[rcme]

Is the market acting like infinite growth is baked in, or is inflation simply out of control? And I’m not talking about CPI over the last three years. Stocks have been insane over the last decade. Real estate has been insane over the last decade. Neither of which is measured by CPI. So yea… the market is pricing things like the Fed will keep printing money to prop up assets it explicitly ignores in its inflation calculation.

[nemothekid]

>Is the market acting like infinite growth is baked in,

It's this. America has decided that:

1. The most important retirement/wealth vehicle is your home.

2. Home prices must only go up or your wealth will be destroyed.

3. The government should use it's power to uphold (1) and (2), which results in NIMBYism, all the tax breaks you see around mortgages, and of course the 2008 bailouts.

w.r.t stocks I largely think that was a ZIRP phenomenon, but stocks are allowed to correct somewhat.

[bumby]

You forgot the part where people use their home equity as a revolving line of credit, which exacerbates #2.

[red-iron-pine]

aka we got a head start and are now able to leverage that head start even further

[bumby]

I was thinking of it differently, more in terms of how debt-laden Americans tend to be. This is just another mechanism of perpetuating that.

It would be one thing if people are leveraging that equity to buy appreciating assets, but too often they are leveraging that debt for depreciating assets.

[bun_at_work]

The market kinda does have infinite growth baked in. To oversimplify more than a bit: The petrodollar system kind of ensures we export dollars to all countries who need to buy energy on the global market (not all, but a lot). That means the monetary supply has to go up or energy prices will skyrocket. So dollars are printed and the fed + treasury target a growth rate of 2%. Obv things are messed up right now, but that is how the system is designed. Infinite growth at 2% inflation per year.

E: To be clear I'm not claiming this is sustainable, only how the system is designed.

[DSingularity]

It certainly feels like money is going to lose its value eventually. Everyone is becoming wealthy by just clicking buy. When people start using that money, what will happen? Markups from exceed demand — inflation.

[XorNot]

Inflation of what though? Real estate is the only asset on the planet we can't just manufacture more of. iPhones, cars, clothes...all of that is disposable and near infinitely reproducible.

A person can't eat more then a very limited amount of food per day, regardless of their wealth.

So what's going to inflate?

[goawaythrwaway]

Why, the misery of poor folks, of course - as measured against a representative bundle of various non-value-producing traumas (i.e. Rich People Problems, in the common parlance.)

You see, when the "We" you reference in your second sentence - who I will actually refer to as "They" going forward (I hope this is not too presumptuous, if it is please notify me as quickly as you can after your 1st or 2nd eight-hour shift and I will update this) - Anyhow, the issue arises when They are no longer sufficiently motivated to infinitely reproduce these iPhones, cars, clothes, etc. for everyone to consume and dispose of. It should go without saying that this state of affairs is massively destabilizing for both We and They.

As the parent to your comment astutely observes, when "everyone is becoming wealthy by just clicking buy" (note: I will likewise be using the term "everyone" in the usual sense, as shorthand for "everyone I care about or know too well to assume financial standing directly maps to moral standing") then there is simply too much money sloshing around for it to continue flowing within the Banks as intended. It then, to borrow a phrase from esteemed economist Dr. Bonzo, begins trickling down to ever lower segments of the population. Obviously, this is Very Bad; and indeed, if this trickle-down continues it may eventually reach populations far below C-level.

That brings us to our current crisis. In the above context, you may think of the money-printer-go-brr approach of 2020 onward as a sort of Hundred Year Flood. What's worse, this flood was already largely concentrated in the lowest-lying areas it was ever intended to reach. Although We had the foresight to levy protective taxes on these areas, even these levees became overtaxed in the deluge and the usual trickle turned into a torrent. Suddenly, even the poor could afford to purchase some of the things they produced. Needless to say, this caused a dramatic decrease in the Productive Misery supply at exactly the moment when We demanded it most. Enter inflation.

Looking back on this disaster, one thing is clear: Though I'd always considered the phrase far too pessimistic to be true, a rising tide really does lift all boats. In fact, these days the yacht gets stuck in traffic so often, I wonder if a third one is even worth it.

[BeFlatXIII]

Real estate and stocks are both inflated from the 2008 money printing. Why didn't the QE from the '08 crisis cause visible CPI inflation? The money went directly to billionaires and banks who bid up prices on assets that banks and billionaires enjoy: stocks, yachts, and real estate. The C-19 stimulus money went to the pockets of ordinary citizens, who then increased demand for products regular people spend money on, causing inflation readily captured by CPI.