Inflation, Deflation & Wealth Concentration

Inflation is making headlines and attention is directed towards government statistics like the consumer price index, or CPI, which is calculated using a basket of consumers goods. However these metrics don't fully represent inflation in respect to the devaluation of our currency. In recent years the gap between the global rich and poor has been widening. The top 1% of high net worth individuals now control 47% of global wealth while the bottom two thirds of the population control just 3%. The advent of the internet has meant that businesses can scale and wealth can be created faster than ever. But wealthy individuals, for the most part, are investing their funds rather than making material purchases. That money sits in real estate, stocks, financial products and inevitably a spreadsheet. As wealth concentrates down to fewer individuals, who spend less as a percentage of their wealth, it takes money out of circulation. This creates a distorted economic impact where assets are increasing in value much faster than consumer goods. The billionaire next door probably doesn't spend significantly more on items that form the consumer price index basket of goods. The coronavirus pandemic was the biggest shock to the global markets for a generation. Entire economies shut down while people stayed at home in lock down. Yet the stock market traded at all time highs. This is because governments across the world are increasing monetary supply at an astonishing rate never seen before in history. The vast majority of this newly printed money finds its way in to financial markets to support the economy. This causes asset prices like stocks to increase which benefits those who are invested creating a scenario of the rich getting richer and a vicious circle of inequality. It's clear investments have become more expensive but are assets increasing in value or is the value of our currency decreasing? I believe that wealth concentration is having a deflationary effect causing real inflation to be far higher than advertised by government statistics. Central banks can't increase interest rates to slow down inflation without hurting the economy. I'm not sure how this plays out or what we can do to make things better but to me it doesn't feel like this isn't sustainable.

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