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by JackFr 3214 days ago
> Inflation has occurred outside of CPI basket, most notably in equity markets and real estate prices in large urban cities

Those are assets rather than goods. They are neither produced nor consumed. That being said, yeah, it's no mystery that low rates have caused asset price inflation, not consumer price inflation.
2 comments
cthrow 3214 days ago
It's all a matter of technicalities and definitions :)

You are consuming housing when you pay rent/mortgage. A house is built, and then its owners consume it in "housing units", or rent those "housing units" to other for consumption.

Likewise that ground beef you have in the fridge is an asset - you can sell it to your neighbor at any point before you consume it.

Equity is a claim on a company's assets. If General Electric goes bankrupt and you own GE stock, you will get paid out (after everyone else) a share of the bankruptcy proceeds. So in a way you own some of what GE produces, some of the inputs it consumes, etc.

You can look at literally any transaction as an investment into an asset (generally durable goods) or the purchase of a good for consumption (generally non-durable goods). It depends on how you want to record it on your personal balance sheet...

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JackFr 3214 days ago
Assets are not durable goods. Assets different than goods.

When you pay rent you are consuming housing. When you pay a mortgage it is a financing transaction on the asset. Your consumption cost nets out because you are both paying and receiving rent. Yes all transactions are for either an asset or a good, as Y=C+I...

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dredmorbius 3214 days ago
The problem with your comment is that durable goods do in fact have many of the characteristics which are desireable of financial vehicles and assets: utility/value, portability, indestructibility, homogeneity, divisibility, stability, cognixability. (William Stanley Jevons, Money and the Mechanism of Exchange https://archive.org/stream/moneyexchange00jevorich#page/n7/m...)

And whilst land may not be particularly portable, land ownership is.

Other productive assets: metals, grain, productive plant, etc., may also have financial asset value. Also goods which aren't particularly useful such as fine art.

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