Bubble-like behavior?
A friend is a builder in Washington, specializing in high-end houses.
“I’ve never seen anything like it. There’s just so much money in Washington. We’re doing 15 different projects. Every one of them is spectacular.”
Money is everywhere. Everything is going up. Gold, for example. CNBC:
Gold could reach $10,000 by the end of the decade, says Ed Yardeni.
Which is another way we could reach our 5-to-1 target, Dow/Gold. If gold goes to 10,000…while the Dow advances only to 50,000…we’d get the ratio we’ve been waiting for.
In the meantime, the most alarming bubble news is that almost everyone is in on it. Reports came in from an investment conference held last week in Las Vegas.
“Every speaker was bullish. Everyone. Usually, there will be a few doom-and-gloomers. But this time, the doomers said they had seen the light. They told us how AI had changed the picture. Yes, of course, there are worrisome things going on, they said. But AI is going to make us all rich.”
It sounds like a re-run of the dot-com delirium of 1999. Then, it was the internet that was going to make a whole new world. And then, we investors could make a fortune by buying Global Crossing or Webvan. After all, for the first time in human history, we had all the world’s knowledge at our fingertips.
Alas, even with a complete set of electronic encyclopedias, we weren’t able to stop the Nasdaq crashing from over 5,000 in March 2000 to 1,100 in October 2002.
The problem with having all the world’s knowledge at your fingertips was that you could spend a lot of time just trying to separate useful knowledge from time-wasters and fake news.
But now that problem is solved. We will now bask in the warmth of real wisdom…as AI rakes the coals of human experience for us.
We may not know what it is we don’t know…or what we want to know…or what good it will be for us to know it…but AI will know!
Better vintages of wine at lower prices…coming soon. Roofs that never leak and socks that never get holes — AI will figure it out.
And how about plastic packaging that you can actually open with your bare hands…or restaurants that know exactly what music you want to hear…or films with your favorite dead stars; Vivien Leigh and Clark Gable in that sequel you’ve been waiting for: ‘Back with the Breeze.’
Let AI take our exams for us…fill in our census paperwork…fix our speeding tickets and show our favorite barista how to give the ICE man the slip.
Oh what a wonderful AI world! But wait. Did the thieves at the Louvre have Grok 3 helping them?
And what’s this? Inflation is still going up. The Wall Street Journal:
Inflation Edges Up, But Less Than Expected, to 3% Rate
Let’s see…3% is a lot more than 2%, the Fed’s target. It’s 50% more. And at that rate, prices will increase by more than a third by 2035. But the 2% target was always nothing more than malarkey.
The Fed announced its 2% target in 2012. It claimed that moderate inflation helped grease the wheels of commerce…that it increased employment…that it would help us ‘grow our way’ out of debt…that it boosted asset prices (such as houses), and made people feel wealthier so they would spend more freely.
This is a ‘bubble-like behavior’ too. People are neither always good nor always bad, but they are always subject to influence. And the influence they’ve been living with for at least three decades tells them they can get other peoples’ stuff without ever paying for it.
Maybe AI can solve that problem too?
Editor’s note: Read more from Bill Bonner and his team at Bonner Private Research.
