The problem with this type of inflation is that it's lopsided. Assets inflate -- equities and real estate. That's great for asset owners. But wages haven't really increased, because most workers don't "need" to own equities, and most Americans already own a house, so they aren't affected by rising rents and home prices.
This is why rent can raise 10% in one year -- the largest expense for nearly everyone -- and you can have 1% inflation. Most people aren't renters. So they aren't paying more for their rent. In fact, when bond prices go down (from this manipulation), mortgages get cheaper, so most people are paying LESS for the same house / mortgage.
Equities go through the roof.
If you're a laborer / renter, this is like a double gut punch. If you're a capitalist aristocrat, it's like a double gift horse.
And, as far as inflation goes, at least the way the Fed measures it -- it doesn't have a huge effect.
Commodities are so globalized now, and the US isn't 50% of the global economy anymore -- more like 20%. So strong upward pressure on commodities here, doesn't have a huge impact on commodities prices.
Yeah effectively it's rich people deciding that enormous sums of money should be invented out of nowhere and given to rich people. And somehow everyone is ok with that
Actually I read that in period of high inflation, the factory workers tend to do OK. They are often unionised, have leverage by doing strikes, they typically manage to keep their wages in check with inflation. It is office workers that are going to be the most impacted.
Though that was from experience from times where there wasn’t this imbalance between supply and demand between blue collar (excess) and white collar (shortage).
Your comment has contradictions. For example, if "most Americans already owns a house", how are they at the same not affected by home prices increasing?
Like a lot of financial analysis I read, you seem to look at only one side of the transaction. For every renter, there's a rentee. For every buyer, a seller. For every borrower, a lender. Those people are abundant as well, and the exact opposite comment could be written about them.
Source? Most of my friends (outside of the tech echo chambers) are worried they'll never become buyers because of student loans, decades of wage stagnation, skyrocketing rent, real estate, college tuition, etc..
Aug 12, 2019: "U.S. consumer inflation outlook declined as Fed weighed rate cuts .... The Fed’s preferred inflation gauge, known as the core personal consumption expenditures price index, gained at an annualized 1.6% pace in June."
This is why rent can raise 10% in one year -- the largest expense for nearly everyone -- and you can have 1% inflation. Most people aren't renters. So they aren't paying more for their rent. In fact, when bond prices go down (from this manipulation), mortgages get cheaper, so most people are paying LESS for the same house / mortgage.
Equities go through the roof.
If you're a laborer / renter, this is like a double gut punch. If you're a capitalist aristocrat, it's like a double gift horse.
And, as far as inflation goes, at least the way the Fed measures it -- it doesn't have a huge effect.
Commodities are so globalized now, and the US isn't 50% of the global economy anymore -- more like 20%. So strong upward pressure on commodities here, doesn't have a huge impact on commodities prices.