Bonds, Balloons, and Scarlett Johansson

Lots of folks writing and talking about the “bond-fund balloon.”  $$  However, I look around and see very high unemployment, no pressure for wage growth, and declining asset prices in houses and assets.  The latter likely due to no wage growth and high unemployment.  Oh, and don’t forget tighter credit. So where are we supposed to see inflation?

Sure, I understand that we’ve had over a 25-year period of declining interest rates and rising bond prices.  All trends eventually end, and we’re near the bottom on interest rates. 

On the other hand, we have companies still firing and not hiring.  Public sector jobs are seeing layoffs, wage freezes, and furloughs.  Those in the public and private sector will soon be asked to chip in for pensions and health care.

Who has extra money to spend and drive up the price of anything?

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Picture is of Scarlett Johansson from Iron Man 2.  Not the best movie ever made, but somewhat watchable.  And Scarlett helps!  As Tony Stark says in the movie, “I want one of those.” 

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