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>It is wrong only if someone is sitting in cash for long periods of time It's wrong because you don't know ahead of time when assets are going to fall. All we
by benj111 4y ago
>It is wrong only if someone is sitting in cash for long periods of time
It's wrong because you don't know ahead of time when assets are going to fall.
All we know in that the long term inflation will average out to X and stock price growth will average > X, and that inflation will erode the value of cash.
Someone with a million dollars in 1900 was very wealthy. Do you think their family that kept all their wealth in cash is still wealthy? No.
- voisin 4y agoI am not suggesting anyone can judge ahead of time when assets are going to fall (though there are certainly indicators). I am stating that CPI inflation is not a “tax” on the cash held by the wealthy. It isn’t relevant. Their “basket of goods” purchased differs dramatically from what CPI measures and largely includes financial assets which have seen deflation. This is objectively a “cash is king” situation despite inflation running hot.
- benj111 4y agoWhat wealth do you think you needed to hold to be in the 1% 100 years ago? Can we agree that it is a lot less than today? The 1% back then didn't have to worry about the price of milk back then either. They still have to worry about inflation though, because if they dont.if their wealth doesn't keep up with inflation they are getting less wealthy. If you have 100 million today you can't just sit back and not worry about your family ever working again, because eventually a house will cost 100 million. Then the car will, then eventually the milk will too. If you have 100 million in the bank and a pint of milk costs 100 million you are no longer wealthy, it doesn't matter what basket of goods they buy.