Where Will All the Money Go When All Three Market Bubbles Pop?
It feels like the early to mid 2000's all over again. Back then we had inverted yield spreads, i.e. the risk premium wasn't just flat but inverted in some cases, and across all major asset classes everywhere. Essentially there's too much money chasing too little actual assets and wealth, which is just another way of saying that the money is overvalued.
Consider defining a new measure of value based on quality of life (let's call it a Qual) and the ability of certain assets to provide quality life; so things like food, housing, infrastructure, hospitals, schools and access to a high quality labour market.
Qual is just a measure, so we can say that a town can be said to have k quals of quality on it, and if we had two such towns there are twice as many quals. So as an economy expands and contracts the absolute number of quals rises and falls. And what a qual is worth in terms of real life stuff remains constant, so you could define a price in quals for food, housing, fuel, building materials and that price would remain constant, since a housing a food, etc. provide the same utility today as they did 50, 100, 1000 years ago. And yet the price in dollars of some of these things is high, which really means that the value of dollars is falling, measured in quals.
I.e. if the price of everything goes up and is in bubble territory, then your're not really looking at an all-asset price bubble, but rather monetary inflation. And yet the official price inflation statistics suggest inflation is low to modest, even near zero. This may be one of those stupid situation where post financial crash everyone says that, well of course in hindsight we were staring at a massive problem all along, but we never consider warnings signs X Y and Z in those terms... yadda yadda.
Essentially inflation is being measured by a peculiarly constrained subset of assets ('basket of goods') that seems to avoid all of the stuff experiencing asset bubbles (for starters consider the difference between 'goods' and 'assets'). The price of consumer goods are subject to lots of dynamics and price pressures, and I would say they don't really capture what's going on with global money systems; and yet these inflation stats are quoted as evidence of low inflation.