How do all businesses in the world coordinate to raise prices simultaneously? And if all prices are rising, aren't businesses costs also rising? If that's so, how are they making more profit across the board, as you suggest?
> How do all businesses in the world coordinate to raise prices simultaneously?
Because anti-trust is a joke, and most brands are owned by a handful of companies, which are chaired over by even fewer handful of investment firms. We are light-years away from the times when business mostly meant mom-and-pop where large scale coordination was impossible. Hell, big tech companies coordinated no-poaching agreements back in 2005, and you think corporations can't possibly find a way to coordinate price hikes in 2023?
Maybe the same mechanism where they're all laying people off at the same time, despite still making handsome profits, in many cases even increasing YoY.
Barter economies also make it next to impossible to save for the the future. Most goods produced by common are perishable and therefore one cannot be “saved” in any meaningful way. This keeps people at sustenance level and working until they die.
> Barter economies never had inflationary periods.
Barter economies have also never existed in human societies. They have either been gift economies (esp. with smaller tribes) or credit economies (records dating back to the earliest tables from Mesopotamia and Ancient Egypt). See:
> Patiently waiting for the day where we stop pretending inflation is anything other than people in government intentionally debasing the currency personal gain.
You'll be waiting forever, because this is not what it is.
Ideally inflation would be 0%, but that is impossible to do because it would mean that the "money" (however defined) available matches exactly that money that is needed for the economy to run and grow. But it is impossible to know/predict a priori how much would be needed.
So if you have too much money available, and more importantly moving around 'too much' (velocity), you get positive inflation. Now if you have too little money available (especially if it's 'hard money' like coins, and not credit), you get the effect of stifling economic activity:
You also have the effect that the people who have the (literal) coin being able to charge more for it (rent seeking) because everyone else wants/needs it to do business (notwithstanding credit arrangements).
So which is a bigger problem: too much money possibly allowing too much economic activity, or too little economic activity? In recent decades (post-Great Depression) the dogma is that we'd rather have positive inflation to have 'extra money' around so that activity is less hindered.
Further, there is a misguided idea that government creates money: it does not. (No, not even the central bank.) Money is created by private banks through credit:
I think there's a bit of Goodhart's law when it comes to inflation (When a measure becomes a target, it ceases to be a good measure),
and honestly it's one of the most BS of statistics.
Clearly inflation is now because companies are raining prices. But is it because of costs, or profiteering?
I find it especially funny when people complain about retailers “profiteering” when their net profit margins are as low as ever in the low single digits.
Edit: here is an updated report of profit margin changes over time by industry:
A) in a stationary scenario a company can't raise its prices arbitrarily because it will lose market share to its compatitors. Competition keeps prices low benefiting consumers while investors still get some profit. Capitalism works great!
B) on sudden changes, textbook conclusions can't be trusted because they are arrived at for stationary scenarios 99.99% of the times, at least that's how I think. You have to go case by case and make your best judgement. The current narrative is that as consequence of the pandemic, when you have "supply chains are collapsing" fearmongering, even if partially true, sellers figured that customers would be more tolerant to price raises, or at the very least, that their competitors would reason in the same way and so everyone can raise their prices and customers don't have a choice anyway. Personally I find it believable that companies would make such a calculation.
Ok, but what changed with scenario A? Monetary inflation!
If the argument is that inflation drives prices up, which allows businesses flexibility to raise them even further, then I won't argue against that.
But the price increases above inflation, aren't real inflation (which is defined by an across the board decrease in the value of money).
The same thing happens when sales taxes are increased. Singapore just increase their GST and many businesses just increase prices well above the increase in tax.
My parents, and all their generation, purchased their apartments with inflation over 10%. The first couple of years was harsh, they had to keep things tight so their salary can cover all their needs. Four years later, their loan was just a small part of their expenses. Eight years later, their loan was less than their phone bill. Inflation has taken their debt away. How is that worse than people being indebted for decades dedicating half their earnings for housing? Maybe inflation is corrosive for investing but maybe it is not bad for the average Joe.
