We were discussing with our colleague Brian how to explain the mission of the Markets and Money to those in foreign countries trying to publish it and make it relevant for locals not interested in the fate of the U.S. Empire. We drew a time line beginning in 2000 and filling in various rising asset markets along the way, starting with the tech bubble and moving on to today, marking the various rises in sectors and asset classes along the way.
This morning, we thought of Genesis five and the descendants of Adam. Adam, of course, is the Great Begatter. All things proceeded from him, and later, from Noah. But it occurred to us that the Great Begatter of asset bubbles is harder to identify. Is it credit? Is it the day Nixon took the dollar off the gold-standard in 1971? Is this what trigged the post-deluvian flood of debt- backed money into the world? If so, where does it all end?
All we can say is that there is a lot of begatting and begotting in the five books of Moses. In financial terms, this means bubbles can go on much longer than you first suspect, especially when the supply of liquidity (superannuation) is tied so directly into the share markets. Maybe this will happen in America too as part of some presidential candidate’s scheme for saving Social Security and the American pension system. We don’t know. But eventually, even in a great flood, things drown instead of floating.