Most people think in terms of purchasing power. How much can one’s cash buy? I reject this view on two grounds. One, it encourages a liquidation mindset. If your life savings consists of 100,000 dollars in the bank, plus a house and some shares of AAPL and INTC, how many years’ worth of groceries can you buy?
If the grocery-value goes up, people cheer.
Life savings is not supposed to be about liquidation. People used to be able to earn a yield on their money. We should think of an estate as a business, with assets that generate income (as people once did). In this view, you don’t think of selling the business every minute of every day, cheering when its price goes up.
You think of its profits. You think of how many groceries you can buy–by operating a business to generate profit.
You don’t think of the purchasing power of the business, but its Yield Purchasing Power.
The conventional purchasing power paradigm paints a rosy picture. That may help explain why apologists for the regime of the irredeemable dollar promote it.
The yield purchasing power view shows something altogether different.
Below are links to articles I have written about Yield Purchasing Power. I also gave a talk about it, in fall 2016 at the American Institute for Economic Research, which was recorded on video.
Yield Purchasing Power Chart
Articles on Yield Purchasing Power
Move Over Entrepreneurs, Make Way for Speculation!
Who the Heck Consumes Capital?!
The Economy is in Liquidation Mode
Yield Purchasing Power: $100M Today Matches $100K in 1979
THERE’S Your Hyperinflation!
Interest – Inflation = #REF
Who Is Worth More: Some Hedge Funds or All our Kindergartens?
Falling Yields, Rising Asset Prices – Rising Yields, Falling Prices
Think Different About Purchasing Power