Wealth is becoming more and more concentrated at the top end of the distribution. Folks at the high end have a lower marginal propensity to consume, and thus invest more in assets. This increase in demand causes all assets to rise.
Generally agree but I'd note politically influential rich should generally prefer productive assets, while people expecting to have to shove the most valuable thing they can find up their ass while running past machine gunners at the border will generally prefer gold.
Gold is totally irrational if you think you'll have the reigns of the country, since you will always win having land and factories under that scenario.
At the governmental level non-Western aligned governments are reacting to freezing of Bank of Russia assets. Freezing of foreign currency reserves was really unexpected. Russia was forced into default because they could not access their USD/EUR.
almost all wealth is cash flows from future labor income. Labor is just heavily leveraged on their own future labor. Kind of like AMD levering up on future gpu sales.
When the price of everything goes up at the same time it's not because everything is more expensive, it's because each unit of currency is worth less in terms of real stuff.
And contrary to the typical gold bug narrative, it's not because central banks are conjuring new money out of thin air.
In an inflationary economy like the one we have, "the market is at all time high" is not really a useful statement since it's the normal state of affairs.
I'm going to rightly be accused of ad hominem for pointing this out, but entertain for a moment that the people calculating inflation are generally directly or indirectly funded by the same federal government that causes inflation.
All of this is consistent with expectations of a slowdown or recession.
The only exception is the stock market but I believe there’s a lot of literature that if you remove the AI stocks from that there isn’t much S&P growth either.
Additionally with the dollar dropping over 10% the stock market real increase isn’t as high as it appears either.
for the past century, the global economy has been a machine for turning fossil fuel into money. carbon output was very directly correlated with growth. that hasn't really changed yet but the writing is on the wall.
also, manufacturing and shipping just fell off a cliff.
Renewables are a quarter of electricity generation now, and in some states are the majority of generation. They're also a decent chunk of all energy though that number's harder to pin down.
GDP is no longer tied to fuel consumption. You can't fight near-free "fuel" and near-zero opex, the renewables slice is only going to increase. I wouldn't trust any metric or rule of thumb tied to coal/oil/gas prices any longer.
I keep wondering when the hangover is going to hit The Market.
I've been told though that it's a meme stock market these days. I don't believe that though — there are people trading billions of dollars in this machine. Perhaps they're waiting for the music stop and hoping they're not the last to grab a chair.
It is very hard to look at the P/E of TSLA and run with the idea that the market is pricing things rationally. Even if you somehow feel bullish about that company, the massive rise in stock price at the same time the concrete sales news started to get worse should be a pretty big alarm bell.
Gold and silver is most likely from China buying a massive amount (to decouple from the USD slowly). Unsure about the asset bubble but interest rates are “high” compared to the zero interests days, still low historically. Assets are the best way to wash away inflation (you pay your debt with today money) so could be the reason.
Because the numerator in all those fractions is the dollar, which is rapidly losing the worlds trust, as a store of value. Eventually we'll see what happens when you try to divide by zero.
Massive gilded-age-levels of wealth inequality that will be politically impossible to address (neither US political party has a unified will to do it due to donor capture, and only the one with less will to do it has any national power currently) until there is a substantial economic crash.
1. Divergent market signals
• Gold has surged (~50 %+ over the past year) and the dollar has weakened, suggesting investor fears that governments may resort to inflation (i.e. currency debasement) to ease debt burdens.
• But bond markets—especially through long-term inflation expectations embedded in yields and inflation swaps—are relatively steady and show little sign of expecting runaway inflation.
2. Why the disconnect?
• The article posits that different investor motivations may be in play. Gold’s rally might be driven not purely by inflation fears, but by geopolitical risk, central bank reserve behavior, and rate cuts/expectations of falling yields.
• Meanwhile, bond investors appear anchored by beliefs in central bank discipline, moderate inflation, and weak job growth, which limit inflationary pressure in the view of bond markets.
3. Longer-term concerns still loom
• Over the long haul, the mismatch between rising debts, low taxation, and persistent spending may force a reckoning: either austerity or inflation. The article suggests many politicians will prefer the inflation route.
• But for now, that outcome seems distant. Bond markets are not pricing in that scenario imminently.
4. Possible scenarios ahead
• If economic growth maintains momentum and the recent softening in jobs is transitory, the Fed might reverse course—undoing rate cuts or raising rates. That could challenge gold, stocks, and bonds alike.
