Jul

14

 From the cheap seats, it appears that when you have (1) massive money printing, (2) a huge expansion in global productive & transportation capacity, and (3) probably the largest labor glut in history, then you have bubbles in assets where a demand/supply imbalance will not be brought to equilibrium by increased production (art masterworks, Vancouver/London/Sydney real estate, gold, equities, bonds), and you have disinflationary pressure on everything else.

Stefanie Harvey comments: 

I heard an interesting piece on Radio Times yesterday where Rana Foroohar was interviewed. She said one issue is that only 15% of the money in the market goes into the economy and 85% stays in the financial system itself, which is an inversion of what it was designed to do (later mentioning Adam Smith - refreshing.) She has a new book called "Makers and Takers"

From the blurb (bold/emphasis mine as an industrial scientist.):

· Thanks to 40 years of policy changes and bad decisions, only about 15 % of all the money in our market system actually ends up in the real economy – the rest stays within the closed loop of finance itself.

· The financial sector takes a quarter of all corporate profits in this country while creating only 4 % of American jobs.

· The tax code continues to favor debt over equity, making it easier for companies to hoard cash overseas rather than reinvest it on our shores.

· Our biggest and most profitable corporations are investing more money in stock buybacks than in research and innovation.

Not sure that I agree more policy is helpful. Smart people make money on churn so not too surprising.


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