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Malthusian said:Thrugelmir said:This is driven by opinion based on macro and micro news events.0
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Inflation is actually the decreasing purchasing power of a currency over time. The increase in prices is simply the rate of inflation.
Increase in prices and decreasing purchasing power of currency are literally the exact same thing. If you want to get really semantic, the rate of inflation is the increase in prices divided by current prices.
Inflation can be a destructive force for some companies. As the market determines whether to buy the goods or services from that particular source.Inflation is a destructive force if your inputs rise faster than the price the market is willing to pay for your outputs. But if the price of inputs for someone is going up, some other company somewhere is rising in value as businesses pay more for their outputs.If you are diversified the risk that you have all your money in the first company and not the second is effectively eliminated. At least from the perspective of someone who is happy to track the indices because they are only interested in preserving the real value of their capital and not outperforming the market.If you are diversified then what happens to "some companies" is not your problem. (If you are a genius who can consistently outperform the market it is also not your problem as you won't invest in them, but there aren't many of those.)Technology and outsourcing has driven cost of production lower for the past 3 decades.And the 3 centuries before that. Which leaves more resources available to be spent on other things, usually owned and produced by other publicly-listed companies somewhere in the world. This is why the continued improvements in productivity since the Industrial Revolution haven't resulted in permanent deflation.1
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