• Only if policymakers allow inflation to run unchecked (or effectively “print money”) would the “debasement trade” fully materialize.
Couldn't find a non-paywall for it, but Google AI mode managed to give a brief summary:
Gold prices are rising sharply, suggesting investor concern about currency debasement through inflation, while the bond market forecasts long-run inflation will remain near the Federal Reserve's target. This discrepancy is likely driven by separate narratives, with gold potentially fueled more by central bank diversification and speculative buying than a pure "debasement trade"
Globally faith in the USD is being lost, and anyone paying attention knows one of Trump's main economic goals is to weaken the dollar. He also clearly wants to tamper with the fed and economic data, which just ads fuel to the fire.
Meanwhile there isn't really a solid alternate to the dollar, so precious metals are default.
Yeah. I remember my mother asking me "If inflation is here, why isn't gold going up?"
But I think that the answer is "pricing in". When there's a month of inflation after 15 years of none, you price in a one-month blip of inflation. When you look at a year or two of inflation, plus the deficit with no end in sight, you price in inflation forever. Those lead to two very different prices.
gold has gone up more than most stocks in the last year, FYI. If you price the S&P in gold, it has declined steadily since 2000. Chinese industrials have increased priced in gold since 2000, incidentally.
I feel like something broke during COVID. My only thought is people want their money to make money (I mean, I know I do), and apps like Robinhood normalized speculation and gambling as "saving your money" and "stocks always go up."
We've had an unprecedentedly long period of growth that a lot of the younger "investors" have known nothing but. So this will be their first real bubble burst.
My little brother-in-law is only 27, he was too young to really remember 2007-10, and he started gable-vesting during lockdown, and when you turn $10 into $120 on some meme stock, you feel like you are up, even though the 50 other bets lost money.
Basically when enough people know nothing other than "stonks go up" and "apes strong together" you can keep pumping, but eventually the dump comes for all of us.
Most of the market's upward movement is from a few stocks that are getting lots of juice from Federal policy.
Gold and silver are at record levels because of capital fleeing fiat due to lack of confidence in central banks -- Trump is actively attacking the US Fed trying to destroy Fed independence. Because the dollar is the world’s funding and invoicing currency, big moves by the Fed reset global financial conditions—pushing other central banks to react even when their domestic cycles don’t match.
Real estate has stalled, hiring has stalled, car buying has stalled (so much unsold inventory dealers can't afford floor plan!). Farmers are getting a $10-$15B bailout / hush money. It's just a matter of time until the correction occurs.
The spike in equities is also based on the assumption that the equities will weather the inflation and still end up as a store of value, but I think that's naive.
Take TSLA, currently "winning" in the special olympics micro-market of the tariff-protected US EV market, and losing internationally -- Musk just did a $1B buyback to juice the price. Take NVIDIA, finally going to get real competition from AMD but spiking after US "deals" juiced the price. Chinese GPUs are 12 months behind and rapidly closing the gap and will be half the price per perf/watt (TSLA investors pretend Chinese EVs don't exist, but not for long).
Imagine 30-120 days out once the national guard is occupying and helping ICE detain more and more of the workforce in the most economically productive 90% of the country!
The US economy is facing the greatest coordinated sabotage it has ever faced and as soon as the real numbers come in things are going to get very very ugly. The country seems to have forgotten that central planning does not work.
> Gold and silver are at record levels because of capital fleeing fiat due to lack of confidence in central banks -- Trump is actively attacking the US Fed trying to destroy Fed independence.
That may be part of it. But another part is the US deficit. There is no way that's sustainable. The Fed can't fix it; Congress has to. And do you see any reason to hope that Congress will?
I think there's zero chance that congress will fix it. It can't fix relatively easy, low-hanging fruit such as PBGC soundness and social security soundness, so I think there is little hope for anything else.
The problem is not congress itself but the peoples' lack of desire to hold members of congress accountable...
Tradfi is increasingly becoming a dog shit product.
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Advent of FATCA means it's hell for normal Americans to bank overseas.
You're basically locking yourself into a tiny box by carrying tradfi products. Most lower middle class people will never notice because if you do things like "receve paycheck, go to grocery store" then you'll never see all the walls built around you. But people with money notice.
If your other passport shows you were born in US your bank will still hold you to FATCA controls, and even if it doesn't show that then they're still bound to FATCA and can be punished if it's uncovered you're a US citizen.