Do the current highs of the stock market indicate that the US Dollar is becoming less valuable?
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Do the current highs of the stock market indicate that the US Dollar is becoming less valuable?
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Do the current highs of the stock market indicate that the US Dollar is becoming less valuable?
@gdinwiddie Or that hype cyles are followed despite smart people knowing the graph can't keep going up forever.
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R relay@relay.infosec.exchange shared this topic
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@gdinwiddie Or that hype cyles are followed despite smart people knowing the graph can't keep going up forever.
@davep So, has someone been hyping all of the stocks in the Dow, and the S&P 500?
I think that it represents that stocks will hold their value in the near term better than cash will. The price of gold also indicates that cash is losing value.
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@davep So, has someone been hyping all of the stocks in the Dow, and the S&P 500?
I think that it represents that stocks will hold their value in the near term better than cash will. The price of gold also indicates that cash is losing value.
@gdinwiddie Gold has always been an equity hedge against liquidity problems etc.
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@gdinwiddie Gold has always been an equity hedge against liquidity problems etc.
@davep As the price of gold goes up, it indicates a less-valuable dollar, not more-valuable gold.
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@davep As the price of gold goes up, it indicates a less-valuable dollar, not more-valuable gold.
@gdinwiddie Possibly, but the value of the dollar is far from the only driver of gold value.
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@gdinwiddie Possibly, but the value of the dollar is far from the only driver of gold value.
@davep What other drivers do you see for the value of gold denominated in dollars?
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@davep What other drivers do you see for the value of gold denominated in dollars?
@gdinwiddie Broad money isn't equity. It is created and destroyed by banks as credit (in the case of over 90% of all broad money). When banks reduce available credit, available broad money can decline precipitously, affecting all aspects of the economy (existing loans need to be paid off but the available broad money isn't enough to sustain the economy to do so). This is not a lagging indicator, but generally the cause of economic cycles. But the fear of impending tightening of lending can also be a factor. This causes people to flee to genuine or perceived forms of equity (including bitcoin etc nowadays).
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@gdinwiddie Broad money isn't equity. It is created and destroyed by banks as credit (in the case of over 90% of all broad money). When banks reduce available credit, available broad money can decline precipitously, affecting all aspects of the economy (existing loans need to be paid off but the available broad money isn't enough to sustain the economy to do so). This is not a lagging indicator, but generally the cause of economic cycles. But the fear of impending tightening of lending can also be a factor. This causes people to flee to genuine or perceived forms of equity (including bitcoin etc nowadays).
@davep When there's less money available in the economy, the money becomes more valuable as it represents a larger percentage of the economy.
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@davep When there's less money available in the economy, the money becomes more valuable as it represents a larger percentage of the economy.
That's not understanding the dynamic nature of broad money's creation and destruction depending on banks' willingness to lend. It's not equity like cash (generally speaking).
