Maybe the whole explanation for every asset crazily mispriced relative to future possible cash flows is reserve currency. Money is free, at least the richer you are the cheaper it gets–good luck trying to get a loan if you’re poor, but if you’re rich you can get cheap money and if you’re really rich you can get almost free money to invest and if the investment blows up in your face the government is there, directly or indirectly, to bail you out. Incompetence reigns. But how is this possible? Why aren’t interest rates higher? Why is there no penalty? Well, of course, there is a penalty, the whole goddamn country has been penalized. All actually working people have been penalize. The infrastructure we all depend on has been penalized. But the markets, those supposedly impartial judges handing out pass/fail decrees based on the amount of competence and hard work in a business, where are they? No where to be seen. The invisible hand isn’t just invisible, it’s nonexistent (as is actually often (although not always) the case with invisible things). Anyway, what can explain this? I’ve been thinking the explanation must be a complicated interaction of multiple different forces too varied and interdependent for our increasingly binary brains to unravel, and I’m certain that is true. But maybe there is one huge cause so large that, were it to be removed, all the others would be crushed by markets reasserting themselves. What if that force is reserve currency? We, for all intents and purposes, print gold. It is like one of those stories in which a fairy of some sort teaches the peasant girl how to spin straw into gold. (Truly, it is remarkable the way modern life has come to resemble some sort of Medieval fairy tale.) Basically dollars are gold all around the world and nothing seems able to dislodge them from that pedestal. What, really, could take the dollar’s place? But if something did, would the happen then?