Great reminder of the big picture. Maintaining a "zoomed out" perspective is an important defense mechanism, keeping us from getting lost in the moment.
I have always disliked the assets verses debt equation. Assets can very greatly in value over time and debts are still owed no matter how much the assets fluctuate. In the case where debts are extinguished before being paid off, this leads to many other issues surrounding the viability of the financial system.
I don't think the government knows how many actual dollars are in circulation. Maybe the financial system seems smaller, but with all those quadrillions of possible derivatives floating around it sure looks to be gigantic. Interesting article to contemplate further.
To the author: Respectfully, you do not seem to be knowing what you are talking about. Or, more precisely, even with the quantity theory of money in mind, you are engaging merely in platitudes.
Excellent big picture view of how silly the concept of market cap is. I combine this with Hussman’s description of how once an asset is issued, it must be held by someone until retired, whether equity, cash, or bond. Like a hot potato. There is never cash on the sidelines. Every share is always owned by someone, it’s just the last transaction price to swap into cash that changes. Great stuff. Thank you.
Wow, a little bit late but I love this, makes me think and I love to read people that makes me think, read this finishing the work of today so extra coffee needed ;)
What you are describing is similar to "money illusion" or "wealth illusion". Inflated prices are giving people the illusion to be wealthy. If houses double in price, many people feel rich and increase their spending, feeding the bubble. In reality, they are only rich, if they sell their house at the inflated price. But they don't do it and if all wanted to do it, it would not be possible and prices would immediately collaps.
It's important to understand these bubble dynamics. It will help you to sell in time.
Excellent metaphor! Buybacks in general and debt financed buybacks in particular are interesting puppets to keep an eye on, easier to notice when step changes occur
You've heard of "Just-In-Time-Inventory" ??? Just-In-Time-Banking :) ...Great Perspective, Thanks!
Absolutely brilliant, brother!
Great reminder of the big picture. Maintaining a "zoomed out" perspective is an important defense mechanism, keeping us from getting lost in the moment.
Great framework. Especially pertinent as market elasticity changes (e.g., passive investing, NIMBY home building, BTC limited supply, etc.).
I have always disliked the assets verses debt equation. Assets can very greatly in value over time and debts are still owed no matter how much the assets fluctuate. In the case where debts are extinguished before being paid off, this leads to many other issues surrounding the viability of the financial system.
I don't think the government knows how many actual dollars are in circulation. Maybe the financial system seems smaller, but with all those quadrillions of possible derivatives floating around it sure looks to be gigantic. Interesting article to contemplate further.
To the author: Respectfully, you do not seem to be knowing what you are talking about. Or, more precisely, even with the quantity theory of money in mind, you are engaging merely in platitudes.
This was a major eye opener to me. This has been under my nose my whole life, but never brought to the forefront of my mind before.
Assets are levered to their moving supply.
Many thanks
Excellent big picture view of how silly the concept of market cap is. I combine this with Hussman’s description of how once an asset is issued, it must be held by someone until retired, whether equity, cash, or bond. Like a hot potato. There is never cash on the sidelines. Every share is always owned by someone, it’s just the last transaction price to swap into cash that changes. Great stuff. Thank you.
note1 : should that be be $15 $trillion? (...$15 billion of cash and bank deposits included)
Wow, a little bit late but I love this, makes me think and I love to read people that makes me think, read this finishing the work of today so extra coffee needed ;)
Thanks TLBS!
What does this say about that nonsense Bitcoin ?
(Sarcastic voice) It seems like the solution to all this is simply creating several hundred trillion dollar coins…. That’ll fix everything! Haha.
What you are describing is similar to "money illusion" or "wealth illusion". Inflated prices are giving people the illusion to be wealthy. If houses double in price, many people feel rich and increase their spending, feeding the bubble. In reality, they are only rich, if they sell their house at the inflated price. But they don't do it and if all wanted to do it, it would not be possible and prices would immediately collaps.
It's important to understand these bubble dynamics. It will help you to sell in time.
Excellent metaphor! Buybacks in general and debt financed buybacks in particular are interesting puppets to keep an eye on, easier to notice when step changes occur