Around the campfire: Into the sunset

This week two figures who have dominated the Year of the Pandemic have ridden off into the sunset – Captain Sir Tom Moore in the UK has just died, and Jeff Bezos in the US, who is retiring as CEO of Amazon.

The former came to public notice last year at the age of 99 when he walked 100 lengths of his garden to raise money for the National Health Service (NHS) and instead of raising £1,000 his efforts gathered £32.8 million, for which achievement he was knighted by the Queen.

Jeffrey Preston Jorgenson (his birth surname changed to Bezos when his divorced mother re-married) founded Amazon in his garage in 1994. It’s now the biggest on-line retailer in the world. The hugely-wealthy Bezos says he is stepping down as Amazon’s CEO to become its executive chairman.

What links these two very different people, other than determination and drive?

The answer is that both in their own ways demonstrate that there is a vast amount of money sloshing around. Amazon’s revenues for 2020 were more than $386 (£283) billion, 38% higher year-on-year. We would never have heard of Tom Moore but for the Covid-19 pandemic. Amazon has clearly profited from the mass switch to on-line spending, another Covid-19 by-product.

The huge spike in US money supply – and elsewhere – is manifesting itself in ways other than Tom Moore’s charity venture and Bezos’s personal wealth. The explosion of new companies aiming to float on stock markets this year – everything from Doc Marten’s boots to the social networking app Bumble and many more web-based companies that have yet to show a profit – is underpinned by massive liquidity that can be injected by investment banks and others.

There is an old saying that ‘markets can stay irrational longer than investors can stay solvent’. We witnessed an outbreak of herd irrationality last week, when a flash mob of retail investors ploughed into ‘rubbish’ stocks in the US. Too much money chasing too few worthwhile goods – a classic definition of inflation.

As John Dizard commented in the Financial Times last May: “While institutions and markets have been kept from imploding by the wall of money the Fed and other central banks have thrown at the economy, they still do not have clear long-term prospects. Financial people, their slide packs in disarray, do not have plans that fit the circumstances”.

The ‘money bubble’ that is inflating before our eyes will sooner or later pop; regulatory authorities lack both the will and the authority to manage the distortions now in our monetary system. For the risk-averse – and who is not? – who need liquidity (i.e. money) for their everyday life, there is a solution. It’s called Glint. With the Glint app and card, you can help reduce the risk of your money losing value over time – the purchasing power of the GB pound has dropped by almost 10% in the past five years, while gold has proven to have increased by almost 75% over the same period. If you haven’t already, you might want to get over to the App store and download the Glint app today.

Until next week.

Jason