Re:Show HN: M1 Chart – The stock market adjusted for the US-...
by 0x008 on Sunday February 14, 2021 @04:25AM
(#26130849)
But then we would never have inflation because not all goods will increase in price at the same time. It takes time until money trickles down through the system doesn’t it ?
Re:Show HN: M1 Chart – The stock market adjusted for the US-...
by conanbatt on Sunday February 14, 2021 @05:24PM
(#26136846)
Not all goods, but generalized. Stocks are a fraction of spending.
High inflation economies have also seen a surge in pricing in housing, relative to other parts of the economy.
Re:Show HN: M1 Chart – The stock market adjusted for the US-...
by 0x008 on Monday February 15, 2021 @01:49AM
(#26139861)
But you said if only a subset of items increases in price it is not inflation by definition?
Re:Show HN: M1 Chart – The stock market adjusted for the US-...
by conanbatt on Monday February 15, 2021 @10:53AM
(#26143845)
Yes.
I'm saying assets have had relative changes of value in high inflation economies, where everything is going up.
Say a bag of rice is 100, housing is 1000. In a 100% inflation scenario, it goes to 200 and 2000, but when you look at prices it is 200 and 3000. This points to two effects: inflation + relative price changes.
It's an informal argument against the notion that there is "asset inflation" because of dollar printing. Economies with high inflation have seen "asset inflation" even with all prices increasing. It points to a typical change in demand.
It is tempting to say that you can have asset inflation while other assets deflate, but it's not consistent with the general topic of inflation that implies the currency gets devalued.
If the government said that it would collect a special tax to all goods but stocks of 1$, it will increase prices of many goods but it will not be inflation. It's a change in the relative price of goods.