Hello Hutch.
We disagree.
1. The Nasdaq is mostly massively captilized junk (i.e., businesses with zero barriers to competition, no profits, no credible business model etc.) That about sums up all but a handful NAS companies, which people seem to think we can build an economy around.
2. The reason the NASDAQ companies have "grown" is that they have the luxury of selling stock, rather than goods and services, to the public. What's more while the NASDAQ grew 80% last year, the US economy grew by only 5%. So what the NASDAQ is showing me is an excess of liquidity coupled with moral hazard induced capital flows into the riskiest assets with the highest potential return (no matter how unlikely that return).
3. The Central banks (Greenspan etc.) buy bonds, with money that is created by the Central banks. It's called an "Open Market Operation," or "Coupon Pass" or "Repurchase Agreement" (in that case, a loan). They add reserves to the banking system and maintain bank loan rates at the fed target rate.
4. I am not a techician. The point of the charts was that, contrary to what AG has been saying, inflation is not at all hard find. I think he no longer has the luxury of noticing inflation because an overly agressive tightening might prick the bubble. Not that I'm complaining. The current environment is easy to peg.
5. Gold will have its day. I don't know when. To know that I'd have to know how much CB gold is on loan, who the CB's are that lent and bunch of other facts I don't know about this murky market.
Paul |
