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There are two main drivers of asset class returns - inflation and growth.
Cash - in savings accounts, short-term CDs or money market deposits - is great for an emergency fund. But to fulfill a long-term investment goal like funding your retirement, consider buying stocks. The more distant your financial target, the longer inflation will gnaw at the purchasing power of your money.
Slow growth and inflation have a tendency to accompany large deficits and increasing debt as a percentage of GDP.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.
Buy a $100 U.S. bond and frame it to teach your children about inflation by watching the U.S. bond value diminish to almost nothing over the next 20 years.
In the 40 years I've been working as an economist and investor, I have never seen such a disconnect between the asset market and the economic reality... Asset markets are in the sky, and the economy of the ordinary people is in the dumps, where their real incomes adjusted for inflation are going down and asset markets are going up.
My bottom line is that monetary policy should react to rising prices for houses or other assets only insofar as they affect the central bank's goal variables - output, employment, and inflation.
Median wages of production workers, who comprise 80 percent of the workforce, haven't risen in 30 years, adjusted for inflation.
And I am convinced that a single focus on preserving the purchasing power of the dollar, in effect, guarding against inflation or deflation, actually creates a solid foundation for the greatest job growth and the strongest economy that America can have.
Inflation is taking up the poverty line, and poverty is not just economic but defined by way of health and education.