It is not normal to want prices to rise and currencies to lose their purchasing power. We look at the advantages of stable currencies and prices. Topics covered include: What's more normal, an inflationary or deflationary mindset? Why it is more normal for prices to fall due to productivity increases How central banks seek to overcome productivity-induced deflation by increasing the money supply How inflation and ongoing currency debasement encourage debt, the … [Read more...]
316: Paper, Rocks, or Digits—What Makes the Best Money
What are the elements of a successful monetary system. Source: Bartek.cieslak at Polish Wikipedia. Edited and captioned. Topics covered include: The stone currency of YapThe fiat currency of ancient ChinaWhy money requires trust, accounting, and tokensWhy too much money can lead to inflation and too little to deflationWhy the best money is useless other than as money Show Notes The island of stone money : Uap of the Carolines by William Henry Furness The Gold Standard, … [Read more...]
309: Investments to Fight Financial Repression
What are some investments that can generate a cash yield greater than inflation in an era when central bank policies keep government bond yields lower than the inflation rate. Topics covered include: How low are interest rates around the worldWhat have inflation rates been and what causes inflation and deflationWhat is financial impressionWhy are central banks keeping short-term interest rates so lowWhat determines interest ratesHow I-bonds workWhy active bond mutual funds can be … [Read more...]
235: What If Home Prices Always Declined
How to evaluate the purchase of a depreciating asset such as buying a house in Japan where prices have declined 23 out of the past 29 years. Photo by Manki Kim In this episode you’ll learn: There are no magical solutions to dealing with a housing bubble.Why Japanese home prices have declined for decades and why the houses are so cold in the winter.Why buy a house even if it will fall in price and how to go about doing so. Show Notes Designing Your Life: How To … [Read more...]
162: Is Inflation A Good Thing?
What causes inflation and why do central banks allow it to persist instead of having a 0% inflation target. Photo by Aaron Burden In this episode you’ll learn: How inflation erodes purchasing power over time.How money creation by banks causes inflation.What is the non accelerating inflation rate of unemployment.How shorter-term rates influence longer-term rates.Why central banks have inflation targets. Show Notes Did Quantitative Easing Work? - Federal Reserve Bank of … [Read more...]
MNY109 Plus: Portfolio Construction and Advisory Fees
This week on Money For the Rest of Us Plus we discuss how advisory fees can be a significant drag on performance returns. We also look at which asset classes do better during episodes of inflation and deflation. Finally, we review a new academic article by Cullen Roche on portfolio construction. The episode length is 24 minutes. … [Read more...]
51: Is Deflation Coming?
The world is flirting with deflation. How GDP growth, debt, population changes and exchange rates will determine whether a Great Depression like deflation is coming. Photo by Hans Splinter In this episode, you'll learn: What is gross domestic product or GDP.What causes GDP to grow over time.What would cause a nation to reduce its output.How debt influences both GDP growth and the rate of inflation or deflation.How GDP is calculated.Which countries are deleveraging and … [Read more...]
41 Plus: Investment Returns During Periods of Inflation and Deflation
In this week's Money For the Rest of Us Plus episode, I give a preview of current market conditions and share the historical performance of stocks and bonds during periods of inflation, deflation and price stability. The episode length is 17 minutes. … [Read more...]
2: What Causes Inflation and Deflation?
Inflation is caused when there is too much money flowing through the economy relative to the amount of goods and services being produced, leading to a jump in prices. Photo by runrun Inflation is similar to how athletes experience unpleasant side effects when they run faster than their aerobic capacity. When too much money chases capacity-constrained goods, services, and workers, it leads to a rise in overall prices. Conversely, deflation, or an overall decline in prices, can occur … [Read more...]
