No, the real reason to worry about the expansion of the money supply is not because it will keep growing ad infinitum, the reason to worry is because an ever-expanding money supply is the only thing holding up asset values right now, so if it collapses, so will asset values...
I'll Take $1,000. A Loan? No Thanks
Back to the hyper-inflationists. 2003-2007 was about giving the middle class cheap loans so they could tie them around their necks and bungy jump off the nearest bridge. Now, the Lost Boys of the Idiocracy can't figure out why lending the middle class more cheap money isn't leading to inflation. It's because no one is giving away free money, at best they are making loans available to people who are already have too much debt, have no collateral, or otherwise can't be fooled five times in a row. Only the morons managing billions and their stooge acolytes haven't made this basic connection yet.
Here Lies The Third Great Asset Bubble
The ever-dwindling set of beneficiaries of today's latest asset bubble are looking down the tracks into the distance trying to discern what will happen if current policies are continued ad infinitum. They are making the self-delusional mistake of extrapolating the recent past into the indefinite future. More importantly, they are conveniently ignoring the obvious fact that their own bloated wealth is dependent upon an ever-expanding money supply which is a model that does not work in reverse. Today's illusory asset values are supported merely by confidence and the marginal fool's willingness to leverage himself into oblivion by buying assets that are ever-more disconnected from their fundamental valuations. Lastly, this isn't a fucking mystery novel, only an abject fool believes that Central banks can defy reality indefinitely. This liquidity-driven "strategy" is already failing the vast majority on this planet and will soon fail the remainder. Without attendant bailouts, this third bubble in assets, confidence, and stupidity, will be the last...
This is something the billionaire set can't even bring itself to contemplate. The overwhelming majority of the money supply does not consist of coins and bills in circulation, it consists of credit. The supply and demand for loans and borrowed money. All of those loans and borrowed money's are secured by collateral. Therein lies the problem, these collateral values (e.g. stocks, real estate, bonds etc.) which inherently support all of this lending and borrowing for speculation, are themselves inflated by the excess liquidity generated by Central Banks. Without increasingly inflated asset values, no one would be willing to lend against these "investments". This "system" of leveraged loans for speculation is similar to how a mortgage on a house works - if the value of the house falls below the value of the loan, then the borrower can be foreclosed, EXCEPT, in this case the amounts of leverage applied are far greater, the value of the collateral assets fluctuate daily, and lenders can recall their loans at the first moment the equity turns negative. In other words, this "expansion" in the money supply is by no means permanent and it relies solely upon artificially inflated asset values driven by the rentier class trading pieces of paper back and forth between each other, using borrowed money. Therefore, of course, this entire latent clusterfuck is supported by one very ephemeral thing, which is confidence. Once confidence disappears then the marginal borrower (aka. speculator) disappears, at which point assets get force liquidated causing collateral values to fall, margin loans get called in - rinse and repeat, over and over again. At that point, the very thing that these hyper-ventilating hyper-inflationists deem to be a never-ending money supply problem, goes away - very quickly. The mother of all bank runs, yet happening overnight at the speed of an HFT bot. Problem solved.
I'll Take $1,000. A Loan? No Thanks
Back to the hyper-inflationists. 2003-2007 was about giving the middle class cheap loans so they could tie them around their necks and bungy jump off the nearest bridge. Now, the Lost Boys of the Idiocracy can't figure out why lending the middle class more cheap money isn't leading to inflation. It's because no one is giving away free money, at best they are making loans available to people who are already have too much debt, have no collateral, or otherwise can't be fooled five times in a row. Only the morons managing billions and their stooge acolytes haven't made this basic connection yet.
Here Lies The Third Great Asset Bubble
The ever-dwindling set of beneficiaries of today's latest asset bubble are looking down the tracks into the distance trying to discern what will happen if current policies are continued ad infinitum. They are making the self-delusional mistake of extrapolating the recent past into the indefinite future. More importantly, they are conveniently ignoring the obvious fact that their own bloated wealth is dependent upon an ever-expanding money supply which is a model that does not work in reverse. Today's illusory asset values are supported merely by confidence and the marginal fool's willingness to leverage himself into oblivion by buying assets that are ever-more disconnected from their fundamental valuations. Lastly, this isn't a fucking mystery novel, only an abject fool believes that Central banks can defy reality indefinitely. This liquidity-driven "strategy" is already failing the vast majority on this planet and will soon fail the remainder. Without attendant bailouts, this third bubble in assets, confidence, and stupidity, will be the last...
