation of consumables can be controlled, but it is painful. Inflation of assets should not be controlled, even if it could - asset growth represents the wealth of those who invested in it. If this growth is artificially suppressed, millions would lose their retirement funds, and become poorer in the future, and for what?
- sjfidsfkds 4y agoInflation means there is too much demand in the economy compared to the supply (of goods and labor). Decreased retirement funds are one mechanism by which asset price reductions can lead to people consuming less and working more. More broadly there’s a wealth effect that determines how much people spend.
- pishpash 4y agoNothing is in a vacuum and wealth only has meaning relatively. As much as it may be a shock to hear, wealth is but a social contract on how much it gets you in exchange. There is no absolute answer on that and it's subject to negotiation. If you are in charge of distributing wealth (which is what this is, let's be honest), higher prices means current asset holders are favored over future asset holders who want to purchase assets. Why should those who invested in a bubble during the loosest money era be entitled to exchange it for the same amount of labor or goods of those who built wealth during austerity?