Asset Prices Are Rolling Over, Despite Massive Money Printing

IDW2015-04-09

My IDW through this past Thursday is pictured below on your left. Despite trillions of new money creation, this measure of asset price inflation that includes financial assets like stocks and U.S. Treasuries as well as commodities seems to be rolling over, and the index has now lingered below the three-year moving average for the past several weeks.

IDW-graffMost notable, however, in the “rollover” picture, as I pointed out in my monthly letter, are commodities that represent demand by the “real” economy as opposed to Wall Street’s mechanism of theft through the printing press. Indeed, it is the 49.81% of the four items of the real economy that is responsible for this flattening out and rolling over of the total IDW. With a 49.81% decline for the four items related to the real economy as opposed to a 45.54% gain for Wall Street and Washington’s “virtual economy,” the IDW is painting a picture that I think is very accurate. The big question is what happens to the economy when this very overvalued stock market crashes, sending the margin clerks to demand repayment, which begets further sales and a massive trip down John Exter’s inverted pyramid?

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.