>
While Dalio has publicly anticipated cash and bonds being poor investments in 2020, I'm making a blanket statement regarding appeals to authority (similar to you).Sure. But my appeal-to-authority has peer-reviewed models behind him. Does yours? [citation needed] :)
> I am curious though -- can you expand on what you believe Krugman's position to be here, and why it makes sense? He doesn't seem to worry about inflation from open market operations because it works until it doesn't.
I've heard the explanation (probably more than once), and it made sense to me when I heard it, but it was not important enough to me to bother retaining. I think this is a decent blurb on it:
> Under these circumstances, normal monetary policy, which takes the form of open-market operations in which the central bank buys short-term debt with money it creates out of thin air, have no effect. Why?
> Well, the reason open-market operations usually work is that people are making a tradeoff between yield and liquidity – they hold money, which offers no interest, for the liquidity but limit their holdings because they pay a price in lost earnings. So if the central bank puts more money out there, people are holding more than they want, try to offload it, and drive rates down in the process.
> But if rates are zero, there is no cost to liquidity, and people are basically saturated with it; at the margin, they’re holding money simply as a store of value, essentially equivalent to short-term debt. And a central bank operation that swaps money for debt basically changes nothing. Ordinary monetary policy is ineffective.
> The flip side of this, by the way, is that all those fears about how “printing money” in this slump would lead to runaway inflation were predictably wrong. If you paid attention to the Japanese story from the last decade, you knew that simply expanding the central bank’s balance sheet did little, and certainly wasn’t inflationary:
* https://krugman.blogs.nytimes.com/2013/04/11/monetary-policy...
So as long as rates are at/near zero, 'printing money' won't be a problem. If, however, rates are in a 'normal' range, then yes, increasing money supply can lead to inflation at that time.
Krugman first wrote about this in 1998 when Japan first experienced what the rest of us are now seeing (it asks for registration, but you can skip it):
* https://www.brookings.edu/bpea-articles/its-baaack-japans-sl...
Generally speaking, if you want to research this yourself, look at these concepts:
* https://en.wikipedia.org/wiki/Zero_lower_bound
* https://en.wikipedia.org/wiki/Liquidity_trap
Perhaps see "The IS-LM Model and the Liquidity Trap Concept":
* https://www.semanticscholar.org/paper/The-IS-LM-Model-and-th...
* https://doi.org/10.1215/00182702-36-Suppl_1-92
> These asset classes are severely under-represented in the CPI. Because these are mostly unrealized gains enjoyed by so few, there aren't that many more people competing to buy milk and eggs, which would actually affect CPI.
It has not been "under-represented in the CPI". It is not the purpose of CPI to look at asset prices, but rather (roughly) cost of living via a basket of goods. For home, the CPI generally includes either rent or mortgage carrying costs.
To home prices, Michael Batnick and Ben Carlson discuss this in light of Ben's weblog post:
* https://www.youtube.com/watch?v=d3dO8BW9RHg&t=3m26s
* https://awealthofcommonsense.com/2021/01/inflation-truthers/
* Discussed here: https://news.ycombinator.com/item?id=25644580
> Many progressive economists don't seem to realize their policies contribute to massive wealth inequality just as much as America's poor attempt at graduated tax brackets.
Want to reduce wealth inequality? Increase taxation/redistribution. Top marginal tax rates are half of what they were during Eisenhower's administration and the (adjusted) minimum wage is below what it was during Nixon. While you may need an economist to get the "right" / "optimal" number, you don't need one to know that they're probably too low.