There’s too much money running around looking for assets.
When money decides to go to work, this means some asset values will fall, hard.
There were many voices over the holiday worrying about a stock market crash. It wasn’t just the usual cranks. Houses cost too much. Cars cost too much. Stocks cost too much.
There are many ways fake assets can be siphoned off into the real economy. Real interest rates are one, inflation is another. When you need money for stuff you want, you Marie Kondo your assets and dump what doesn’t give you joy.
Idiots think this makes Bitcoin a winner. Bitcoin is designed to always rise in value because there’s an upper limit on supply. But Bitcoin isn’t real. Just like gold isn’t money.
Nothing is money and everything is money. Money is a verb. It’s what lies between exchanges of value, assets to assets, or assets and work. To be of use, money must hold its value through the transaction. Afterwards it’s just another asset. It’s like so much in science. What it is depends on the observer. Is the cat alive or dead? Is light a wave or a particle? It depends on what you want it to be.
What we need from money is enough to support all the transactions being done with it, in a uniform manner. The U.S. GDP was $22.9 trillion last year. But the currency also supports other countries, like Saudi Arabia, which still sells in dollars, as well as countries that peg their currency to the dollar for its stability.
What this means for 2022 is you invest in what’s real. The Cloud Czars are real, putting all their cash flow, and more besides, to work building assets that can bring a return. Software companies are the buy side on this infrastructure, chip companies the sell side.
Our political problems involve the uneven distribution of these assets. We have chosen to leave them in market caps and thus produced a second Gilded Age. Stocks work, so we put more money in stocks, but stocks mostly benefit a few so they get all the value. We could choose to redistribute some of this wealth, to invest it on behalf of the people. But until we make that choice it won’t happen.
That choice will be made, eventually, and how it’s made matters for your money. Will it be done democratically, through established institutions? Will it be done by fiat, governments warring on one another? Or will it be done chaotically, through disaster and human demands for change?
I have no idea. Those are political questions. We can make any choice, or choices, that we wish. Will we be able to change our mind if we make a wrong choice? I don’t know this, either. But revolutions happen, too.
I do know this. The creativity economy is real. You’re not imagining it. If you can dream it, you can build it. So, if you want to be helpful to your fellow man and woman, start dreaming and building today.
