The U.S.$ has been in a stealth decline, though there has been nothing stealthy about the Bond market smash up.
A decline in the value of the US$ (Inflation) would explain part of the equity rally, as well as the bond market's debacle.
Tough stuff to put your mind around.
2 comments:
How does inflation happen in an economy of falling demand and falling wages? Is this the dollar falling against other currencies?
Oil is rising, yet stocks go up by 10MM barrels per week. Someone is stockpiling the genuine article, not just buying futures. That would lead me to believe that the dollar is in trouble against other currencies. If the tanks fill up before real shortages show up or the dollar falls, there may be one last really good opportunity to buy.
Regards,
Coal Guy
Inflation is the devaluation of fiat money from printing more paper money than the actual value of the real economy.
Money isn't capital; its just a means of exchange. It can represent capital only if it is representative of something of true capital value, otherwise its as valuable as Monopoly money.
The amount of money in circulation now is in excess of the actual wealth existing in society, it is debt created on the promise that future real wealth will eventually be created to support it.
But with a contracting economy we see wealth destruction; but the 'wealth' was imaginary, it was just debt based on non-existant future capital.
The trouble is, if all currencies are doing this, you can't see it between currencies as they're all falling together.
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