Inflation so low as it has been kept the past decades has created a fantastic environment for investing. But it seems that has taken away any chances for average people to make a living. Hyper-inflation is bad, but low inflation is equally bad when it helps to concentrate wealth in a few hands.
I see many people demonizing inflation because it will hurt "investments". Maybe, it is time that something else than salaries hurt for a change.
Is it really a "nitpick", though? People always trot out the argument that inflation helps people who hold debt, but I would think that the era of lenders irrationally handing out long-term loans at low fixed interest rates would have been over many decades ago, no?
Those long term low fixed rate loans with no prepayment penalty are ultimately underwritten by people who use USD, and US voters implicitly like that policy because they like seeing the price of their assets go up.
Without the taxpayer subsidy, I doubt any lender would offer those terms.
> Floating rate debt holders can get burned pretty badly in an inflationary period.
So, it is the change in inflation, the raise, what makes it bad. If you ask for a loan when interest rates are at 15% your house price is going to be lower than when interest rates are at 1%.
So, you are right that "an inflationary period" as "increasing inflation" may be bad. But, maybe, the problem was that interest rates got to 1% . Such low interest make that just getting to a low 5% you are paying x5. Print more money, keep interest rates at 10% and unless they go up to 50% you are not so bad as people is nowadays.
> If you ask for a loan when interest rates are at 15% your house price is going to be lower than when interest rates are at 1%.
In a stationary scenario, yes. But in a scenario where interest rates just jumped up after being very low for decades, it's likely that prices haven't come down in reaction to IR up. How long it takes for prices to react depends on other factors.
I don't see how inflation favors debt holders. That money you lent out us paying back at a fixed rate over time. Meanwhile, inflation means rates continue to rise, meaning your loan return looks worse and worse. Sure, it's better than doing nothing with your money, but I don't think debt holders are winning in a high inflation scenario.
I'm not sure which of you or the comment you replied to is using 'debt holder' correctly. But they meant inflation benefits the person who has to pay the debt back over time, not the person who issued the debt.
Nitpick: It is not inflation itself, but unexpected change of inflation rate. Expected inflation rate is neutral, because everyone accounted for it in interest rates.
Yes and it also penalizes people who want to plan ahead and save. At 10% inflation year over year what is the point in saving for a nice house that might take you 8 years to save up for.
What you describe benefits people who overextended themselves and got lucky. Not really the thing i care about encouraging
Post-WWII a guy without a high school education was able to get a job at the steel plant, buy a house, raise a family, buy a rental in Florida, and retire with a pension.
The post-WWII U.S. economy was an anomaly - having half the worlds GDP. So many other industrialized countries were bombed and needed to rebuild. The U.S. was the factory of the world for a couple/few decades. We had security, capital, demographics, and productivity gains all in our favor during that time.
We no longer live in that economy. Members of today's millennial generation struggle to save for housing while paying down student loans. Many are still living with their parents. For those who want to have kinds it is common that both parents need to work. Wages have been stagnant for several decades. The government has subsidized 30 year fixed rate low interest mortgages, and the accumulated asset wealth this realized has benefited older generations, making housing much harder to afford for everyone else, a greater multiple of their incomes. Younger generations don't expect to do better than their parents. Maybe this explains the rise in populism. Is this sustainable? Can housing keep increasing in value? Or do we need to make changes?
Well, you can look at it from the opposite perspective.
In an ever inflating economy, why 'save' when you can do literally the same thing by taking a loan, getting the thing now and paying for it over time?
Both perspectives include risk where you don't get the thing' because you don't create enough capital in time. So why bother waiting, when you can get that thing now?
>In an ever inflating economy, why 'save' when you can do literally the same thing by taking a loan, getting the thing now and paying for it over time?
