Where Have All The Dollars Gone?

The recent fibrillations in the market, at least on a post hoc analysis basis, have been driven by a smidgen of increase in wages for the 99%. In retaliation, the Marie Antoinette Class has burned down the asset markets. Spite. The thing is: where have all the dollars gone? The inflation in the asset markets could/can only happen if there's excess moolah chasing the instruments. Right? Treasuries represent the lowest risk opportunity cost to the MAC, and the MAC has shown over the last decade or so that they'd rather hold Treasuries than expand the real economy. Spite. One might even harbor the notion that the MAC would prefer the "return" from catastrophic deflation (held moolah buying a bit more each day as prices plunge) over building out new physical capital.

But, you say, what if there's a sharply diminishing venue for new physical capital? Fab 8 is instructive (see recent missives). What if the notion that new knowledge of the scientific/engineering kind is slowing? What if Treasuries aren't the opportunity cost, but it's really the other way round? What if the MAC look at their world from the other direction? What if they say, "I'm not going to dump Treasuries and make real investment until the real return difference is way higher than it is today"?

If so, then the turbulence of recent days is just pique at the fact of a bit more in the pockets of the 99%. It won't last just because the Era of Low Returns is here to stay. All that idle moolah will, soon enough, go back to chasing Treasuries. As the punch line of the adage of the frog and scorpion says, "It's just my nature".