Investors Struggle to Make a Profit in an Economy With High Liquidity, by Bill Bonner

Buying financial assets at this point means buying assets whose values have been artificially inflated by an ocean of fiat debt issuance. That means the investor will probably not make money. From Bill Bonner at rogueeconomics.com:

Tell me, friend, when did Saruman The Wise abandon reason for madness?

– Gandalf, Lord of the Rings

YOUGHAL, IRELAND – The Federal Reserve keeps “printing” money – at the rate of about $3 billion per day – and lending it to member banks at a real (inflation-adjusted) rate of MINUS 6%.

Not surprisingly, the hustlers are out in force, figuring out new ways to get their hands on it. Bloomberg reported in November:

[Solar-powered vehicle maker] Sono has racked up about 108.8 million euros ($123 million) in losses since its inception in 2016. When key investors balked at putting in more money roughly two years ago, co-CEOs and co-founders Laurin Hahn and Jona Christians turned to crowdfunding. There was a hitch in that strategy: since March of last year, Sono has been unable to access about 5 million euros from PayPal. The online payment company froze its account, citing risks related to unexpectedly high transaction volume. Sono says it started the process of fighting this as of mid-August.

Without any proceeds from this week’s IPO, Sono estimates it would have been insolvent by next month or shortly thereafter. It expects to lose money for the foreseeable future and continue relying on external financing to stay in business.

But the IPO went forward on November 17 at $15 per share and Sono (SEV) briefly got a market value of $1.8 billion…

And it’s not the only company in FantasyLand drawing in big bucks.

Last month, Bloomberg reported that companies have taken in a record $600 billion in IPOs so far this year. That’s up from $235 billion in 2019 and $370 billion in 2020.

Prior to this, the record stood at about $420 billion… in 2007.

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