This article provides a macro-foundation for why the specific value of 2% is a valid inflation target. The approach postulates that innovations generate transactional cost savings by comparison to barter. The optimal velocity of money is derived as a function of productivity growth and of...

The long-term equity premium value is found to both be consistent with historic gross domestic product (GDP) growth and portfolio insurance against downside risk. First, we use a supply-side growth model and demonstrate that the arithmetic average stock market return and the returns on corporate...

Economists have argued that a long-term inflation target near 2% is optimal (Summers, 1991; Fischer, 1996; Goodfriend, 2002; Coenen et al., 2003; Bernanke, 2003). However, these arguments are really about why a low positive inflation rate is ideal to avoid a deflationary trap, not explaining why the specific...

Economists have argued that a long-term inflation target near 2% is optimal (Summers, 1991; Fischer, 1996; Goodfriend, 2002; Coenen et al., 2003; Bernanke, 2003). However, these arguments are really about why a low positive inflation rate is ideal to avoid a deflationary trap, not explaining why the specific...

We construct a gold valuation theory based on viewing gold as a global real store of wealth. We show that the real price of gold varies inversely to the stock market P/E and thus is a direct function of a global yield required to achieve a constant real after-tax return equal to long-term global...

The Equity (return) Premium is shown to emerge fully, specifically and episodically from just three transient factors: EPS growth above long term GDP/capita growth; after tax long bond yield below GDP/capita growth, and change in P/E (valuation) - without a risk premium. The earnings/price (E/P)...

Despite being a consumable commodity with price intuitively fluctuating based on marginal supply and demand, this paper proves that the price of oil is driven by a yield measure combining the TIPS yield and an expected inflation derivative

•Bitcoin valuation is largely a function of both the real yield and expected inflation.•Fed assets in relation to real gdp drive the real yield.•Money supply in excess of real gdp drives inflation.•Bitcoin, like gold, faces twin headwinds if the fed sticks with announced policy and...

TIPS (Treasury Inflation-Protected Securities), or the real yield, are directly and inversely impacted by Fed Asset levels to the degree they depart from real GDP growth (the excess of monetary capital thus created reduces the real yield obtainable since it outpaces real GDP growth which is the...