Prepare to be shocked. Too much money, or water, can be hazardous to your health and that of society in general.
While money and water seemingly are two unrelated subjects, consider the strange terminology interplay between the two.
Having money to spend is called being liquid or having liquidity. Sounds a lot like water.
Spending that money is said to create cash flow in the economy. Ditto.
A company or individual that has a reliable way of making money is said to have a cash stream. Ditto again.
Channels to distribute either money or water are referred to as conduits. More of same.
Those whose debts greatly exceed assets are said to be under water, or drowning in debt. That was the last example.
To restate our starting point, too much water and too much money are potential problems
As incredible as it would seem, with water being the basis of all life as we know it, a person actually can die from drinking too much and suffering water poisoning.
The brain malfunctions when electrolytes are tipped outside of normal levels of balance due to having too much water in the body. Death can follow.
Central banks around the world seem intent on finding out if they can poison the global economy by injecting too much liquidity – excess money supply created by their concerted quantitative easing in the hope of propping up things.
Already this excess liquidity has interfered with the brain function of the economy and markets.
How else to explain the radical upward price movements of Bitcoin above an intrinsic value most learned economists put at zero?
Similarly, can we really justify stock markets near all-time highs in the United States while the economy is on life support?
A company such as Tesla, darling of the green crowd, can have its share price soar to the stratosphere despite making money not by selling electric cars, but due to the carbon credits it gets for doing so and can peddle to companies not as favorably viewed through the green prism.
Oil demand supposedly is declining rapidly with people not working or traveling as much and general economies being slowed, yet oil prices are moving upward at a rapid pace.
In my Pennsylvania county, an area whose demographics of aging population and very modest household income would suggest limited vitality in the real estate market, houses are going up for sale and just as quickly being grabbed off the market by eager buyers.
Wild government overspending in forms such as stimulus payments, guaranteed basic income, an increasing percentage of the population nationally depending for the government for all or a large portion of its income, or any of the other examples of federal government largesse, is not the recipe for long-term economic health.
Financial liquidity, as with water, flows rapidly to where it is least resisted, creating price distortions when the flow is money, or floods when the flow is water.
Either way, the aftermath is not pretty.
Investment bubbles (another water analogy, sorry) burst, leaving rich and poor alike soaked.
Some day, perhaps not too far in the future, we’re going to see that.
Excess monetary liquidity has blinded the markets to what is or isn’t a fair price. It already is beginning to produce price inflation, a process that gathers speed slowly, like a rocket launch, but quickly gains momentum.
From author Ray Bradbury writing in his book The Illustrated Man (“Too much of anything isn’t good for anyone”) to Psychology Today magazine in February 2013 (“Too much of anything is bad for you”) to Mahatma Buddha (“Everything which in your life you have in excess than you actually require is poison . . .”), negative consequences of excesses in even things perceived to be positive long have been noted.
So it is with water, and governments’ bloated money supplies.
Sam Ross Jr's site 