[voisin]

Inflation doesn’t show up in CPI but it sure has shown up in asset prices as a direct consequence of their unwillingness to pull back on M1. So your initial point that you have to keep reminding people that we won’t see inflation because velocity of money has declined is not accurate. We have seen it in all asset classes and it is because they never, ever pull back on M1.

[imtringued]

You have to consider that if asset appreciation was a mirror image of CPI inflation then rent payments must go up to compensate for the increase in housing prices. They did go up, but mostly in major cities and they didn't catch up with asset appreciation.

Remember, when you get a mortgage to buy a house including land you will eventually have to pay the mortgage back and if you aren't doing so yourself, then your tenants have to do it and their income gains don't exceed CPI as of now (assuming no job switch). Even if you sell, you are speculating that someone else thinks that way and if no such person exists then the price of housing will go down.

[arcticbull]

If a given quantity of assets (let's say 1 SPY share) will buy you more good from the CPI basket this year than last year, that's not inflation, that's a return on investment. It would only be inflation if while the notional price of SPY shares went up the quantity of goods you can buy with it stayed flat or went down.