The Money Supply Has Shrunk For Eight Months In a Row

[Q.E.D.]

https://mises.org/wire/credit-crunch-money-supply-has-shrunk-eight-months-row


Conclusion:
...
These factors all point toward a bubble that is in the process of popping. The situation is unsustainable, yet the Fed cannot change course without reigniting a new surge in price inflation. Any surge in prices would be especially problematic given the rising cost of living. Both new and used cars are becoming increasingly unaffordable. Ordinary Americans face a similar problem with homes. According to the Atlanta Fed, the housing affordability index is now the worst it's been since 2006, in the midst of the Housing Bubble.

If the Fed reverses course now, and embraces a new flood of new money, prices will only spiral upward. It didn't have to be this way, but ordinary people are now paying the price for a decade of easy money cheered by Wall Street and the profligates in Washington. The only way to put the economy on a more stable long-term path is for the Fed to stop pumping new money into the economy. That means a falling money supply and popping economic bubbles. But it also lays the groundwork for a real economy—i.e., an economy not built on endless bubbles—built by saving and investment rather than spending made possible by artificially low interest rates and easy money.

 

[maxinger]

That is fine as long as our trading income is not shrinking.

The bubble is highly welcomed as it will create massive trading opportunitiessss.

Anyway, let the Fed and politicians handle the above problems.
They are being paid to do it.
And we just focus on trading.

 

[David's faith]

True wealth is creates in bear markets, when prices are cheap and free capital to chase them is scarce

 

[ktm]

You are talking about monetary policy. You should take a look at recent fiscal policy and give it the same level of scrutiny. While trillions of new cash pumped into the SYSTEM has consequences, so does trillions in cash GIVEN TO THE PUBLIC - perhaps even more so.

 

[tony.m]

The bubble is highly welcomed as it will create massive trading opportunitiessss.

This is bad news for traders who only go long.

 

[SunTrader]

You are talking about monetary policy. You should take a look at recent fiscal policy and give it the same level of scrutiny. While trillions of new cash pumped into the SYSTEM has consequences, so does trillions in cash GIVEN TO THE PUBLIC - perhaps even more so.

Yeah because all the lousy public will do with that money is spend it.

Spend on goods produced by companies that other people invested in.

Gee ya think those people don't want those other people to not spend it on goods/services produced by companies they invested in?

Better to give the 1%ers yet another tax break - so they can tricky ummm trickle down some more crumbs.

 

[SunTrader]

This is bad news for traders who only go long.

Traders don't go long only.

 

[zdreg]

https://mises.org/wire/credit-crunch-money-supply-has-shrunk-eight-months-row


Conclusion:
...
These factors all point toward a bubble that is in the process of popping. The situation is unsustainable, yet the Fed cannot change course without reigniting a new surge in price inflation. Any surge in prices would be especially problematic given the rising cost of living. Both new and used cars are becoming increasingly unaffordable. Ordinary Americans face a similar problem with homes. According to the Atlanta Fed, the housing affordability index is now the worst it's been since 2006, in the midst of the Housing Bubble.

If the Fed reverses course now, and embraces a new flood of new money, prices will only spiral upward. It didn't have to be this way, but ordinary people are now paying the price for a decade of easy money cheered by Wall Street and the profligates in Washington. The only way to put the economy on a more stable long-term path is for the Fed to stop pumping new money into the economy. That means a falling money supply and popping economic bubbles. But it also lays the groundwork for a real economy—i.e., an economy not built on endless bubbles—built by saving and investment rather than spending made possible by artificially low interest rates and easy money.

Easy money does not cause low interest rates. Quite likely the opposite.

 

[M.W.]

The negative money supply growth rate is so miniscule that it hardly makes a dent in total money supply. Still way too much money is sloshing around the system. That money still chases investment opportunities, regardless of how sinister and uninspiring most are. No bear market until the balance sheet is not significantly shrunk by fed.

https://mises.org/wire/credit-crunch-money-supply-has-shrunk-eight-months-row


Conclusion:
...
These factors all point toward a bubble that is in the process of popping. The situation is unsustainable, yet the Fed cannot change course without reigniting a new surge in price inflation. Any surge in prices would be especially problematic given the rising cost of living. Both new and used cars are becoming increasingly unaffordable. Ordinary Americans face a similar problem with homes. According to the Atlanta Fed, the housing affordability index is now the worst it's been since 2006, in the midst of the Housing Bubble.

If the Fed reverses course now, and embraces a new flood of new money, prices will only spiral upward. It didn't have to be this way, but ordinary people are now paying the price for a decade of easy money cheered by Wall Street and the profligates in Washington. The only way to put the economy on a more stable long-term path is for the Fed to stop pumping new money into the economy. That means a falling money supply and popping economic bubbles. But it also lays the groundwork for a real economy—i.e., an economy not built on endless bubbles—built by saving and investment rather than spending made possible by artificially low interest rates and easy money.

 

[Q.E.D.]

True, but prices determined at the margin, & even stagnant money supply, is a negative for assets, as ever-increasing supply needed to support / advance prices.

The 2000 / dot.com bubble illustrated that companies can create more stock -- either thru new companies, or secondaries--or insider selling --more than drunken-inspired Greenspan Fed could print.