Because you cant get a loan. Lending is much more risky if the borrower doesn't have a down payment and their current income is meaningless in comparison to the loan interest compounded over 10-30 years.
Edit: another fact to consider is that in an economy where your only option is to borrow, you pay a premium to the lender and have no option
Inflating the economy has been working over the course of the last century or even longer.
What many people appear to be oblivious of is that this growth has been fundamentally based upon a few factors: (a) very useful innovations in science/technology, (b) population growth and (c) almost limitless and thus cheap fossil energy in combination with ecosystems as basically humanity's landfill for all the waste streams of our ignorant and half-assed make-a-quick-buck-products.
(a) may very well continue delivering efficiency/productivity gains over decades to come or forever.
(b) and especially (c) are hitting ceilings right now.
I think this "ever inflating economy" has only been possible without much more frequent financial collapses because there was all this extra potential for use/misuse of natural resources available. This is what kept filling in actual consumable value/goods for all the inflated $.
With this extra potential becoming smaller and used up I very much doubt the current economic model can be kept running for more than another 15-20 years.
And with modern monetary theory MMT economists enticing politicians and naive optimists with their "yes, there is free lunch for everyone, don't you all worry about running deficits" message, the whole economic system is set up for hitting the ecological limits with the foot still on the accelerator.
Are there any banks where you live that give fixed rate mortgages?
Where I live getting fixed rate loan is in banks propositions but they will never give fixed rate to people.
They will claim that with your income you don’t qualify and you qualify for adjustable rate loan - which is only good for banks when inflation shoots up and previous years we had almost no inflation until it hit 20% out of nowhere. So all of it was calculated by banks and normal people who had it good for last 10-15 years now had to pay up.
Pretty much all (~90%) of all home mortgage loans are fixed rate with no prepayment penalty in the US, guaranteed by the federal US government taxpayers of course.
I don't think you can count on high inflation to counter wealth concentration. Well simply moves to inflation proof assets.
People living and to mouth aren't hurt by inflation as long as salaries track, but that's not the same as saying that it helps them.
Housing was cheap in the '70s because people couldn't save up to buy a house. Of course it worked out great for those that did, but that isn't the typical story
Yes, as a general rule of thumb salaries track or exceed inflation in the long run. If that weren't the case, everybody would be living in Huts eating gruel
Significant wealth inequality gaps and the lack of wage growth, in relation to inflation, coincide. There's a lot of data on this subject, but getting specifics on how the data is collected is very difficult (given the data collection is often decades old).
But that scenario also creates winners and losers, because a loan with an interest rate lower than inflation is wealth transfer from the creditor to the debtor. The privileged, who can access these loans get richer, while others lose access to the housing market due to ever increasing prices caused by these loans.
This wouldn't be a huge problem if it was a mistake by freely operating private creditors, who theoretically, would realise their error and try not to issue long term loans fixed at a rate lower than inflation. One could see this as a "bet" by the creditors that the inflation rate will decrease in the future and they'd make a profit. The problem is when state-backed creditors are forced to issue low-rate loans as a government policy of homeownership. There, a country's tax base ends up funding people who can access these loans, while everyone else ends up further from owning a home. This is what happened in Turkey in 2020.
> Maybe inflation is corrosive for investing but maybe it is not bad for the average Joe
Joe wins one game of musical chairs once in a while, but the banks won't lose money lending money, they will get their dues, and with the uncertainty of inflation they will err on the safe side and the other Joes will lose.
> Maybe, it is time that something else than salaries hurt for a change
Low and middle class people are the most affected because wages and salaries aren tied to an inflation index. Rich people have easier access to inflation resistant investments.
Most of the mortgages here in South Africa are variable interest rate. So whenever the government wants to "fight" inflation, they raise the interest rate. They cause a huge increase in the amount I have to pay to service the debt, to the point where it makes more sense to sell off that debt and just hoard the money somewhere else. Just a small anecdote.
