/biz/ - Business & Finance

this one was brutal...

>everything is getting more expensive
EVERYTHING IS RELATIVE
What exactly is getting more expensive? CPI/RPI show that inflation is relatively stable, therefore we have price stability. What we DO have is asset inflation. Why?

Central banks have a monopoly on money creation through issuing debt, normally done through quantitative easing, where central banks buy government bonds and/or other financial assets from institutions to inject liquidity back into the system and buoy up the economy. This money is supposed to trickle down and cause inflation, but it doesn't, at least not as much as traditional models would assume. This is because the money is injected into financial assets, increasing their value and causing an endless loop of ever increasing asset prices which in turn increases credit which in turn increases asset prices and so on and so forth.
This money doesn't trickle down to the majority because the elites, insiders, plutocrats or whatever you want to call them have a great deal of informational asymmetry and political clout which allows them to take advantage of risk shuffling (i.e. pawning off the risk of default to other institutions which have tacit or explicit government support) through financial engineering and guarantee that even if they do manage to fuck it all up, as happened in 2008, the government will bail them out.
What really happens is that the money printers simply inflate asset prices and re-shuffle capital ever upwards, meaning we have price stability (for everyday staple goods; note here that prices still inflate, but at a modest single-figure rate, which is entirely manageable and some may argue even beneficial to the economy as a whole), without financial stability (as the financial system is kept afloat via state-sanctioned market manipulation for the benefit of the capital-rich).
price stability =/= financial stability

WE are not fucked. YOU are fucked because you lack CAPITAL.

>>15003327
In case anyone missed the thread

rip in peaces opie