I think you're right but I don't think it has to be that way.
Like others, up until a few years ago, I was a Keynesian. But then I realized that if you allow inflation you're not just "rewarding investment", but you're taking non-participation off the table -- and that's a big problem. Because then people participate in markets not based on value but because they have no choice. That means that you go from value investing to "growth investing" -- which is another name for pyramid scheme and people unironically saying that "the market always goes up."
Not how I understand it. That just means you're willing to tolerate a higher P/E for that stock. You still expect earnings will eventually cover the price.
When you have 401(k) plans which essentially say, "Put your money in the 'market' and it will go up to beat inflation," or you outright say (as many do) that "the market will always go up over time," that's growth investing, and it's straight up a Ponzi scheme. You don't care about the earnings, you just expect to sell for a higher amount than you bought.
Like others, up until a few years ago, I was a Keynesian. But then I realized that if you allow inflation you're not just "rewarding investment", but you're taking non-participation off the table -- and that's a big problem. Because then people participate in markets not based on value but because they have no choice. That means that you go from value investing to "growth investing" -- which is another name for pyramid scheme and people unironically saying that "the market always goes up."