I've lived through inflation. People who have not (my Canadian wife wife for one :) lack intuitive feeling to translate simple number into everyday occurrences. And every equation has two sides.
My parents did the same thing - they'd buy something expensive on loan and the loan would reduce with time in effective value. Great right? But what about the other side? The person /business that sold you that car or furniture or whatever is basically left hanging.
Worst part of inflation is that it makes saving impossible. There's no effective way to prepare for anything. Any money or earnings you have is basically slipping inexorably through your fingers as grains of sand.
Salary too! Unless my salary goes up with inflation (rare!) I'm literally getting paid less every month and every year. You may pray and hope somebody somewhere will provide for you (government or whatever) but as far as I can see, inflation comes for everybody eventually. It's a Gian game of chicken and race that tends to explode.
That doesn't mean that we can't and shouldn't have discussion what level of inflation may be "good", given myriad conflicting and contradictory goals and consequences and timelines. Deflation is bad for other reasons.
Except every investment becomes high-risk. Businesses cannot make financial plans/projections because of the uncertainty created by the same inflation. Depending on the inflation percentage, the furthest you could plan ahead could be up to a couple of months. Would you make long-term investment in an economy where companies cannot predict what is going to happen in the next 3 months?
If I was losing 10%+ a year I absolutely would. I'm sure not everyone would,but the present rate of investment is absolutely dire and needs to change. If inflation does that, then great.
If instead it puts more onus on the state to invest as the only major player who would.. then that's also great.
It shouldn’t matter much whether inflation is low or high as long as it is stable. Every supposed effect of inflation seems to be mostly an effect of either wealth redistribution or uncertainty.
Well it needs to be somewhat reasonable for that to work. It might not matter much whether money has a half-life of 20 or 30 years, but if it becomes 10 days or 1000 years then that is a quite significant change in the way that money works.
It can also be seen as a form of wealth redistribution. People who have the flexibility to change their prices or wages in sync with inflation won't see its effects as much as those who are either locked into long term obligations or have less economic mobility.
But that’s what the article is really about. It shows how there is an intrinsic link between the rate of inflation and the volatility of that rate YoY.
I mean they are inextricably linked cofactors, but given that the observed increase volatility is measured as the absolute value (can be in either direction, i.e. ±) I would venture to say that at least some of it is regardless of Fed (re)action.
However, I would also posit that it just doesn't matter since the feds will continue (as they've said and shown) to take action so long as the inflation rate isn't at their target rate, so cofactor A automatically implies cofactor B and we just have to deal with that fallout.
The Fed is not a force of nature, its response to the rise of inflation is absolutely crucial and important for economy, and it is not in any metaphysical way coupled to the rise of inflation — it can act as it pleases.
5-7 percent inflation is not so bad when your assets are returning 20-100 percent or more a year (such as Meta stock, Nvidia, real estate, tech stocks, Tesla, etc.). The Economist is always finding some reason to complain . there is always something wrong with the world somewhere or sometime. High inflation in the 80s and 90s didn't stop tech investors and real estate investors from making fortunes.
Most of the current inflation is probably a delayed effect of the recent money printing craze. If that's the case, then the corrosion to investing is overstated.
As a late GenXer, I saw the problems hitting millennials coming just a few years later and decided to take the leap early. I was way off on the inflation bump, about 20 years early, but I was correct about the asset inflation. Hence, while others in their early 20s were out having fun, I focused on saving and investing into rental properties. Back then, home prices were already steep, but not as insurmountable. I pinched my way to 4 rentals and managed to hold on to all but one.
Since my call on general inflation was so far off, I rode quite modest investment returns from 2001. Then when COVID stimuli finally brought the long awaited bump in inflation, my rental returns took off, tripling my average rate over the prior 17-19 years.
