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@ FLASH⚡️
2025-05-06 07:41:45
⚡️👀 READ - The five buckets of inflation
"If you create an array of all the products, services, and assets in the world that you might purchase with the cash flow generated from working, there are four standard buckets and one special bucket.
The first bucket is deflating products. This is anything that could be dematerialized to your iPhone, iPad, or computer: video, music, news, books, maps, information, etc. Or anything manufactured by a robot or in a big factory that gets stamped out in massive quantities, with a low variable cost and a high fixed cost: generic drugs, computer chips, and commodities. They’re all deflating.
The next bucket is secondary property. Its inflation rate is 0 to 2%. Property in the secondary markets [includes] manual unskilled labor, branded consumables, government services, and regulated services. They hold their value or tick up [slightly].
The third bucket is what nobody talks about, where prices are rising 6 to 8% per year. That’s scarce products: luxury items, elite medicine, elite services, and elite education. Thirty years ago, I went to MIT, and it cost $9,600 a year. Now it costs $60,000 a year. Do the math. It’s up by a factor of six in 30 years. That’s ~6% per year.
Then there’s this horrifically painful category—scarce assets—where inflation is between 8% and 24% per year. That’s equities, debt, prime real estate, luxury property, and scarce art. The S&P index went from 1,000 to 3,500 over ten years (2010-2020), which gets you a decent clip (13.5%). Then look at a penthouse apartment in New York, a house in the Hamptons, or an acre of beachfront property in South Florida—they’re going through the roof.
And, of course, I’ve got one last category inflating faster than 25%. Do you want to guess what that is?
Bitcoin."
— Michael nostr:nprofile1qqs2xs05tluhtr6hpgsmqqxp04898gayjlyrjlexcrndv8j6el784xqpz4mhxue69uhk2er9dchxummnw3ezumrpdejqz8rhwden5te0dehhxarj94ex2mrp0yh8wmrkwvh8xurpvdjs5krwps
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