E El-Erian Has It Right: The Failure Of Monetarism And Asset Purchasing

Mohtashami is always the optimist, saying that cash buyers will drop to 20 percent of buyers in the rest of the year. But he still adds a cautious note,  saying that buyers cannot gain enough equity to move up to better homes, and we know that was a central means towards prosperity in the last century.

So El-Erian is not speaking in a vacuum. It is simply essential that corporations pay better wages, that they make the real economy prosper. With the Fed betting on low bond yields and banks doing the same, we will likely never return to the prosperity of the past, but we certainly can do better than what is going on now.

And that means the economy needs to be set up so all classes have the opportunity to get ahead. That is missing now. That is stealing from future prosperity. Business would do well to heed this warning, that future prosperity for them demands better wages now. It is just good business. 

Finally, El-Erian fears that improbable events, like a Trump presidency or massive fluctuation in the price of oil, from 3 to 7 percent, become more probable as this asset inflation and wealth divide increases. That should alarm everybody. 



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Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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