I don’t see how the continued bout of modest inflation would be bad for asset investments. Indeed, I’m seeing what remains of my fixed rate mortgages fade away rapidly while rents keep getting bid up by tenants. My debt load fell so fast in the past three years that I’ve had to relever up to ride the inflation wave. Quite a ride since. Meanwhile, I’m pleasantly surprised that I’m totally on the mark about the reversion of the suburban exodus during COVID as tenants are throwing out far more in rent than I could have imagined.
Yes, this inflation bump sucks for anyone living on fixed investment incomes or salaries, but for any half competent investor, it’s fulsome times and I can’t imagine having the balls to whine about it to the masses on the economist. The smarter play has been to promote the fiction of rich-cession, even if that’s too fanciful for millennials and gen Zs to swallow.
80 comments
[ 5.8 ms ] story [ 196 ms ] threadIf both directions can lead to runaway feedback, it likely needs to be controlled.
Because anti-trust is a joke, and most brands are owned by a handful of companies, which are chaired over by even fewer handful of investment firms. We are light-years away from the times when business mostly meant mom-and-pop where large scale coordination was impossible. Hell, big tech companies coordinated no-poaching agreements back in 2005, and you think corporations can't possibly find a way to coordinate price hikes in 2023?
Barter economies have also never existed in human societies. They have either been gift economies (esp. with smaller tribes) or credit economies (records dating back to the earliest tables from Mesopotamia and Ancient Egypt). See:
* https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
For a more recent example of a society becoming pure credit, see:
* https://en.wikipedia.org/wiki/Irish_bank_strikes_(1966–1976)
* https://www.youtube.com/watch?v=mFIQWWt4UaA
You'll be waiting forever, because this is not what it is.
Ideally inflation would be 0%, but that is impossible to do because it would mean that the "money" (however defined) available matches exactly that money that is needed for the economy to run and grow. But it is impossible to know/predict a priori how much would be needed.
So if you have too much money available, and more importantly moving around 'too much' (velocity), you get positive inflation. Now if you have too little money available (especially if it's 'hard money' like coins, and not credit), you get the effect of stifling economic activity:
* https://en.wikipedia.org/wiki/Great_Bullion_Famine
You also have the effect that the people who have the (literal) coin being able to charge more for it (rent seeking) because everyone else wants/needs it to do business (notwithstanding credit arrangements).
So which is a bigger problem: too much money possibly allowing too much economic activity, or too little economic activity? In recent decades (post-Great Depression) the dogma is that we'd rather have positive inflation to have 'extra money' around so that activity is less hindered.
Further, there is a misguided idea that government creates money: it does not. (No, not even the central bank.) Money is created by private banks through credit:
* https://www.bankofengland.co.uk/explainers/how-is-money-crea...
* https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625
* https://rationalreminder.ca/podcast/132
And if you think that deposits are re-loaned out, this is utterly and completely wrong and out of date. Tobin called this "the old view" in 1963:
* https://elischolar.library.yale.edu/cowles-discussion-paper-...
Clearly inflation is now because companies are raining prices. But is it because of costs, or profiteering?
One source of data that might be useful is this:
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...
I find it especially funny when people complain about retailers “profiteering” when their net profit margins are as low as ever in the low single digits.
Edit: here is an updated report of profit margin changes over time by industry:
https://www.yardeni.com/pub/sp500margin.pdf
Edit 2: nvm, above link is not so useful since it is showing operating profit margin, not net profit margin
That isn't clear at all.
If companies are raising prices, why didn't they raise them before?
A) in a stationary scenario a company can't raise its prices arbitrarily because it will lose market share to its compatitors. Competition keeps prices low benefiting consumers while investors still get some profit. Capitalism works great!
B) on sudden changes, textbook conclusions can't be trusted because they are arrived at for stationary scenarios 99.99% of the times, at least that's how I think. You have to go case by case and make your best judgement. The current narrative is that as consequence of the pandemic, when you have "supply chains are collapsing" fearmongering, even if partially true, sellers figured that customers would be more tolerant to price raises, or at the very least, that their competitors would reason in the same way and so everyone can raise their prices and customers don't have a choice anyway. Personally I find it believable that companies would make such a calculation.
