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Inflation over half a lifetime is not really relevant. For investors, large savings should be in productive assets (debt or equity), and real rates (on bonds) o

by FabHK 4y ago

Inflation over half a lifetime is not really relevant. For investors, large savings should be in productive assets (debt or equity), and real rates (on bonds) or real returns (on shares) have been positive. For non-investors, real wages are much more important. But even including the high inflation in the 1970s and early 1980s (which Paul Volcker famously vanquished), that period from 1970 to 2020 averages less than 4% inflation a year. The four decades from 1982 to now have been pretty good on the inflation front. Which is much preferable to +20% one year, and deflation another year, as in decades prior.

kragen 4y ago
See https://news.ycombinator.com/item?id=32258546 https://news.ycombinator.com/item?id=32258546 for why 4% inflation over decades is relevant to average people. Dollar inflation over the past year has been I think 9%, higher than at any time since Volcker supposedly vanquished it. It's anybody's guess whether the vanquished inflation will be 0% or 15% over the next year.
- FabHK 4y ago
  Next year will be closer to 0% than 15%, I wager. Let's see. You say inflation is important when: * you get a 30-year mortgage on a house. - true, but more inflation is better for you then. * sign a 99-year lease. - true, but more inflation is better for you then. * save money for retirement 45 years in the future. - that should not be in money, so the level of inflation is not relevant, real returns are (the difference between nominal returns and inflation). * buy a life insurance policy that probably won't pay off for 50 years. - yes indeed. Some of them offer inflation protection. * rent an apartment to someone under rent-control laws that can hold the rent fixed until they die. - yes indeed, good point. Also if you write a mortgage. That does not affect most average consumers, though.
  - kragen 4y ago
    As Retric points out in https://news.ycombinator.com/item?id=32258306 https://news.ycombinator.com/item?id=32258306, every transaction needs both a buyer and a seller to happen, so all of these things do affect most average consumers.

by FabHK 4y ago

kragen 4y ago

See https://news.ycombinator.com/item?id=32258546 https://news.ycombinator.com/item?id=32258546 for why 4% inflation over decades is relevant to average people. Dollar inflation over the past year has been I think 9%, higher than at any time since Volcker supposedly vanquished it. It's anybody's guess whether the vanquished inflation will be 0% or 15% over the next year.

FabHK 4y ago
Next year will be closer to 0% than 15%, I wager. Let's see. You say inflation is important when: * you get a 30-year mortgage on a house. - true, but more inflation is better for you then. * sign a 99-year lease. - true, but more inflation is better for you then. * save money for retirement 45 years in the future. - that should not be in money, so the level of inflation is not relevant, real returns are (the difference between nominal returns and inflation). * buy a life insurance policy that probably won't pay off for 50 years. - yes indeed. Some of them offer inflation protection. * rent an apartment to someone under rent-control laws that can hold the rent fixed until they die. - yes indeed, good point. Also if you write a mortgage. That does not affect most average consumers, though.
- kragen 4y ago
  As Retric points out in https://news.ycombinator.com/item?id=32258306 https://news.ycombinator.com/item?id=32258306, every transaction needs both a buyer and a seller to happen, so all of these things do affect most average consumers.