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All assets are denominated in currency, so there exists no "shield" from inflation, except perhaps government-issued bonds that guarantee a return above inflati

by pcrh 1y ago

All assets are denominated in currency, so there exists no "shield" from inflation, except perhaps government-issued bonds that guarantee a return above inflation. Most so-called shields against inflation are investments that yield more than the rate of inflation. The reason I used the comparison between wealth tax and inflation is to illustrate that modest wealth taxes in the order of 1% are not more onerous than many other influences on wealth.

dragonwriter 1y ago
> All assets are denominated in currency False. All assets can be valued in currency, but most are not denominated in currency (and even more are not denominated in whichever specific currency it is that you are trying to hedge against inflation in.) Debt instruments are usually denominated in some currency, but stocks are a claim on a particular share of the assets of a corporation at dissolution, not denominated in a particular currency. A stock of a physical commodity is denominated in the physical commodity, not a currency.
- pcrh 1y ago
  You are correct. Inflation affects the value of all assets whose value is frequently traded using currency (which is most of stock markets, property, etc). To argue otherwise would be to deny the seriously negative impact high inflation can have on all aspects of the economy. There are assets whose value is mostly not financial, e.g. physical, social, intellectual, or otherwise. These retain their value despite inflation. Nevertheless, I aimed to show that a modest 1% tax is not onerous compared to other impacts on accumulated wealth.
  - dragonwriter 1y ago
    > Inflation affects the value of all assets whose value is frequently traded using currency (which is most of stock markets, property, etc). Affects them all, sure, but it doesn't affect them all in the same way, even on a broad qualitative level.

by pcrh 1y ago

dragonwriter 1y ago

> All assets are denominated in currency False. All assets can be valued in currency, but most are not denominated in currency (and even more are not denominated in whichever specific currency it is that you are trying to hedge against inflation in.) Debt instruments are usually denominated in some currency, but stocks are a claim on a particular share of the assets of a corporation at dissolution, not denominated in a particular currency. A stock of a physical commodity is denominated in the physical commodity, not a currency.

pcrh 1y ago
You are correct. Inflation affects the value of all assets whose value is frequently traded using currency (which is most of stock markets, property, etc). To argue otherwise would be to deny the seriously negative impact high inflation can have on all aspects of the economy. There are assets whose value is mostly not financial, e.g. physical, social, intellectual, or otherwise. These retain their value despite inflation. Nevertheless, I aimed to show that a modest 1% tax is not onerous compared to other impacts on accumulated wealth.
- dragonwriter 1y ago
  > Inflation affects the value of all assets whose value is frequently traded using currency (which is most of stock markets, property, etc). Affects them all, sure, but it doesn't affect them all in the same way, even on a broad qualitative level.