9 ms·

Fiat money is not going down as much as asset prices are going up, though. So it's part of the story, money losing value in the real economy. That's been happe

Fiat money is not going down as much as asset prices are going up, though. So it's part of the story, money losing value in the real economy. That's been happening since moving off the gold standard at roughly similar rates. There's something that happened during ZIRP & Negative Real Interest Rate Policies that completely divorced the value of money in the real economy from the value of assets & future cash flows, and even when interest rates became positive again, the trend appears to have continued. Perhaps all investors just believe ZIRP & Negative Real Interest Rate Policies are coming back, maybe to even more negative real rates than ever before.

tossandthrow 1y ago
> Fiat money is not going down as much as asset prices are going up, though. How do you measure this? What is this claim founded in? You could indeed say that inflation should be defined by the asset prices. This would couple fiat and asset prices definatorically.
- onlyrealcuzzo 1y ago
  Because normal people mainly use money to pay rent and utilities and taxes and buy corn from the grocery store, not to buy future cash flows.
  - Ancapistani 1y ago
    At any given time, most of the money isn't in the hands of "normal people", though. It's in the hands of banks, states, and large companies.
    - onlyrealcuzzo 1y ago
      The amount of money isn't relevant. Money is fake. The real economy isn't.
- jhrmnn 1y ago
  I’m guessing what was meant is that the price of things that are to be invested in is growing wrt the price of things that are to be consumed. Which naively makes sense to me in an economy based on growth where the total consumption starts to stagnate—the surplus still has to go somewhere. Is it so or is reality more complicated than that?
  - tossandthrow 1y ago
    I think this is a key observation. Apparently consumables have become incredibly cheap. But then again, consumables will like start to rise in price now people need more money to buy a house, etc. You could also say that real salaries have gone down a lot, which is probably also true. These effects have to go through very complex value chains.
- paulpauper 1y ago
  It makes more sense or is more plausible to say that asset prices are rising to hedge or tracking inflation, versus a falling dollar. I
paxys 1y ago
> Fiat money is not going down as much as asset prices are going up, though. I'm assuming you are referring to CPI, but that is just a single measure of inflation and serves a very specific purpose. One could argue that "real" inflation in fact is the US dollar's value relative to gold or other similar assets.
- onlyrealcuzzo 1y ago
  If one was not someone who lived in the real economy and spent most of their money on things in the real economy, and instead was a billionaire, and spent most of their money buying future cash-flows, then sure.
  - paxys 1y ago
    There are plenty of people in this economy who sit somewhere in between having to spend their entire paycheck on rent and groceries and deciding which one of their yachts to take on the next vacation. I'd wager most people reading this are in the middle category, and so deeper analysis on inflation and long-term stores of money is absolutely relevant.
  - tossandthrow 1y ago
    This is an imprecise take, in particular due to one thing: Target return rate. The rich people expect a return rate regardless of how expensive the asset was, and eventually the asset will have to give that. This transaltes into more expensive consumables, rents, etc. Ie, Asset prices are a part of the real economy.
jack_h 1y ago
> There's something that happened during ZIRP & Negative Real Interest Rate Policies that completely divorced the value of money in the real economy from the value of assets & future cash flows I’m not sure I follow. The USD is just a medium of exchange. 100% of the dollars commands 100% of the wealth of the economy. If you increase the number of dollars but the size of the economy itself doesn’t increase then the underlying prices would go up and the value of individual dollars would go down.
- rayiner 1y ago
  That’s not accurate for two reasons. First, the dollar isn’t just a medium of exchange, but a medium for storing value since it’s the reserve currency. Second, a dollar can get spent multiple times so there isn’t a direct relationship with the amount of economic activity as you suggest.
  - jack_h 1y ago
    I don’t disagree with your first point, but your second point may have been a misunderstanding of what I said or I don’t understand what you’re saying. I’m not suggesting when you spend money it goes away and can’t be used again. I was more suggesting the M0/M1/M2 money supplies change in size which is distinct from GDP size, although I admit that is a simplification.
    - rayiner 1y ago
      Gotcha. I thought you meant it was a 1:1 correlation. My mistake.
- throw0101c 1y ago
  > If you increase the number of dollars but the size of the economy itself doesn’t increase then the underlying prices would go up and the value of individual dollars would go down. Just looking the number of dollars, without looking at what they're doing, is like thinking you will gain weight because your fridge/pantry is stocked: > But also – why do so many people insist that inflation is an increase in the money supply? This makes zero sense. Here’s why – our economy is mostly a credit based economy. So, if I take out a loan for $100,000 then the money supply has technically increased by $100,000. But what if I don’t actually tap that loan? What if I borrow the money because, for instance, house prices just went up 25% and I want to have some cash around for emergencies? This doesn’t tell us anything about prices, living standards or really anything. But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy. * https://www.pragcap.com/three-things-i-think-i-think-i-see-dead-mutual-funds/ https://www.pragcap.com/three-things-i-think-i-think-i-see-d... Japan had an ever increasing money supply for decades and experience not just low inflation, but at times deflation: * https://fred.stlouisfed.org/graph/?g=1680i https://fred.stlouisfed.org/graph/?g=1680i See also US: * https://fred.stlouisfed.org/graph/?g=1MG9e https://fred.stlouisfed.org/graph/?g=1MG9e Besides the quantity of money, you have to actually look at what the money is doing (velocity), which in recent years is 'not much': * https://en.wikipedia.org/wiki/Velocity_of_money https://en.wikipedia.org/wiki/Velocity_of_money * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V As it stands there's just a growing pile of US money doing a whole lot of nothing in money market funds: * https://www.cnbc.com/2025/09/12/7-trillion-cash-money-market-yields-fed-interest-rate-cuts.html https://www.cnbc.com/2025/09/12/7-trillion-cash-money-market... * https://www.apolloacademy.com/6-trillion-on-the-sidelines-in-money-market-funds/ https://www.apolloacademy.com/6-trillion-on-the-sidelines-in...

