The asset may well appreciate, hopefully at a rate faster than inflation. Financial assets represent the other main category of investment assets. Over the long term, we see periods of low inflation, alternating with periods of high inflation. Until the oil shock of the 1970s, post-War inflation in the U.S. was low. During periods of low inflation, most financial assets greatly outperform hard assets.
Financial assets are a claim on the earning power of some entity.
Low inflation generally fosters high economic productivity. During periods of low inflation, hard assets like vintage clothing and jewelry tend to appreciate rather slowly, often barely keeping up with inflation. From inflation data for the year 2000, it is clear that a 19-year period of disinflation is ending, ushering in a period of rising inflation. The significance of this development for the collectibles market cannot be overestimated. First oil, then labor costs, then general inflation, have started to awaken from their slumber.