If the argument is that inflation drives prices up, which allows businesses flexibility to raise them even further, then I won't argue against that.
But the price increases above inflation, aren't real inflation (which is defined by an across the board decrease in the value of money).
The same thing happens when sales taxes are increased. Singapore just increase their GST and many businesses just increase prices well above the increase in tax.
Inflation so low as it has been kept the past decades has created a fantastic environment for investing. But it seems that has taken away any chances for average people to make a living. Hyper-inflation is bad, but low inflation is equally bad when it helps to concentrate wealth in a few hands.
I see many people demonizing inflation because it will hurt "investments". Maybe, it is time that something else than salaries hurt for a change.
Without the taxpayer subsidy, I doubt any lender would offer those terms.
So, it is the change in inflation, the raise, what makes it bad. If you ask for a loan when interest rates are at 15% your house price is going to be lower than when interest rates are at 1%.
So, you are right that "an inflationary period" as "increasing inflation" may be bad. But, maybe, the problem was that interest rates got to 1% . Such low interest make that just getting to a low 5% you are paying x5. Print more money, keep interest rates at 10% and unless they go up to 50% you are not so bad as people is nowadays.
In a stationary scenario, yes. But in a scenario where interest rates just jumped up after being very low for decades, it's likely that prices haven't come down in reaction to IR up. How long it takes for prices to react depends on other factors.
What you describe benefits people who overextended themselves and got lucky. Not really the thing i care about encouraging
What he describes is risk taking which is generally praised here.
However risk taking on housing has historically turned out bad for individuals and the economy
What are you basing that on? The GFC may be the most recent major crisis but home ownership is the American dream post-WWII.
Post-WWII a guy without a high school education was able to get a job at the steel plant, buy a house, raise a family, buy a rental in Florida, and retire with a pension.
The post-WWII U.S. economy was an anomaly - having half the worlds GDP. So many other industrialized countries were bombed and needed to rebuild. The U.S. was the factory of the world for a couple/few decades. We had security, capital, demographics, and productivity gains all in our favor during that time.
We no longer live in that economy. Members of today's millennial generation struggle to save for housing while paying down student loans. Many are still living with their parents. For those who want to have kinds it is common that both parents need to work. Wages have been stagnant for several decades. The government has subsidized 30 year fixed rate low interest mortgages, and the accumulated asset wealth this realized has benefited older generations, making housing much harder to afford for everyone else, a greater multiple of their incomes. Younger generations don't expect to do better than their parents. Maybe this explains the rise in populism. Is this sustainable? Can housing keep increasing in value? Or do we need to make changes?
Because you cant get a loan. Lending is much more risky if the borrower doesn't have a down payment and their current income is meaningless in comparison to the loan interest compounded over 10-30 years.
Edit: another fact to consider is that in an economy where your only option is to borrow, you pay a premium to the lender and have no option
> In an ever inflating economy, ...
Inflating the economy has been working over the course of the last century or even longer.
What many people appear to be oblivious of is that this growth has been fundamentally based upon a few factors: (a) very useful innovations in science/technology, (b) population growth and (c) almost limitless and thus cheap fossil energy in combination with ecosystems as basically humanity's landfill for all the waste streams of our ignorant and half-assed make-a-quick-buck-products.
(a) may very well continue delivering efficiency/productivity gains over decades to come or forever.
(b) and especially (c) are hitting ceilings right now.
I think this "ever inflating economy" has only been possible without much more frequent financial collapses because there was all this extra potential for use/misuse of natural resources available. This is what kept filling in actual consumable value/goods for all the inflated $.
With this extra potential becoming smaller and used up I very much doubt the current economic model can be kept running for more than another 15-20 years.
