Real Private GDP, Currency Creation, Inflation & Corp Profits Trend Together But No Mathematical Relationship

“Davidson” submits:

Real Private GDP, currency creation, inflation, corporate profit are all intimately connected. There is no mathematical relationship, but they trend together.

Understanding economics, corporate finance, GDP, inflation are only connected through experiential observation. The failure of our efforts to apply math is based on the fact that every day, every year and every investment cycle occurs based on advancing our knowledge based on what we learned yesterday, last year and etc. Our thinking and action based on our accumulated knowledge never repeats. Today’s cycle includes the iPhone, introduced in 2007, which we did not have the last cycle. Smartphones have drastically lowered the cost of communication and information gathering, i.e. deflationary.

The way the iPhone came about and all its infrastructure was through corporations making a profit This is how Free Markets work. One has to get to the level of individual transactions and analyze what is going on between individuals to break down how today’s markets work and what they represent.

1)   Millions of years ago markets evolved as the most efficient method of survival for groups of proto-humans. Individuals with specific talents, like arrowhead making, made the best use of limited materials and time to make arrowheads for all. They traded these for those individuals who made the best foot ware with the least waste and so on for each survival need and skill of the group. They could not afford to waste resources or time letting the poorly skilled make useless tools for the rest of the group. Someone who insisted on making something the group did not need, made it poorly or wasted resources would quickly have found few willing to barter for other goods of survival. Individuals naturally migrated to doing what was best for group survival. Even back as far as 4mil years ago ‘faster, better, cheaper’ was required. Markets are ‘US’ and are simply more sophisticated today. Markets are so ubiquitous as an aspect of society operations that we fail to see them unless we step back and look carefully.

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Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or ...

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