“No Man’s life, liberty, or property are safe while the legislature is in session” -Mark Twain
Over the past week, Neil and I have received many questions about the government shutdown and impending debt ceiling and how they might affect the markets. So we thought we would share with you a quick summary of what we believe is happening and how we are positioning our portfolios as a result.
The general idea about inflation we are taught is that the greater the supply of money, the less a single dollar is worth, and the prices for the goods we buy should rise. This simple model usually holds true, yet policies by the Federal Reserve over the past five years have substantially increased the supply of money but have failed to stimulate above average inflation. Inflation lowers everyone’s purchasing power and erodes the real return on investments, so keeping an eye on when inflation might rise is important.
M2 Money Stock Since 2008