Comments (5)

  1. Just brilliant David – Thank you.

  2. f james knittle says:

    great series on the bubble-many thanks
    what if a global (almost everyone but swiss and germans would
    benefit) return to the gold standard! price it high enough (50,000
    per ounce) and existing debts become insignificant. debts in old
    dollars, income in new.

  3. Aurelia Tan says:

    Thank you for a great read.
    Question : besides gold, would pHysical property serves as a good inFlation hedge too?

  4. SM says:

    Very interesting article, thank you.

    My concern is, as our economy is credit based, given current leverage in all segments, any substantial increase in rates would lead to huge hit to profits and depression in economic activity. If MMT scenario unfolds, all private credit issuance will stop. the fed will not only have to control the whole curve, it and the government will essentially have to become the provider of credit to the economy either directly, or through backing up NIM for the banks. Again, great destruction of capital and depression, even with “great” nominal returns on equity investments….

    I am also afraid in this situation gold and gold miners investments can be restricted/confiscated to quench alternative capital allocation.

  5. Sam says:

    If your MMT thesis is correct (I think it is), then the whole bubble in equities concept is not – it just means the market anticipates the same. in the case of dollar destruction equities will go up as an aggregate, and will be among the assets classes to preserve wealth (at least partially).

    Of cause, the preservation may not be 100%, as many businesses will suffer/go under. Yet, given the total size of capital invested, there is no plausible way to move it somewhere else.

    Ironically, the zombie companies that thrive by making on volume what they loose in sales, may also be beneficiaries, as they are getting market share now, and in the end their liabilities will go away, and structural inefficiencies may be altered to the positive side by coming currency destruction….

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