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To Hit in the Field of Financial Market Delusions, Keep Your Eye on the Ball 3/31/21

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2 hours ago, potatohead said:

My theory is that the money or reserves being created is  simply being funneled to financial assets and then leveraged umpteen times over.

Yes. 

2 hours ago, potatohead said:

This financial engineering pins this velocity number down because money is trapped

This is where the common conception of V creates confusion. It just doesn't work that way. The money isn't trapped. It's just circulating in the financial sphere and not the economic sphere. Hence we get massive asset inflation. Nobody cares about that because measures of consumption goods inflation favored by eConomists and policymakers are muted. CPI and PCE specifically exclude asset prices, including housing. If actual house prices were included in CPI it would be 6% not 2%. 

Which is why they exclude it. Nothing to see here. Move along. 

 

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1 hour ago, DrStool said:

Yes. 

This is where the common conception of V creates confusion. It just doesn't work that way. The money isn't trapped. It's just circulating in the financial sphere and not the economic sphere. Hence we get massive asset inflation. Nobody cares about that because measures of consumption goods inflation favored by eConomists and policymakers are muted. CPI and PCE specifically exclude asset prices, including housing. If actual house prices were included in CPI it would be 6% not 2%. 

Which is why they exclude it. Nothing to see here. Move along. 

 

really appreciate. Yes by trapped I meant stuck in the financial system.

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1 minute ago, DrStool said:

I don't know why gold has not done well in this environment. 

long story short....Most have been playing on paper. The leverage and leasing game is adding more ounces into the market to act like a sponge during rising times. The physical market is small compared to paper. I have to say that at least bitcoin not having a deep derivatives market, acts like a cleaner market compared to the metals. However, we are seeing deleveraging going on in the metals space. Physical is now being demanded. I am trying to educate people to the reality that physical metal provides versus the risk in everything else. The silver movement is having an impact. I think the end game is when physical gold and silver become too expense to its paper counterpart and difficult to obtain. Just like physical assets being removed from the CPI, gold and silver are the barometer of confidence in this whole shell game.

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