Jan

13

 Boomers are retiring.

A. their productivity is going down.

B. They are consuming more than they are producing.

Therefore, C. they are ultimately inflationary.

The store of wealth of the boomers, however, does slow down the Velocity of money. Hence the money created now, is not causing inflation due to the "higher savings" rate or in many cases "lower leverage rate" of both private and companies.

But to perhaps ask for a further explanation: People do "consume" despite deflation, but they stop storing value in assets that are deflating, i.e. houses and real estate in general. Instead they store value in cash and short term liquid holdings…. hence slowing the velocity of money and further causing a deflationary spiral.

While stopping building houses nobody really needed would free up resources to more productive uses, it also was the most common way to leverage, again both privately and for financial companies, and hence a massive slowdown of money turns from hand to hand.

What am I missing?


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