The lion kingdom managed to grow its stonk weighting to only 38% during last year's bear market.  Most animals today have at least 50% in stonk or even higher.  Lions have a delusion that they can get a better deal in the future.  Once again, another bear market seems to be over despite quantitative easing rolling over.  The fed is matching its sales with retail cash inflows to keep things roughly flat. 

The journey began with asking 3 big questions: does inflation targeting manely create inflation or deflation?  How does becoming more productive outgrow debt?  Does the government calculate inflation the same way taxpayers calculate capital gains?  If everyone trades based on inflation targeting, won't a tsunami of early retirements require monetary tightening?

Intuitively, if productivity grows, prices should fall & debt should become more burdensome.  What really happens is falling prices of some items create slack which allows other items to rise in price.  The government trades price increases against price declines the same way investors trade capital gains against capital losses.

 

 When one item can no longer fall, another item takes its place.  30 years ago, the government didn't track cell phone plan costs.  Today, it's a key measurement.  There is always something else depreciating.

 

Inflation targeting has always been a battle to push inflation higher than its natural equilibrium.  The faster 1 thing depreciates, the faster another thing has to appreciate to hit the target.  Most items for the last 700 years have depreciated.  Only in 1979 & 2022 has inflation targeting required tightening the money supply for any period of time. 

Not enough people save money for a tsunami of early retirements to crush the stonk market.  There is always more than enough productivity, more than enough people who need money, to create deflationary pressure.  There is always more labor than demand for it so the government will always be under more pressure to loosen the money supply than tighten it.