Inverse inflation applying to firm assets and liabilities

[mrmanganese]

Is inverse inflation applied toward reducing the dollar value of assets and liabilities of a bank? If not, it definitely should be, as those are all dollar denominated.

What about the value of stocks on the global market with inverse inflation? It may be logical to reduce values by inflation rate, because inflation would usually be a component in revenue & earnings growth, and growth in stock prices is related to growth in those metrics. For instance, revenue may grow 8% in a year, but if inflation was 3%, then "real" growth was only 5%. So in a normal inflation situation, you might expect the stock price to increase by 8% to keep pace with inflation related growth. However, in an inverted inflation setting, you'd only see the real growth of 5%, so that's approximately how much you might expect the stock to be affected.

It's been a while since I played, I just remember liking the inverted inflation mode, but feeling like it was inconsistently applied, where DLC businesses specifically seemed to create an overpowered sort of protection against inflation, resulting in them offering outsized returns.

[Stylesjl]

From what I understand Inverse Inflation does actually lower the value of those assets/liabilities. And the stock prices on the global market I think also reflect inverse inflation but it is hard to know given that stock market prices fluctuate randomly all the time and inflation is only relevant to stock prices in the long run or when inflation values are high.

[mrmanganese]

From what I understand Inverse Inflation does actually lower the value of those assets/liabilities. And the stock prices on the global market I think also reflect inverse inflation but it is hard to know given that stock market prices fluctuate randomly all the time and inflation is only relevant to stock prices in the long run or when inflation values are high.

I had a really hard time figuring out whether inverse affects any of them. The balances at the bank are constantly shifting, and like you said, the stocks fluctuate a lot. It just seemed over the long haul like both stock and loan returns were way too lucrative, like I was both getting the expected returns, and also being completely sheltered from inflation on top of that.