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Uncertainties in the continued supply were driving up the price of futures. It’s not “let’s bet some free money on the price of gas increasing”. It’s “we need
by drxzcl 3y ago
Uncertainties in the continued supply were driving up the price of futures.
It’s not “let’s bet some free money on the price of gas increasing”. It’s “we need to secure enough gas to keep the factory running next year, let’s buy as much as we can at any price we can reasonably turn a profit at”.
- marcus0x62 3y agoUncertainties in the continued supply of S&P 500 futures drove up the price of S&P 500 futures? People continued to bid the price of residential real estate up solely because they believed there was a lack of housing starts? Or maybe — just maybe — the ZIRP free money spigot had something to do with it as well.
- drxzcl 3y agoI was referring to the commodities market. The stuff you need to keep your factory running. I agree with you that the financial economy is largely divorced from actual stuff, which is why pumping money into it doesn’t lead to rising prices of stuff, just rising prices of financial instruments. That’s the key here. Increasing the money supply should lead to increase in prices if and only if it is spent on stuff. If it’s squirreled away in complex financial instruments, we just call it “amazing returns”
- marcus0x62 3y agoI don't see how you can increase the money supply faster than population growth and not have price increases eventually. When money supply increases manifest via the debt markets, cheap dollars will flood into markets that are typically financed (e.g., houses.) When people see those 'amazing returns' over a prolonged period of time, they feel wealthy and are willing to spend more and spend more freely on goods and services.