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| You may be correct in assuming big inflation longer term. The one saying that comes to mind, however, is that you can go broke short term even if you are right long term. But - what makes you so sure you are right about the long term when you cannot begin to predict the shorter term? You are taking exactly the same position of the climate modelers - they have been spectacularly wrong now for 18 years (and counting), as global temperatures have not increased, but they are absolutely sure they will be proven right in the long term. I have to say about inflation/deflation - like I've said about the climate - look at the data and see if it agrees with your assumptions.
Government bonds are valued according to expectations of returns to capital in the future. When you have an oversupply of money relative to (qualified) demand, interest rates are low, since they reflect the price of "renting" that money. Again, with the best minds all around the world betting money based on these expectations, why would anyone presume to assume that they know more than the collected wisdom of all the people valuing these bonds?
Again, I would say - simply look at the charts to see if there is any confirmation of these assumptions. Or - do what the climate modelers have been doing and admit that you cannot predict the weather a few days into the future, but claim that you can predict a thirty year moving average of that weather one hundred years into the future. Those of us who have tried to do this, and who have actually tried to quantify it, know that it probably will be quite frustrating.
But, of course, there is always the answer that, sure, I'm wrong short term - due to manipulation. But that, in a market as big as this, appears to be grasping at straws by someone who has been wrong in these markets. It is normal for markets to be doing exactly the opposite of what the majority of people think they should not be doing. That is simply how markets work. If there is one consistency with markets, it is just this - they will behave the opposite of what they are generally expected to do. The last time we put in a cycle high in the corn market was the 70s, and the expectation then was that "they are not making any more land, so it can't go down." Gerald Ford came out wearing his WIN button - I still have to laugh at that. When Paul Volker was appointed, and he said what he planned to do, I knew of no one who thought he had a chance. So my question is - still - is this time really different? | |
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The 4.5 trillion dollar balance sheet. Continued QE
