[quote=jpinpb][quote=CA renter]I think that asset price deflation hits the rich more than the poor. While “the rich” do generally have more cash than poor people, more of their money is tied up in assets (stocks, bonds, housing, etc.) than poor people. Workers get their “wealth” from wages, not capital gains…[/quote]
CAR – I’d add that with the phenomena of zero down, NINA loans, the poor were able to buy houses (assets) and not just rely on wages b/c there was equity withdrawal, as well.[/quote]
True, and it was a great party while it lasted.
Unfortunately, the Joe Sixpacks of this world cannot distinguish between illiquid and liquid investments, nor do they necessarily understand the power of leverage, especially how that can work on the downside.
Wealthy people generally understand the risks and *in general* are hedged to some extent. They’re also better able to get in and out of certain asset classes or they can hire someone to babysit their investments for them. Poor people with highly leveraged housing “investments” are the poster children for what happens when all of your eggs (money and/or leverage) are in one basket. That rarely works out well in the long run.
I’d much rather see wage inflation than asset price inflation, but have no say in these things. 😉
