Re:Abundant Capital
by woofie11 on Tuesday February 23, 2021 @02:01PM
(#26241350)
Blargh.
I wrote that badly, didn't I? Let me rephrase that more clearly: Let's say I expect 100% inflation over the next 5 years.
I can buy an investment which will lose 50% of its real value over that time. I come out neutral compared to holding cash.
In dollars: I buy today at a nominal value of $1 million, and sell at $1 million. Same as cash.
In value: I buy today at a real value of $1 million. I sell at a real value of $500k in 2020 dollars.
I can buy into investments whose real value is falling, and still come out ahead in inflationary times. Value-losing startups suddenly become okay investments since they lose less value than dollars.
Both due to COVID19 and government debt generally, I think we're heading for high inflation.... People are looking for assets to put money into. Real values can go going down, while nominal (dollar) values can be going up.
Selling at $2 million would mean I didn't lose value, but I'm not sure people are finding alternative investments which won't lose value; it's why people are grabbing bitcoin, and stocks are hot.
I wrote that badly, didn't I? Let me rephrase that more clearly: Let's say I expect 100% inflation over the next 5 years.
I can buy an investment which will lose 50% of its real value over that time. I come out neutral compared to holding cash.
In dollars: I buy today at a nominal value of $1 million, and sell at $1 million. Same as cash.
In value: I buy today at a real value of $1 million. I sell at a real value of $500k in 2020 dollars.
I can buy into investments whose real value is falling, and still come out ahead in inflationary times. Value-losing startups suddenly become okay investments since they lose less value than dollars.
Both due to COVID19 and government debt generally, I think we're heading for high inflation.... People are looking for assets to put money into. Real values can go going down, while nominal (dollar) values can be going up.
https://en.wikipedia.org/wiki/Real_versus_nominal_value_(eco...
Selling at $2 million would mean I didn't lose value, but I'm not sure people are finding alternative investments which won't lose value; it's why people are grabbing bitcoin, and stocks are hot.