Hacker News Reader

Comment by mxcrossb | Hacker News Reader

I think your analysis is right, but if cars and houses are things that people buy with borrowed money, it does seem like interest rates being low would drive prices up. And it might increase the price of inflation proof assets like crypto. Is there a framework we should be describing this with besides the broad “inflation” term?

View on HN

Cars are lasting longer, and how many cars can the average person own? There's also depreciation, so cars aren't 'quite' an asset, so trade-in is also limited if people want to rotate vehicles (unless one leases).

> Is there a framework we should be describing this with besides the broad “inflation” term?

If asset prices are higher than what they "should" be, then one generally calls that a bubble.

There's a practically unlimited supply of cars. If people start buying more manufacturers will produce more.

But they can only be produced at a finite rate, which may cause competition amongst buyers in the short term as they bid against each other for the finite number that are on the lot.

Further, the resources needed as raw material are finite (unless we start asteroid mining), as is the energy needed in the process: we have only so many gigawatts we can produce at one time.

More plants can be built, but those take resources as well: some of the very same resources that are needed to build the cars we're talking about.

Reply on news.ycombinator.com