The popular debate, if any, runs out of road once we start to discuss money itself - a critical component within the debate, but insufficiently understood by just about everybody. Why have the untold trillions of central bank ex nihilo base money not already triggered eye-watering levels of inflation ? 1) Because they mostly sit inert (so far) as commercial bank reserves. 2) Because commercial banks' balance sheets remain mostly upside down (i.e. the banks are still pretty much insolvent), so the last thing these firms are going to do is actually lend it out to anyone. 3) There is already uncomfortable inflationary leakage feeding into the prices of many financial assets, including the obvious usual suspects, stocks and bonds.

And so the economy, like that of Weimar Germany, remains moribund even as more and more money gets printed. At some point, which may be fast approaching, the marginal user of money is going to get fed up at this constant devaluation of their purchasing power, and the rush into hard assets will begin. As longstanding readers and our clients are well aware, we love hard assets. As one highly successful fund manager recently wrote to us,

Hard assets rock.

David Fuller's view Hard assets are currently out of favour, partly because when they are not performing, people prefer other assets which provide some yield. However, with competitive devaluations and quantitative easing very much in play, hard assets are unlikely to remain out of favour for much longer.