The Tug of War is a great metaphor. There is no "market", just people, buyers & sellers. Or, a buyer (price too high) and a seller (price too low) who agree to invest according to their beliefs (which often include inside knowledge) (and lots of fake news.), for each transaction. The "market" is a word that means the sum of all the transactions, total buyers tugging up against total sellers tugging down. The price is what is discovered about the aggregate.
I don't believe in huge labor shortage, because a) the employment is high, but not so high, and b) wage growth has been high, but not so high (in most lower paid jobs). Funny how US says employment rate is slightly lower now at 60%
If rich country economists can't agree on a definition and what the actual facts are, it's certain that there will not be consistent forecasts about financial future trends.
Despite Libertarians talking about regulations, I don't yet read the Fed talking about regulations and restricting supply is part of what is driving inflation.
This is wrong. The first part of the post is wrong about a price being right. No price is right even in textbooks teaching the forces conditioning prices over time for different goods, services, and assets. In textbooks, "solving for the equilibrium" is just a tool to explain how people interact and how people may respond differently to changes in those forces. In the case of financial assets, bitcoin in particular, we can argue that one important force is the expectation of changes in the assets' purchasing power and we argue it recognizing how people differ, especially about that expectation.
All that is very entertaining --at least for serious economists. But the post's second part is very frustrating for serious economists because everybody hardly knows which prices are changing and how much. Also, we rely heavily on the fake clowns reporting prices and spreading rumors. Yes, the financial press can report how the prices of financial assets are changing and how their purchasing power (measured by baskets of goods and services) has been been changing but reporters cannot infer how prices will be changing even in the next few hours, much less tomorrow. Serious economists know that even their best models can hardly predict well prices' path, and by definition they cannot anticipate "shocks", including what a senile President will do, re-do, and then deny/confirm he had done it. Serious economists know that price indexes may differ a lot because of large differences in the relative weights of the goods, services, and assets actually included in their estimation. Serious economists know that shocks in energy markets will affect price indexes differently --first by their direct impact if energy is included in the estimation, then indirectly because of how many other prices may change due to the shock in energy prices. Yes, Milton Friedman called inflation any continued, generalized increase in the price index of broad basket of goods and services, and made clear that his monetary theory of nominal income assumed that the demand for M was stable and the supply of M was controlled by its only supplier. But there is no M which meets Milton's two conditions. Indeed, it's difficult to explain recent increases in a price index by looking only at past increases in any M (that was why Milton liked to talk about lags). So, don't be surprised that we cannot explain increases in several price indexes in the past 3 years by reference to M0 or M2 or any other M. Worse, some Ms may have increased but in response to the increases in prices (this is what passive money models assume to prevent the shock's negative impact on people's demand for most goods and services). If we work hard, maybe by 2030 we will have a good idea of what happened the past 3 years.
The Tug of War is a great metaphor. There is no "market", just people, buyers & sellers. Or, a buyer (price too high) and a seller (price too low) who agree to invest according to their beliefs (which often include inside knowledge) (and lots of fake news.), for each transaction. The "market" is a word that means the sum of all the transactions, total buyers tugging up against total sellers tugging down. The price is what is discovered about the aggregate.
I don't believe in huge labor shortage, because a) the employment is high, but not so high, and b) wage growth has been high, but not so high (in most lower paid jobs). Funny how US says employment rate is slightly lower now at 60%
https://tradingeconomics.com/united-states/employment-rate
While OECD stats say US employment rate is at 71%
https://data.oecd.org/emp/employment-rate.htm
If rich country economists can't agree on a definition and what the actual facts are, it's certain that there will not be consistent forecasts about financial future trends.
Despite Libertarians talking about regulations, I don't yet read the Fed talking about regulations and restricting supply is part of what is driving inflation.
This is wrong. The first part of the post is wrong about a price being right. No price is right even in textbooks teaching the forces conditioning prices over time for different goods, services, and assets. In textbooks, "solving for the equilibrium" is just a tool to explain how people interact and how people may respond differently to changes in those forces. In the case of financial assets, bitcoin in particular, we can argue that one important force is the expectation of changes in the assets' purchasing power and we argue it recognizing how people differ, especially about that expectation.
All that is very entertaining --at least for serious economists. But the post's second part is very frustrating for serious economists because everybody hardly knows which prices are changing and how much. Also, we rely heavily on the fake clowns reporting prices and spreading rumors. Yes, the financial press can report how the prices of financial assets are changing and how their purchasing power (measured by baskets of goods and services) has been been changing but reporters cannot infer how prices will be changing even in the next few hours, much less tomorrow. Serious economists know that even their best models can hardly predict well prices' path, and by definition they cannot anticipate "shocks", including what a senile President will do, re-do, and then deny/confirm he had done it. Serious economists know that price indexes may differ a lot because of large differences in the relative weights of the goods, services, and assets actually included in their estimation. Serious economists know that shocks in energy markets will affect price indexes differently --first by their direct impact if energy is included in the estimation, then indirectly because of how many other prices may change due to the shock in energy prices. Yes, Milton Friedman called inflation any continued, generalized increase in the price index of broad basket of goods and services, and made clear that his monetary theory of nominal income assumed that the demand for M was stable and the supply of M was controlled by its only supplier. But there is no M which meets Milton's two conditions. Indeed, it's difficult to explain recent increases in a price index by looking only at past increases in any M (that was why Milton liked to talk about lags). So, don't be surprised that we cannot explain increases in several price indexes in the past 3 years by reference to M0 or M2 or any other M. Worse, some Ms may have increased but in response to the increases in prices (this is what passive money models assume to prevent the shock's negative impact on people's demand for most goods and services). If we work hard, maybe by 2030 we will have a good idea of what happened the past 3 years.
You can buy 2 year puts on TLT. That is a not infinite time, but worth a little action.