system
Given the following post, respond as if you're commenting on Reddit:
human
If inflation decreases the buying power of cash, why do people sell off stocks on reports of high inflation? Wouldn’t it be better to have your capital invested in an asset?
gpt
The expectation is that the Federal Reserve will continue to tighten financial conditions in order to combat high inflation. This means credit will become more expensive and growth will be harder to achieve for these companies. There's so much more to it of course but that's the broad stroke explanation for why equities are responding poorly.