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Comment by lixtra | Hacker News Reader

Asset prices are just one parameter in a complex system. Inflation is another. For example commodity prices could inflate so fast that earnings of companies grow into their valuations.

Another parameter is whether you’re free to spend your money. Currently in lockdown, all my money doesn’t buy me a dinner with friends in a restaurant (okay, I could pay a hefty fine, so restaurant dinners have inflated 1000%s in price!).

It’s not clear to me how the future will unfold and therefore I spread my worth in various assets and consume what may be unavailable soon.

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You have the democrats calling for "trillions" in stimulus: https://www.bloomberg.com/news/articles/2021-01-08/biden-cal...

You have Jerome Powell telling you that "stocks are not that high" considering that the risk free rate just collapsed: https://www.cnbc.com/2020/12/16/powell-says-stock-prices-are...

If they want to go by history, they just have to look back at the last decade to see what this does to a stock market. There is no alternative.

Most of the stock market focused writing recently appear to be from one of two perspectives, with very little big picture that unifies both.

1) The monetary perspective, in which stock prices are what they are, but there's a broader game (the real economy) of primary concern

2) The stock market analyst perspective, in which stock prices ebb and flow within a given range according to somewhat understood patterns

The issue is that (1) has been taking monetary actions never before seen (not even to support WWII), and (2) is crying from the rooftops that nothing makes sense when analyzed under historical pricing standards.

Well, yes. Both of these are true.

Much higher commodity prices would eat into the margins of any company using those resources, thereby decreasing their value

That depends on the pricing power of the company. But true, I rather meant broad inflation than commodities only.

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