tossandthrow 1y ago

> Fiat money is not going down as much as asset prices are going up, though. How do you measure this? What is this claim founded in? You could indeed say that inflation should be defined by the asset prices. This would couple fiat and asset prices definatorically.

onlyrealcuzzo 1y ago
Because normal people mainly use money to pay rent and utilities and taxes and buy corn from the grocery store, not to buy future cash flows.
- Ancapistani 1y ago
  At any given time, most of the money isn't in the hands of "normal people", though. It's in the hands of banks, states, and large companies.
  - onlyrealcuzzo 1y ago
    The amount of money isn't relevant. Money is fake. The real economy isn't.
jhrmnn 1y ago
I’m guessing what was meant is that the price of things that are to be invested in is growing wrt the price of things that are to be consumed. Which naively makes sense to me in an economy based on growth where the total consumption starts to stagnate—the surplus still has to go somewhere. Is it so or is reality more complicated than that?
- tossandthrow 1y ago
  I think this is a key observation. Apparently consumables have become incredibly cheap. But then again, consumables will like start to rise in price now people need more money to buy a house, etc. You could also say that real salaries have gone down a lot, which is probably also true. These effects have to go through very complex value chains.
paulpauper 1y ago
It makes more sense or is more plausible to say that asset prices are rising to hedge or tracking inflation, versus a falling dollar. I

paxys 1y ago

> Fiat money is not going down as much as asset prices are going up, though. I'm assuming you are referring to CPI, but that is just a single measure of inflation and serves a very specific purpose. One could argue that "real" inflation in fact is the US dollar's value relative to gold or other similar assets.

onlyrealcuzzo 1y ago
If one was not someone who lived in the real economy and spent most of their money on things in the real economy, and instead was a billionaire, and spent most of their money buying future cash-flows, then sure.
- paxys 1y ago
  There are plenty of people in this economy who sit somewhere in between having to spend their entire paycheck on rent and groceries and deciding which one of their yachts to take on the next vacation. I'd wager most people reading this are in the middle category, and so deeper analysis on inflation and long-term stores of money is absolutely relevant.
- tossandthrow 1y ago
  This is an imprecise take, in particular due to one thing: Target return rate. The rich people expect a return rate regardless of how expensive the asset was, and eventually the asset will have to give that. This transaltes into more expensive consumables, rents, etc. Ie, Asset prices are a part of the real economy.

jack_h 1y ago

> There's something that happened during ZIRP & Negative Real Interest Rate Policies that completely divorced the value of money in the real economy from the value of assets & future cash flows I’m not sure I follow. The USD is just a medium of exchange. 100% of the dollars commands 100% of the wealth of the economy. If you increase the number of dollars but the size of the economy itself doesn’t increase then the underlying prices would go up and the value of individual dollars would go down.

rayiner 1y ago
That’s not accurate for two reasons. First, the dollar isn’t just a medium of exchange, but a medium for storing value since it’s the reserve currency. Second, a dollar can get spent multiple times so there isn’t a direct relationship with the amount of economic activity as you suggest.
- jack_h 1y ago
  I don’t disagree with your first point, but your second point may have been a misunderstanding of what I said or I don’t understand what you’re saying. I’m not suggesting when you spend money it goes away and can’t be used again. I was more suggesting the M0/M1/M2 money supplies change in size which is distinct from GDP size, although I admit that is a simplification.
  - rayiner 1y ago
    Gotcha. I thought you meant it was a 1:1 correlation. My mistake.
throw0101c 1y ago
> If you increase the number of dollars but the size of the economy itself doesn’t increase then the underlying prices would go up and the value of individual dollars would go down. Just looking the number of dollars, without looking at what they're doing, is like thinking you will gain weight because your fridge/pantry is stocked: > But also – why do so many people insist that inflation is an increase in the money supply? This makes zero sense. Here’s why – our economy is mostly a credit based economy. So, if I take out a loan for $100,000 then the money supply has technically increased by $100,000. But what if I don’t actually tap that loan? What if I borrow the money because, for instance, house prices just went up 25% and I want to have some cash around for emergencies? This doesn’t tell us anything about prices, living standards or really anything. But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy. * https://www.pragcap.com/three-things-i-think-i-think-i-see-dead-mutual-funds/ https://www.pragcap.com/three-things-i-think-i-think-i-see-d... Japan had an ever increasing money supply for decades and experience not just low inflation, but at times deflation: * https://fred.stlouisfed.org/graph/?g=1680i https://fred.stlouisfed.org/graph/?g=1680i See also US: * https://fred.stlouisfed.org/graph/?g=1MG9e https://fred.stlouisfed.org/graph/?g=1MG9e Besides the quantity of money, you have to actually look at what the money is doing (velocity), which in recent years is 'not much': * https://en.wikipedia.org/wiki/Velocity_of_money https://en.wikipedia.org/wiki/Velocity_of_money * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V As it stands there's just a growing pile of US money doing a whole lot of nothing in money market funds: * https://www.cnbc.com/2025/09/12/7-trillion-cash-money-market-yields-fed-interest-rate-cuts.html https://www.cnbc.com/2025/09/12/7-trillion-cash-money-market... * https://www.apolloacademy.com/6-trillion-on-the-sidelines-in-money-market-funds/ https://www.apolloacademy.com/6-trillion-on-the-sidelines-in...