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It's precisely the same 'theory' with equities. The price goes up because there is an inadequate supply of equities - hardly surprising given all the buy backs
by neilwilson 5y ago
It's precisely the same 'theory' with equities.
The price goes up because there is an inadequate supply of equities - hardly surprising given all the buy backs and lack of new issues.
Supply and demand used to be the basis of economics. If prices go up for a thing, that encourages more of the thing to be made.
So we fix it by making more stuff. That's what the market clearly wants - more houses and more investment opportunities.
The trouble with monetarists who quote 'M' series as thought they were handed down from Mt Sinai is that they are obsessed with looking at the cow from the smelly end.
It all becomes clear when you look at it from the smiley end.
- VirusNewbie 5y agoThe number of shares has nothing to do with supply. Making “more shares” doesn’t increase supply. What happened with equities is that the dollar became worth less because their are more of them. This is true for everything else except for some physical commodities it is further exacerbated by some physical shortages (you aren’t wrong about a housing shortage but that doesn’t affect the second derivative here).