Monday, August 15, 2011

Watch The Money Supply

The money supply (M2) is growing again and at a very fast clip. This means three things: 1) The economy will not fall back into recession; 2) Asset markets are headed up, not down; 3) Inflation is going to pick up.

What growth in M2 does not necessarily imply: 1) a major increase in GDP growth; 2) any substantial improvement in employment levels.

So, watch for stagflation and watch for asset prices to move up.