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Comment by psim1 | Hacker News Reader

So: my investments remain in very bad shape, inflation skyrockets, meaning my current net worth as well as future earnings are far lower. What does this help someone in personal terms?

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Hard to say, but if FED does inject a lot of liquidity into the market, it's possible that the stock market will re-flate. So if you have equities and other hard assets (gold, real-estate, bitcoin etc.), you might do good in the future.

Market inflation expectations are currently below the Fed's 2% target.

Not for long.

What makes you think that? People said similar things in late 2008 when the Fed greatly expanded its balance sheet, and then inflation went negative for the next year.

There was great inflation in financial assets, for the whole decade leading up to the current crisis. So there is a good chance the same thing will happen again, now that the central banks have taken the big guns out. I keep hearing that the FED (and other CBs) our out of bullets, but I think they have unlimited bullets. If you inject enough liquidity even a dead horse will bounce back; and for an example of that, you can check out the Venezuelan stock market (https://tradingeconomics.com/venezuela/stock-market).

So you're making the opposite prediction to the person I originally replied to? Investments will gain value faster than the cost of living?

Inflation is a loaded term, so I replied to mention that asset inflation was high, even though that is not reflected in the reported inflation numbers. As for you second question, I think the answer is yes, because for now I see CBs injecting money through the financial system. If the CBs start handing out checks directly to people, then we might see the CPI going high as well, in a more correlated manner with investments.

Yeah I really don't get how people can uncritically repeat that inflation is low. There is a massive asset inflation bubble as you've said. And consumer goods should have been naturally going down in price, from all the outsourcing and cost cutting. Instead tons of manufacturing jobs went to Mexico/China, making items of lower quality (eg disposable rather than repairable), while all the purchasing power benefit of this was erased by policy. The price inflation is clear when you compare domestically produced goods, good quality tools, non-GMO produce, food from local farms, commercial equipment, etc - quality we used to take for granted now costs a hefty premium.

The Fed kept interest rates artificially low for the past decade such that everyone could dance around a stock market bubble, and now they've backed themselves into a corner. Rather than let interest rates naturally rise as the bond market is currently signalling, they're making further moves to suppress them. Fundamentally they're continuing to undermine the distributed decentralized economy, and reshaping it into a centrally planned one revolving around who gets access to newly created money.

If you were like the wealthiest 0.0001% -- you would have vastly more wealth/assets than you could ever accumulate by laboring. In this case, everything you mentioned is good. For everyone else, it's bad.

If you're retired, this is possibly good for you. Reducing bond yields to 0 is usually very bad for pensions and retirees... But maybe you've got a lot of equities?

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