{"id":54439,"date":"2020-07-29T07:36:38","date_gmt":"2020-07-29T12:36:38","guid":{"rendered":"https:\/\/olduvai.ca\/?p=54439"},"modified":"2020-07-29T07:36:43","modified_gmt":"2020-07-29T12:36:43","slug":"there-aint-no-such-thing-as-a-free-lunch-part-3","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=54439","title":{"rendered":"There Ain\u2019t No Such Thing as a Free Lunch \u2013 Part 3"},"content":{"rendered":"\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"http:\/\/theswarmblog.com\/wp-content\/uploads\/2020\/07\/photo-1579186140969-7d690cb8b536-776x310.jpg\" alt=\"\"\/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><a href=\"http:\/\/theswarmblog.com\/index.php\/2020\/07\/28\/there-aint-no-such-thing-as-a-free-lunch-part-3\/\">There Ain\u2019t No Such Thing as a Free Lunch \u2013 Part 3<\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">In previous articles, I examined the negative externalities of post-Keynesian measures like unlimited monetary easing. First, I explained that such policies were inflating asset prices, squeezing working and middle classes, and thus leading to a core deflationary impact on the rest of the economy (see&nbsp;<a href=\"http:\/\/theswarmblog.com\/index.php\/2020\/04\/26\/there-aint-no-such-thing-as-a-free-lunch-part-1\/\">There Ain\u2019t No Such Thing as a Free Lunch \u2013 Part 1<\/a>). Then, I wrote that too many bailouts might lead to moral hazard and zombie companies, undermining future economic growth (see&nbsp;<a href=\"http:\/\/theswarmblog.com\/index.php\/2020\/04\/27\/there-aint-no-such-thing-as-a-free-lunch-part-2\/\">There Ain\u2019t No Such Thing as a Free Lunch \u2013 Part 2<\/a>).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If such policies tend to weaken the economy, then why assets like stocks, bonds, and real estate keep on rising?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Greed is Good<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As already mentioned, bonds and equity markets have been more and more driven by the \u201cFed put\u201d narrative (see&nbsp;<a href=\"http:\/\/theswarmblog.com\/index.php\/2020\/07\/09\/the-fed-put-narrative-era\/\">The Fed Put Narrative Era<\/a>). Besides, households might see the drop of interest rates as a screaming buy signal in the residential real estate space. People have been taught that any correction should be regarded as a huge investment opportunity, so everyone is willing to join the party.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Fear of missing out is a powerful catalyst, especially when wages inflation is so low that all you can do is&nbsp;<em>hope<\/em>&nbsp;for significant returns on investment markets. If the Fed has our back and if Nancy Pelosi is right about \u201cthe stock market floor\u201d, then why not taking risks?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Narratives and Fantasy<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Even if people love to state that \u201cthe market is not the economy\u201d, assets like, stocks, bonds, and property, are supposed to reflect economic values somehow. And the bad news is that GDP growth has been decreasing for decades in Western economies (see chart below).<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"http:\/\/theswarmblog.com\/wp-content\/uploads\/2020\/07\/us-gdp-growth.png\" alt=\"\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There Ain\u2019t No Such Thing as a Free Lunch \u2013 Part 3 In previous articles, I examined the negative externalities of post-Keynesian measures like unlimited monetary easing. First, I explained that such policies were inflating asset prices, squeezing working and middle classes, and thus leading to a core deflationary impact on the rest of the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1849,647,30111,3650],"class_list":["post-54439","post","type-post","status-publish","format-standard","hentry","category-economics","tag-financial-markets","tag-precious-metals","tag-the-swarm-blog","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=54439"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54439\/revisions"}],"predecessor-version":[{"id":54440,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54439\/revisions\/54440"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=54439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=54439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=54439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}