We know that buffett is heavily into ‘trailorparks’ and Gates is buying Farmland - (assets) - Housing is also ‘Assets’ - and these are all areas where indivivuals either have to pay to access products or to acquire in their own right.
So I’m not so sure that the ‘Plebians’ will be content to just “let the rich get richer” - without seeking to participate. In fact House prices, through the mechanism of Attributed gain have already made many ‘Boomers’ and others seem wealthy.
The Result of “no Inflation” due to asset price rises - surely leads to ;
"You will own Nothing " - and you will be happy - N’est ce pas ?
Yes, it’s an easy to understand phrase ’ money printing’ but as you say QE is not the creation of new notes which is an inflationary pressure.
However QE does have an effect on long term int rates - causes them lower (and thus stimulating Govt spending/borrowing).
QE sucks financial assets, most commonly Govt Bonds out of the system (private sector) and replaces with easier to spend Bank Reserves - as the bonds get bought so their price goes up and therefore yield (int rate) comes down.
First direct effect is not felt by the average consumer - rather by wealthy investors in the Stock market - as long term rates come down then a guy has to get profit somewhere.
Is this the reason for JP investors selling off US bonds? Quote from this article:
Treasury Department data show Japanese investors overall have sold a net $24 billion of U.S. government bonds since the start of the Asian nation’s current fiscal year on April 1. They offloaded $35 billion in the 12 months before that, the most in three years.
Not sure how to interpret this news yet and it’s impact on the USD tbh. On the surface it appears to be massively risk-off sentiment?
If they were big sellers that would indicate a rise in yields - which is exactly what we got.
The world and his mother was short T bonds for quite a while but that short position is being closed out which explains partly the fall in yields over the past couple of months.
The bond market is not my speciality but I think a move into bonds and fear of deflation to come will push up the dollar.
It’s likely the stock market will top soon (ISM tops leads market tops by about 3-6 months).
If we do get a major top in stocks that can only be dollar bullish
Apparently the world’s biggest pension fund played a huge part. The Japanese Government Investment Fund (JGIF) reduced it’s exposure to US bonds and bills from 47% to 35% of it’s foreign debt holdings.
It’s great to understand there’s a correlation b/w bonds and the ISM. This got me to read this bit on investopedia.
LOL. For someone with no background or clue of economics I’m better off starting from the ground up. Trying to finish an Al Brooks book (2/3rds of the way through a grinding and annoying read so far) and start off with a “For Dummies” book on economics. I’ll ratchet my way up to Macro Economics soon enough
But reading the news and trying to understand it has certainly been educational.
