Replying to nicodemus

No, I said that for hyperinflation to occur, there needs to be a continuous backstop of monetary expansion. Much more than the current rate.

I agree that there would be price inflation on goods/services if stocks/investment vehicles were cashed out - no debate there. The argument is whether or not that would be hyperinflation - and it wouldn’t be. You even used the past tense for describe the expansion: “was” - as in, isn’t occurring now.

There’s no illusion - everyone is aware of the rapid expansion during Covid (the rate has returned to something closer to “normal”). The investors aren’t trapped. If they sold and spent it, they’d benefit from the Cantillon effect. Everyone else would feel the effects as the money moves through supply chains - but not the investors. They’re first in line. And they know it.

If there is an illusion, it’s one of wealth by having the denominator of asset prices being constantly debased. But we know that, and even the masses are slowly starting to figure it out, again, like the boomers did in the 70s.
Avatar
SimplifiedPrivacy.com 8mo ago

We are not really disagreeing much here, mostly definitions and outcomes. I do think there would be hyperinflation tho. It's not possible for either of us to know, as the asset prices themselves would collapse, as they cashed out. So our disagreement is subjective.

I agree it isn't an illusion on an individual level, as they aren't trapped. But as a collective group they are. This is the same with fractional reserve banking. As an individual depositor there is no illusion or trap. This depends on how one defines "illusion".

Reply to this note

Please Login to reply.

Discussion

00
nicodemus 8mo ago

Yep. Just speculation. But it’s good to play this out, and I’m always learning.

Yeah, asset prices would collapse if there was a sudden mass sell off. This would be another deflationary impulse, as this would ultimately lead to the destruction of money supply due to the resulting defaults, downsizing, and bankruptcies. Jobs would be lost, and the value of money goes up, not down. Prices would fall as a result. The asset sellers still win in this regard, as they’re both first in line to the deflationary impulse and will be flush with more cash - even if it’s less than they desired.

Anyway I play out the selling of assets, I end up with either no real change or deflation.

Hyperinflation typically leads to the abandonment of money - a rush to assets.

I don’t think any group is trapped other than the poor that hold no assets. No matter the outcome, they remain poor.

Those with assets can come out at break even or possibly even enrich themselves.

I think the only thing trapped beyond the poor is the system itself and those who control the system. Not really the participants…