Thread by @gabebassin

A thread on Inflation.

0/As the US stock market reaches all-time highs amidst a very interesting macro backdrop I continually hear people talk about Inflation. More specifically, the lack of inflation.

1/For example, articles like @ryanlcooper 's (theweek.com/articles/78995…) that rail against Austrian economics and laud Keynesian policy are comical at best and a extremely unfair at worst.

2/Beyond being seemingly politically motivated, they appear to miss the point when it comes to inflation. They also don't fully acknowledge why people may question the monetary experiment known as Quantitative Easing.

3/Usually the argument goes, “Look at the PCE and wages and CPI and blah blah/whatever data point. There is no INFLATION! We told you we could print money ad infinitim and there would be no consequences.”

Something to that effect.

4/What these arguments often ignore is the massive ASSET inflation we have seen since much of these “innovative” monetary tools have been implemented.

5/Have a look-see:

6/Here is the SP500:

7/Here are good old plain vanilla 10 year Treasury Notes:

8/Here are Home Prices:

9/Here are Real Estate prices across different classes (yes, its not up to date, point still remains):

10/Re: Real Estate--We don’t see a gazillion cranes in the sky in pretty much every city and town in the US because prices are NOT high.

11/How about small business prices?

@ReformedBroker outlines this point much better than I could in this post here:

thereformedbroker.com/2018/08/10/if-…

12/How about Venture Capital valuations? I must admit I don’t have much data on this as a lot of the metrics are not published but just a couple observations:

13 /Uber:~$65B AFTER a down round. Up from $5.4 MILLION in 2010.

Lyft: $15B.

Both are taxi hailing apps.

I know, I know. "But the network effect bro!!"

14/ WeWork: @profgalloway articulated this well.

https://twitter.com/businessinsider/status/868633942714228736

.

$550k per customer!!

Community Adjusted Ebitda! WTF!!!

15/Here is a @CBinsights list of Unicorns for your perusal:

cbinsights.com/research-unico…

I am pretty sure this list is longer than any time in history. No price inflation here!

16/There is NEGATIVE ARBITRAGE to go public right now. This is contrast to the late 90s/early 2000s where public markets welcomed these companies.

Public markets are saying “you have come too far too fast, don’t come here”.

17/Feel free to @ me if you disagree or have a good argument as to why venture deals are currently cheap.

18/Lastly, look at the price of Bitcoin. It's up like 1000000x since the beginning of QE. Talk about INFLATION!!

This is a direct response to fed money printing. The Genesis Block says so itself.

19/I could go on but hopefully you get my point.

These are just a few examples of the pretty huge inflation we have seen in the economy that seems to get swept under the rug in the inflation conversation.

20/Just to be clear I am not trying to sound dogmatic. Maybe I am just sensitive?

I think there is merit to many schools of economics and none of them are right 100% of the time.

21/Currently the Austrian School is making some good points re: Hard Money and BTC. Thank you @saifedean, @MustStopMurad, @pierre_rochard, @bitstein, @MartyBent, @BobMurphyEcon for furthering this discussion.

These arguments need to not be so flippantly dismissed by the masses.

22/Lets just be fair about the discourse when we talk about Inflation. There are very real effects being felt across assets and markets and this needs to be respected.

23/I could talk further about how this asset inflation has exacerbated the wealth disparities and the sociological effects of this but thats a whole other tweet storm!

24/ h/t @BMBernstein, @arjunblj, @clearingfog_III, @TaylorPearsonMe for our 🔥 private chat where we discuss a lot of this stuff