Friday, December 19, 2014

What Invention Has Made Us More Money Than Any Other?

The printing press because it allows us to print more and more and more money!

Japan is in recession. Europe is in recession. The Ruble has collapsed because oil prices have cratered so Russia will soon be mired in a depression. Does this spook the markets? Only temporarily. As soon as the Fed revs up those glorious machines and shows a willingness to make sure lots and lots of dollars are available to everyone, we can all get back to the business at hand - making money in the stock market.

Oh, sure, in the old days, a share of stock represented partial ownership of a company that made things. If the company did well, you did well. If the company did poorly, then you lost money. That's not so true any more. Now it represents ownership of a piece of paper whose value can go up and up and up because there are so many dollars floating around looking for something to buy to make more dollars which will make people richer, giving them more dollars to buy pieces of paper that will be worth more dollars because there are more dollars trying to buy them. See how it works? It's all about having lots and lots of dollars, thanks to the printing press at the Fed.
Stocks in Japan and Australia led Asia higher for a second day on Friday, as investor confidence continued to be bolstered by expectations the U.S. is in no rush to raise interest rates.

Buying returned to the region despite lingering worries over lower oil prices. The Nikkei Stock Average jumped 2.4% to 17621.40, while Australia’s S&P/ASX 200 closed up 2.5% to 5338.60.

Materials and utilities stocks led in Australia, as the latest indications from the U.S. Fed appeared to overshadow concerns that lower commodities prices would pressure the nations’ producers.
Emphasis mine. Commodities are real things. Chunks of metal, whole cows, containers full of oil and other fluids. Even they cannot stand in front of the power of the printing press. Just when it looks like things will be valued according to their worth, the Fed steps in, shows off its printing press like Vanna White unveiling a new puzzle on Wheel of Fortune and all is right with the world again.

Hooray for the printing press!

No comments: