But isn’t the cash’s purchasing power getting inflated away, at say 6.4%, so the liquidity evaporates?
We can all be given millions (super liquid) but that doesn’t make us millionaires in terms of purchasing power. At first it seems like everyone is rich, then folks realize it’s funny money and suppliers raise prices. Since money is (dynamically) valued by what you can buy with it.
So the seller of the house sold for a million, for example, but it turns out they actually have ~850k if they sat on the cash for a couple years.
We can all be given millions (super liquid) but that doesn’t make us millionaires in terms of purchasing power. At first it seems like everyone is rich, then folks realize it’s funny money and suppliers raise prices. Since money is (dynamically) valued by what you can buy with it.
So the seller of the house sold for a million, for example, but it turns out they actually have ~850k if they sat on the cash for a couple years.