EDITOR NOTE: America has just scaled the proverbial “Mount Everest” of asset valuations. It did so on artificial oxygen, as a more natural environment might have caused it to terminally stumble closer to basecamp; far from the peak. But here we are. The M2 money supply and home prices have soared to such heights that we can look down at the 2000 peak in the way that you might see Mt Denali’s apex if it stood side by side with Everest. If the Warren Buffett indicator were a reliable measure of height, then that too has exceeded its year-2000 reading. But money velocity is at an all-time low. It may be the factor that’ll make the descent a bit hazardous. On second thought, it’s likely to be the sheer cliff that forces the American economy’s rapid descent. This is where your “green” turns to “red”; where the evidence of your wealth may be discernible from the crater it left behind in your memory; where a once-comfortable lifestyle makes its presence known through the sharp hunger pangs in your stomach. On the edge of this cliff, you will certainly need a parachute--literally, a “golden” one.
The Scream! Out-of-control money printing, dead money velocity and collapsing purchasing power of the dollar.
(Bloomberg) — With U.S. equity indexes rising to fresh records again this week, one of Warren Buffett’s most-famous catchphrases comes to mind: Investors should “be fearful when others are greedy.”
Any Buffett disciple who checks in on the billionaire investor’s favorite market valuation metric these days may get the urge to shriek in terror.
And then there are home prices at 38% higher than the peak during the 2005 housing bubble.
Here is what causing me to shriek in terror. Out-of-control money printing, dead money velocity and collapsing purchasing power of the dollar.
Originally posted on Confounded Interest