Money supply drives rally (E1366)

RT (formerly known as Russia Today ) has the video Money supply drives rally (E1366).

In this episode of the Keiser Report, Max and Stacy discuss the money supply increasing at the same pace as the S&P 500 stock market rally. Could they have anything to do with each other? Hmmmm. We wonder. They also discuss the rapidly increasing rents causing voters to demand action from candidates when, perhaps, the only problem is the central banks printing money for their member banks.

In the second half, Max interviews Steve Beauregard of Bloq about building in a bitcoin bear market.

It is amazing how these people can be so wrong about so much, but introduce an idea or two that is correct.

They did not exactly say this, but what they said about asset price inflation including real estate and rents made me realize why rent-control is a bad idea. Real estate price increases and rent price increases are the consequence of the massive money creation that is going on that is not producing “consumer” price inflation. As some proponent of Modern Money Theory (MMT) has pointed out, real estate prices are driven by how much money banks will lend for real estate. With all that central bank money that has been created with nothing to invest that money in except some assets and stock prices, this is what is driving up real-estate and rents.

The rent price control that might work would be to stop putting the money directly in the private banks, but for the government to spend this money into the economy in ways which increased the size of the real economy to produce economically useful stuff for the consumers. By buying stuff and employing people to make it, the money would be recirculated into the economy to buy the new stuff the growing economy could produce. Let’s also not forget that tax policy can also be used to redirect private sector money away from harmful uses. The taxes that the government collects can then be redirected to productive uses.

One of the issues that the current discussion of Modern Money Theory lacks is a discussion of the economic impacts of the distribution of money within a sector. MMT gains a lot of insights from looking at the sector balances between the government sector, the domestic private sector, and the foreign sector. As important as the flows between the sectors is, the flow of money within a sector is important too.

If you need for me to try to untangle the last few sentences I have written, ask questions on Facebook so I will know what needs to be untangled.

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