Talk:Asset price inflation

Copyright

Added copyedit template -- good start to an article, but the tone is pedantic. -- Avocado 01:46, 10 October 2007 (UTC)

Overhaul recommended

First, Asset Price Inflation is a misnomer, the article should be renamed Asset Price Appreciation. Here's why:

"Inflation" is a defined term with a specific meaning: a sustained increase in the general price level of goods and services. It is assumed and understood by economists (although not explicitly stated, as it should be) that "goods and services" refers to currently consumable goods and services, intended for consumption generally within a year. These would be goods and services consumed to maintain a household or business in the ordinary course of their affairs. That is, "everyday expenses."

"Capital assets" are long-term assets not intended for current consumption, but rather are held for a period generally greater than a year. Examples of capital assets are homes and financial investments. When the values of such capital assets increase, some say that their prices "inflate" or "are inflating," which is not necessarily wrong per se. However, often such people then make the leap from "inflate/inflating" to inflation, which is most definitely incorrect, as "inflation" has a specific definition that does not apply to capital assets. For this reason, some are confused as to why inflation of currently consumable goods and services is perceived as bad, whereas "inflation" of capital assets is perceived as good. But an increase in the value of a capital asset isn't "inflation" to begin with, it's appreciation.

As one can see here, the Consumer Price Index tracks only currently consumable goods and services, with one notable exception: vehicles, as these are goods that are considered to be currently consumable because we drive ("consume") them everyday. Note that "housing" is tracked, but this is not the same as the value of homes, as those are capital assets. Similarly, financial assets are not tracked in the CPI, as they are also capital assets. Nor are other capital assets such as boats and airplanes.

Although it is true that the purchasing power of goods and services derived from realized gains from the sale of appreciated capital assets is reduced by inflation, such reduced purchasing power can be determined by adjusting realized gains by an inflation index (such as CPI) for the period that the capital asset was held. But this is not the same as saying that the capital asset itself experienced "inflation." It experienced appreciation. — Preceding unsigned comment added by Soibangla (talk • contribs) 18:56, 2 January 2015 (UTC)

POV tag

This concerns POV tag cleanup. Whenever an POV tag is placed, it is necessary to also post a message in the discussion section stating clearly why it is thought the article does not comply with POV guidelines, and suggestions for how to improve it. This permits discussion and consensus among editors. From WP tag policy: Drive-by tagging is strongly discouraged. The editor who adds the tag must address the issues on the talk page, pointing to specific issues that are actionable within the content policies, namely Wikipedia:Neutral point of view, Wikipedia:Verifiability, Wikipedia:No original research and Wikipedia:Biographies of living persons. Simply being of the opinion that a page is not neutral is not sufficient to justify the addition of the tag. Tags should be added as a last resort. Better yet, edit the topic yourself with the improvements. This statement is not a judgement of content, it is only a cleanup of frivolously and/or arbitrarily placed tags. No discussion, no tag.Jjdon (talk) 23:47, 30 April 2008 (UTC)

Rename

I think I've more commonly heard references to 'asset price inflation' than to 'assets inflation'. Might be a better title? --Rinconsoleao (talk) 09:04, 8 August 2008 (UTC)

General concerns about this article

"Asset price inflation is an economic phenomenon denoting a rise in price of assets, as opposed to ordinary goods and services."

Ordinary goods are also assets.

"Under free market capitalism, assets inflation has particularly affected the financial sphere (e.g. derivatives, dot-com bubble, boom and bust, etc.)."

Boom and bust is a "financial sphere"?

"However, it is also spilling over into the 'real' economy, particularly the housing market."

Derivatives are already non-monetary items or part of the "real" or non-monetary economy as opposed to the monetary economy. There is thus no spilling over into the "real" economy.

"This is the result of the following changes to the world economy:

• deregulation
• globalisation
• financialisation."

This statement needs to be referenced.

"Many people find it bizarre that, while general inflation is seen as "bad", house price inflation is seen as "good"."

