Debt Worldwide Hits Record $86k per Person

Re:Debt Worldwide Hits Record $86k per Person by nradov on Saturday December 15, 2018 @08:35AM (#18688327)

Inflation generally doesn't hurt the value of stocks in a 401(k). You still own the same percentage of the underlying public corporations. Inflation only hurts your bond holdings. This is one reason why it's best to keep at least some of your retirement fund assets in stocks even as you approach retirement age rather than shifting entirely too bonds.

TIPS also provide a way to hedge against inflation in retirement funds.

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Re:Debt Worldwide Hits Record $86k per Person by slededit on Saturday December 15, 2018 @08:44AM (#18688349)

Inflation does hurt the underlying companies, and thus stocks are not immune.

Except in cases with extremely high inflation most contracts are not inflation adjusted. By the time a company is paid the merchandise sold is worth significantly more in fiat terms. In high inflation an entity is loathe to trade assets for dollars and so the economy will slow.

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Re:Debt Worldwide Hits Record $86k per Person by nradov on Saturday December 15, 2018 @08:59AM (#18688400)

Your point is generally false as long as inflation remains at a reasonable level (no hyperinflation). You can chart out stock market index returns versus inflation if you don't believe me.

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Re:Debt Worldwide Hits Record $86k per Person by slededit on Saturday December 15, 2018 @09:23AM (#18688476)

I was speaking of relatively high inflation (>10%). The fed has been extremely good at keeping inflation stable so we have not seen this in a long time.

This is not a criticism of current fed policy with respect to its relatively low inflation targets. While the effects I mentioned still occur, they are vastly outweighed by other concerns at low inflation levels.

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