A Quote by David Stockman
The problem is that you're creating a system of bubble finance where interest rates are so low that people can speculate. An asset value goes up. You put it up as collateral. You borrow against it. You buy more of the asset. You then take the rising asset. You borrow against it again. This is the nature of what's going on in the world. This isn't an excess of real savings. This is an excess of artificial credit that's being fueled by all the central banks.
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When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold.
What we define as a bubble is any kind of debt-fueled asset inflation where the cash flow generated by the asset itself - a rental property, office building, condo - does not cover the debt incurred to buy the asset. So you depend on a greater fool, if you will, to come in and buy at a higher price.
Interest rates are to asset prices what gravity is to the apple. When there are low interest rates, there is a very low gravitational pull on asset prices.
If the asset solves a real problem for a real customer, then there'll be value in the asset.
In the 40 years I've been working as an economist and investor, I have never seen such a disconnect between the asset market and the economic reality... Asset markets are in the sky, and the economy of the ordinary people is in the dumps, where their real incomes adjusted for inflation are going down and asset markets are going up.
My net worth is the market value of holdings less the tax payable upon sale. The liability is just as real as the asset unless the value of the asset declines (ouch), the asset is given away (no comment), or I die with it. The latter course of action would appear to at least border on a Pyrrhic victory.
Banks don't want certain asset classes, and that's created opportunities for private equity, hedge funds, Silicon Valley. In this case I think he was referring to some of the European banks shedding assets, and the big buyers are probably not going to be big American banks. Someone like Blackstone may have a very good chance to buy those assets, leverage them, borrow up a little bit, and do something good there.
I think we have a bubble in the US in government bonds, because of the quantitative easing and the negative real interest rates, and to some extent, that increases asset values across the board, including in startups.
To pump up consumer or government demand would force interest rates up and asset prices down, possibly by enough to destroy more jobs than are created.
If you let interest rates be freed, be set by the free market, they would rise dramatically. There would be a lot of broken furniture on Wall Street. It needs to be broken. The back of the speculative bubble would be broken and we could slowly heal the financial system. That's what I think we need to do but it's never going to happen because there's trillions of asset values dependent on the Fed continuing to suppress, repress interest rates and shovel $85 billion a month of liquidity into the market.
I think the issue that millennials have is that the return on asset classes such as bonds, cash, are so low now compared to the historical levels that it's very difficult for them to save enough to be able to retire comfortably. If interest rates do trend back upwards, it may be less of a problem going forward.
Never work for a company that says people are its most important asset. If you wanted to get a mortgage and you said that your only asset was people you would end up living in a tent.
I think the asset management industry, especially in the US, is going through a pretty tough time. If you talk to the CEO of a US asset manager, morale would be at a low, even though stock markets are at almost record levels.
Is not the action of nature like the stretching of a bow? The high, it pulls down; the low, it lifts up; It takes from what is in excess In order to make good of what is deficient. Who can take what they have in excess and offer it to others?
Peace, for us, is an asset and in our interest. It is an absolute human asset that allows an individual to freely develop his individuality unbound by any regional, religious, or ethnic fetters.
A bank-issued digital asset can only really efficiently settle between the banks who issued it. I strongly believe banks need an independent digital asset to enable truly efficient settlement, and we believe XRP is best positioned for that role.
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