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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: bart13 who wrote (75584)12/14/2006 11:15:59 AM
From: GST  Read Replies (1) of 110194
 
You need to look beyond money to understand what money will buy. Roughly 300 million Chinese were brought into the industrial global economy over the last twenty years. The build out of infrastructure has been nothing short of breathtaking. Another 300 million are expected to join the global industrial economy in the next ten years or so -- more than joined in the last twenty years. Add India and other parts of the world and you have a vastly changed set of supply and demand conditions.

I remember one visit I had to Japan three years ago now. I met with officials from Commerce and had a far ranging discussion about trade related issues. They readily agreed that there were probably no issues that could not be solved in coming years -- except for one area. And that area is competition for resources like oil -- and oil in particular.

The monetarist looks at money supply and then goes home to bed satisfied in the belief that money supply reveals all. Hogwash. Money supply is the sound of one hand clapping. Add one billion consumers to the world -- at 1.5 billion it is triple the number of twenty years ago -- and then try to pretend that prices are all about how much paper you decide to print. The same is true of positional goods --- the price of entry into Harvard, beachfront property in Hawaii, fine art. It is not about money supply alone. It is about the supply and demand that money is used to mediate among nations. It is about national competitiveness. It is about global supply and demand and the imbalances that in time work their way through the system.
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