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Real risk equals loss of purchasing power.

In nearly all academic studies, risk is defined as "risk equals volatility." Usually the safest asset is deemed to be the US T-Bill, often called by the academics the "risk free asset." This is misleading because it is merely an academic reframing of the definition of real risk.

If inflation shoots up 10%, that T-Bill now buys 10% less goods. If the dollar loses 20% against the value of a basket of currencies, that dollar now buys 20% less imported oil, 20% less imported food and 20% less clothes made in China.

Real risk equals loss of purchasing power.