And with modern monetary theory MMT economists enticing politicians and naive optimists with their "yes, there is free lunch for everyone, don't you all worry about running deficits" message, the whole economic system is set up for hitting the ecological limits with the foot still on the accelerator.
Where I live getting fixed rate loan is in banks propositions but they will never give fixed rate to people.
They will claim that with your income you don’t qualify and you qualify for adjustable rate loan - which is only good for banks when inflation shoots up and previous years we had almost no inflation until it hit 20% out of nowhere. So all of it was calculated by banks and normal people who had it good for last 10-15 years now had to pay up.
People living and to mouth aren't hurt by inflation as long as salaries track, but that's not the same as saying that it helps them.
Housing was cheap in the '70s because people couldn't save up to buy a house. Of course it worked out great for those that did, but that isn't the typical story
https://www.cbpp.org/research/poverty-and-inequality/a-guide...
Significant wealth inequality gaps and the lack of wage growth, in relation to inflation, coincide. There's a lot of data on this subject, but getting specifics on how the data is collected is very difficult (given the data collection is often decades old).
This wouldn't be a huge problem if it was a mistake by freely operating private creditors, who theoretically, would realise their error and try not to issue long term loans fixed at a rate lower than inflation. One could see this as a "bet" by the creditors that the inflation rate will decrease in the future and they'd make a profit. The problem is when state-backed creditors are forced to issue low-rate loans as a government policy of homeownership. There, a country's tax base ends up funding people who can access these loans, while everyone else ends up further from owning a home. This is what happened in Turkey in 2020.
Joe wins one game of musical chairs once in a while, but the banks won't lose money lending money, they will get their dues, and with the uncertainty of inflation they will err on the safe side and the other Joes will lose.
> Maybe, it is time that something else than salaries hurt for a change
Low and middle class people are the most affected because wages and salaries aren tied to an inflation index. Rich people have easier access to inflation resistant investments.
*The average homeowner
My parents did the same thing - they'd buy something expensive on loan and the loan would reduce with time in effective value. Great right? But what about the other side? The person /business that sold you that car or furniture or whatever is basically left hanging.
Worst part of inflation is that it makes saving impossible. There's no effective way to prepare for anything. Any money or earnings you have is basically slipping inexorably through your fingers as grains of sand.
Salary too! Unless my salary goes up with inflation (rare!) I'm literally getting paid less every month and every year. You may pray and hope somebody somewhere will provide for you (government or whatever) but as far as I can see, inflation comes for everybody eventually. It's a Gian game of chicken and race that tends to explode.
That doesn't mean that we can't and shouldn't have discussion what level of inflation may be "good", given myriad conflicting and contradictory goals and consequences and timelines. Deflation is bad for other reasons.
If instead it puts more onus on the state to invest as the only major player who would.. then that's also great.
However, I would also posit that it just doesn't matter since the feds will continue (as they've said and shown) to take action so long as the inflation rate isn't at their target rate, so cofactor A automatically implies cofactor B and we just have to deal with that fallout.
Since my call on general inflation was so far off, I rode quite modest investment returns from 2001. Then when COVID stimuli finally brought the long awaited bump in inflation, my rental returns took off, tripling my average rate over the prior 17-19 years.
I don’t see how the continued bout of modest inflation would be bad for asset investments. Indeed, I’m seeing what remains of my fixed rate mortgages fade away rapidly while rents keep getting bid up by tenants. My debt load fell so fast in the past three years that I’ve had to relever up to ride the inflation wave. Quite a ride since. Meanwhile, I’m pleasantly surprised that I’m totally on the mark about the reversion of the suburban exodus during COVID as tenants are throwing out far more in rent than I could have imagined.
Yes, this inflation bump sucks for anyone living on fixed investment incomes or salaries, but for any half competent investor, it’s fulsome times and I can’t imagine having the balls to whine about it to the masses on the economist. The smarter play has been to promote the fiction of rich-cession, even if that’s too fanciful for millennials and gen Zs to swallow.