In other news, the S&P 500 and Nasdaq closed at record highs on Friday. The obvious explanation for both is there's a lot of money looking for somewhere to park, driving asset prices up and bond yields down.
There's either something not captured in inflation numbers, or most of the stimulus money just got invested and not spent.
There are two sides to every trade. When I buy into S&P, along with others, forcing the price up, someone else is selling and gets my money. What do they do with it? I can't know.
It's not going into a bank account called "S&P", where it's parked, it's a transitory snapshot of a transaction.
yes. I still find myself looking around from time to time wondering how it's all gonna end... feels like something should pop eventually, but what? or why?
>There's either something not captured in inflation numbers
My pet theory is that real inflation is higher than the official one, and is around 4-5%. The cause of the inflation is a gradual loss of quality basically everywhere except high-tech.
When the official inflation rate is calculated the basic assumption is that each item (which price is compared YoY) is exactly the same as it was last year. In another words, it assumes that its quality remains constant.
However, it's not always true (I believe it rarely is). Sometimes quality goes up (e.g. due to the Moore's Law in high tech). Sometimes quality goes down (e.g. due to cheaper food ingredients). When quality goes down but price stays the same, the official inflation would be 0%, but the real inflation would be greater than 0%.
I'm not aware if there is any way to account the change of quality in the inflation calculations. I suspect it's just not possible and therefore any published price-based inflation rates are bogus.
There's either something not captured in inflation numbers, or most of the stimulus money just got invested and not spent.
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