Hard Assets are seeing tremendous demand as some investors are front running MMT taking over in Congress. Modern Monetary Theory is something everyone should have a basic understanding of , and politically speaking it is the path of lease resistance , given its belief deficits don’t matter and countries who can print their own currency can print their issues away , and if inflation runs hot , MMT says raise taxes. Yellens appointment to treasury was a tea leaf to that option. It would be just a move to very open fiscal policy with much less pretense of constraint Based on the MMT beliefs laid out in Stephanie Keltons Book .
It is the only “feasible in practice “ way of transforming asset multiples and valuations (that are at historic valuations) Into a new normal or that is the hope
We have already become the biggest holders of our own debt and we (the fed ) just monetize (buys) the debt Treasury sells to pay for deficits . It’s a CJ . That way we buy our own debt to keep interest rates artificially low (bond prices are inverse to rates) as we run huge deficits . This is why central bank balance sheets the world over have expanded exponentially (first in 2008 crisis and again in response to Covid)
As of a few Months ago
Fed owns 3.8 Trillion
Japan 1.25 T
China 1.06 T
There is no Turning back , this sort of situation has played out for nearly 2000 years with various monetary systems (or as Mark Twain would say history doesn’t repeat but it rhymes )