Where exactly does all the inflation money go?

[Anonymous]

The lack of understanding on this forum is… understandable.
Broadly speaking, nobody gets richer, inflation is caused by a too many dollars chasing too few goods and services.
We massively increased the money supply the past 2.5 years, and this is global, America actually exported inflation.
Inflation has knock on effects across the economy, so it’s not like a builder is getting much richer because the price of houses has skyrocketed, that demand for house increases demand for the materials to build houses, so the price of materials also rises.

But there can be winners and losers. You can win the inflation game by having locked in a very low mortgage rate, and you end up paying off that mortgage with dollars that are nominally worth less than they were when you started your mortgage, eg your mortgage is appreciably cheaper as inflation increases

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Collectors, Lenders and Investors.

OP here. What investors exactly? If the market is down 20% as a whole? Is it private companies?

Check out earnings call transcripts and shareholder reports for different companies in sectors such as pharmaceuticals, oil, food, and you will find where the “inflation dollars” went

But if all of this is true, why aren't the stock indices going up? S&P pharma is basically flat. S&P Oil and gas is comparable to 2015 levels. Food and beverage is doing well, but still only a 10% annualized 10-year return (I guess I see why bill gates bought so much land now!).

It would just seem that index funds would be performing better if it was corporate greed. Is the money being siphoned off to preferred shared holders in some way? I just don't get where it's all going?

because people are afraid that we are in a bubble, so they are selling their stock and sitting on cash. earning 5% in CDs is preferable to having all your money in the market when it dramatically drops 40% or whatever in the next 6-9 months

[Anonymous]

During the pandemic, millions of Americans literally got free money on the email, then billions more were given to businesses through PPP (don’t get me started on all the fraud), oh yea also interest rates were zero. Way more money chasing the same things

[Anonymous]

Anonymous wrote:Hoping there's maybe an economist or something on this forum because I'm simply confused.

Groceries seem to be up 30% or so on average. Used cars are more expensive. Housing has appreciated (until recently) and the cost of housing has soared (40% increase in price plus rates ballooning from 3.5% pre-pandemic to 7-7.5% today.

Despite everything costing more, I can't for the life of me figure out where all of this money is actually going? Most people working in government, education, etc. have seen raises that significantly underperform "real inflation" metrics. Even friends in the private sector seem to be getting promoted, but their raises and promotes are hardly worth anything when you account for inflation (10% raise is eaten into pretty quickly these days).

Credit card debt is ballooning. The stock market is down 20% from ATH.

No one seems to be getting richer. We're all becoming remarkably more poor, but someone has to be winning right?

Is it old people collecting social security and a general loss of productivity due to aging demographics.

Is Russia eating our lunch?

Is the US diminishing in terms of power and I'm just paying more for food so someone disadvantaged doesn't have to?

Is the market down because its forecasting in interest rate hikes and the unwinding of the fed balance sheet?

Someone. Please. Help me understand?? I don't really buy this media narrative that feels spoon fed and maybe 3-6 months outdated by the time it arrives. I'm not sure I trust the cohort of journalism majors to really know what's happening as it happens...


So my question to whoever might be able to answer this is simply, "Where is all the cash going?"

The cash goes to the entity where it finally comes to rest. Say you make $100K (from $90K last year) and are left with $10K at the end of the year after ALL expenses. That $10K goes to you. The $45K car you bought (you would have spent $40K last year) will go to the dealership. The additional $5K is due to inflation and will get split across the value chain - Dealership, salesman, manufactured, other staff, etc.

In this example, you and the car dealership value chain participants benefited from inflation - $5K each. The discussion on "raises are not keeping up" is just mental masturbation, that only matters to those who live paycheck to paycheck. if you are going to bank most of your raise, then it doesn't matter as much. Sure it's less than otherwise but assuming you invest the $5K, the $5K will end up doing better due to inflation as well over the long term.

[Anonymous]

Does China’s selling of U.S. debt have to do with the inflation?

[Anonymous]

Anonymous wrote:Corporations are doing stock buy backs and paying their CEOs multi millions. Meanwhile, the workers themselves aren't doing as well

The largest egg company in America? Gas companies? Banks? And many more, all reporting record profits.

YET there is an "egg shortage". At Whole Foods there was a sign saying you could only buy 2 packs because of a nation wide egg shortage.

[Anonymous]

Anonymous wrote:There’s lots out there if you want to read a little beyond DCUM opinions. Perhaps you could get something out of the George Mason’s Mercatus Center’s “Inflation Primer.”

I'll check this out.

[Anonymous]

Anonymous wrote:During the pandemic, millions of Americans literally got free money on the email, then billions more were given to businesses through PPP (don’t get me started on all the fraud), oh yea also interest rates were zero. Way more money chasing the same things

This is it.

[Anonymous]

The top 1% got even more 1% during the pandemic than they were beforehand. That'd be a great place to find some extra money. It's out there somewhere per M2 (money supply) data.

And as people have said, inflation is too much money chasing too few goods. We paid a bunch of people to sit and home and do nothing while we shut down many businesses that created the goods. It's literally inflation 101.

[Anonymous]

M2 chart- https://fred.stlouisfed.org/series/M2SL

Such a huge jump in 2020 and only a tiny blip down in the past year.

[Anonymous]

One last thing- it may be more helpful to think of the events as a currency debasement rather than "inflation". Plus, many think due to the rising national debt and now the tremendous interest payments on said debt (approaching more than the entire defense budget), that such currency debasement will only continue. You will never see $1.99 ground beef again.

[Anonymous]

It is terrifying that people don’t understand this. It goes nowhere. Literally everyone got more money, approximately the same amount (in percentage) and at approximately the same time. But, not exactly the same percentage and not exactly at the same time. And this is why it feels like inflation is hurting you.

In the end of the day it all evens out (approximately). If you locked in asset acquisition in the beginning you will do well. If you acquired at the end, you don’t do poorly, you just miss the gain.

Virtually everyone who owned a house when the pandemic began will be better off when the inflation subsides.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Corporations are doing stock buy backs and paying their CEOs multi millions. Meanwhile, the workers themselves aren't doing as well

The largest egg company in America? Gas companies? Banks? And many more, all reporting record profits.

YET there is an "egg shortage". At Whole Foods there was a sign saying you could only buy 2 packs because of a nation wide egg shortage.

The egg shortage is bc of an avian flu virus requiring culling of large numbers of chickens. The price of beef is up for a different reason which is that there are fewer and fewer beef farmers raising cattle.

[Anonymous]

Anonymous wrote:It is terrifying that people don’t understand this. It goes nowhere. Literally everyone got more money, approximately the same amount (in percentage) and at approximately the same time. But, not exactly the same percentage and not exactly at the same time. And this is why it feels like inflation is hurting you.

In the end of the day it all evens out (approximately). If you locked in asset acquisition in the beginning you will do well. If you acquired at the end, you don’t do poorly, you just miss the gain.

Virtually everyone who owned a house when the pandemic began will be better off when the inflation subsides.

This. Oh my lord. Isn’t this the same forum where everyone claims to make $500k per year? And have saved $2M by age 40?

[Anonymous]

Anonymous wrote:Greedy corporation's price gouging.

Which one?

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