The stock market does not have a life of its own. In a relatively free economy, success or failure of investment in stocks depends ultimately on the same factors that determine success or failure of any business.
Japan's government is now addicted to easy money Abenomics. With Abe now gone, the next leader might tinker around with altered approaches, but it will be more of the same.
The United States currency has only really weakened relative to the yen and the euro, but that depends on optimistic expectations of a European and Japanese economic recovery.
Liquidity only disguises risk; it does not resolve solvency issues driven by collapsing cash flows while costs remain elevated.
Just how is this magic created? The spurring of demand in the midst of a covid-created depression. The wizards at the Fed and Treasury have created an intoxicating frothy brew for stock and home buyers alike.
A rising price of gold and silver in US dollars, euros, Chinese renminbi, Japanese yen, etc. means this: the higher the price of this precious metal, the lower the exchange value of official currencies.
Central bankers are saying two things at once. First, they say that negative interest rates are a natural historical development. But then they say negative rates are an essential tool central banks are using to manipulate the economy.
Demand for gold tends to increase as faith in government and government intervention in the economy declines.
Our high levels of malinvestment mean that negative interest rates will not have the steroidal effect that's hoped for. But they will deliver another few years of subpar debt-fueled economic activity.
The crisis we faced in 2008 has not gone away, as we failed to heed its warning to change course and reduce debt levels. Instead, it has become bigger and more dangerous.
