3 ms·

What is inflation?

• skylan_q 14y ago
  An increase in the money supply in an economy.
• tatsuke95 14y ago
  It's an increase in the price level. Most of the "printed money" that has been generated by the Fed since 2008 has gone to the financial sector shrinking their balance sheets by something like $3.5 TRILLION (as opposed to the Fed expanding the balance sheet by $1.5TT). That's deflationary. The Fed has been on the gas since 2008 to maintain the price level. As far as the bubble in "tech", it's a misallocation of resources. This is what happens in all the hot sectors (Tech in 1999, Housing in 2005, Tulips in 1700). There's a lot of money chasing returns that are no longer availabe. So they look for riskier assets. It's not that there are no valuable tech companies, just that there aren't enough valuable tech companies. But everyone thinks they've got a winner. Bubbles are hard to predict, hard to stop and hard not to participate in. But one thing I learned from the real estate crash: you don't take advice about the bubble from realtors.