The term general inflation meaning the rise in the general price level is used in the same sentence with the term "house price inflation" where inflation simply means an increase in the average price of houses. PennySeven (talk) 17:32, 4 April 2009 (UTC)

I also find it odd that wage or commodity inflation is bad, but asset price inflation is good. Since when is having to pay half ones income for housing a good thing? If land was taxed at the full rental value, housing would be a quarter of the cost or less. Whatever the taxman relinquishes is used to bid up housing, so that one ends up paying even more as taxes have to be made up by taxing labour instead of land. I think one of the reasons is that the rich don't make profits or wages, they make capital gains (which are taxed at half the rate as profit, if at all). WjtWeston (talk) 02:35, 2 January 2011 (UTC)

Speedy deletion

I would tag this article for speedy deletion.PennySeven (talk) 17:31, 4 April 2009 (UTC)

Concepts in this article should be merged or included in the inflation (a price increase) article or that article´s concepts should be merged/included in this article. PennySeven (talk) 17:38, 4 April 2009 (UTC)

I have removed Inflation (a price increase) to avoid POVFork with this article.PennySeven (talk) 10:16, 5 April 2009 (UTC)

Creating the Inflation (a price increase) article was an unintentional mistake on my part.PennySeven (talk) 10:17, 5 April 2009 (UTC)

Asset price inflation is asset price increase

Asset price inflation is asset price increase, the same as inflation (a price increase) PennySeven (talk) 18:38, 4 April 2009 (UTC)

Real Estate

Whenever taxes are taken off real estate the result will be an asset bubble. Whatever the taxman relinquishes will be used to further bid up real estate prices. See: The New Road to Serfdom: An illustrated guide to the coming real estate collapse by Michael Hudson WjtWeston (talk) 02:27, 2 January 2011 (UTC)

'Two empty beer cans worth Two trillion dollars'

Asset price bubble is not hard to imagine as long as we realize that debts are illusory wealth. Two guys can decide to swap beer cans with each other, value each beer can at 1 trillion and call themselves the world's first trillionaire . This is what the banks did during 2003-2007. Create increase in house prices by a trillion ( imaginary beer can ) in exchange of mortgages worth a trillion dollar recorded as asset in their books ( imaginary beer can since debtors will default ) — Preceding unsigned comment added by 182.19.253.212 (talk) 23:37, 31 December 2014 (UTC)

Dr. He's comment on this article

Dr. He has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

The concept of "assets inflation" is confused with "asset price inflation" and some clarifications from experts are needed. There should be a connection to bubbles and crashes.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. He has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Carl Chiarella & Roberto Dieci & Tony He, 2006. "Aggregation of Heterogeneous Beliefs and Asset Pricing: A Mean-Variance Analysis," Computing in Economics and Finance 2006 108, Society for Computational Economics.

ExpertIdeasBot (talk) 16:29, 19 May 2016 (UTC)

Dr. Derviz's comment on this article

Dr. Derviz has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

One must clearly state the relation of the discussed term with that of asset prices bubbles. The 17th Dutch tulips episode mentioned in the last section of the article is a conventionally provided example of a bubble, not inflation.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Derviz has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Derviz, Alexis, 2013. "Bubbles, bank credit and macroprudential policies," Working Paper Series 1551, European Central Bank.

ExpertIdeasBot (talk) 18:26, 27 June 2016 (UTC)

Dr. Alevy's comment on this article

Dr. Alevy has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

As noted this is a 'stub' and the bulk of the issues lie outside my area of expertise.

My contact with this topic is through research on asset price bubbles in experimental markets. That topic is not addressed here, however, it seems more fundamental questions are also not well-addressed (e.g housing and stock market bubbles and crashes).

Work that would provide an entry into the experimental literature (which has shown that mispricing that can be characterized as bubbles and crashes is a fairly robust phenomenon) includes the seminal work of Smith, Suchanek, and Williams(1988; Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets; Econometrica) and a recent review by Stefan Palan (2013; A Review of Bubbles and Crashes in Experimental Asset Markets; Journal of Economic Surveys)

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Alevy has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Jonathan E. Alevy & Michael K. Price, 2012. "Advice and Fictive Learning: The Pricing of Assets in the Laboratory," Working Papers 2012-07, University of Alaska Anchorage, Department of Economics.

ExpertIdeasBot (talk) 17:04, 27 July 2016 (UTC)