[EGreg]

I never understood this... if there was some investment strategy that beat inflation, then if everyone used it, inflation would catch up to it.

So if you invest 10% of your salary all you're doing is saving 10% adjusted for inflation, assuming your investment vehicle doesn't do worse than inflation. And then when you retire you just live off that.

There is no free lunch. In Capitalism, millions of people are in a rat race to survive and eat.

[WalterBright]

> if there was some investment strategy that beat inflation,

There is, stocks average 7% returns after inflation.

> then if everyone used it, inflation would catch up to it.

Inflation is caused by the government printing money faster than the economy grows, not investments.

[EGreg]

It can be caused by both.

Inflation is a result of a large number of people being able to pay higher prices for the same goods.

[WalterBright]

The act of spending does not create money.

[EGreg]

That is not relevant to what we were talking about.

[WalterBright]

How do you think money is created?

In any case, no matter how wealthy Fred is, if Fred spends an extra $1000 on X then he has $1000 less to spend on something else. How is that supposed to result in inflation? Spending money doesn't magically put more money in one's pocket (despite wishing it did!), it means you've got less money.

[y4mi]

Inflation means, afaik, only that the same amount of money has lesser purchasing power than it previously had.

This is an effect that can have various causes. One of them is that the government or Central Banks printed more money. Another way this could happen is if there was an influx of income in your region. This effect is less visible in today's economy with cheap and easy shipping of products, but can still be observed in objects that are pretty much impossible to ship. The only example that comes to my mind right now is housing.

[EGreg]

Money is created many different ways. Banks could loan out a lot of money for instance, if some promising new opportunity is discovered. M2 money consists of many more things than just government-issued money from the mint.

Secondly, inflation is defined as a RISE IN PRICES and not the printing of money. Even Milton Friedman said that inflation is a monetary phenomenon. His claim be totally tautological if the definition was as you think it is.

So, tons of things can lead to inflation. Here is a list: https://www.investopedia.com/ask/answers/111314/what-causes-...

[__blockcipher__]

You didn’t talk about velocity of money at all. That’s a big warning flag to me.