We've been looking at how the idea of “The Wisdom of Crowds” can give us an edge when it comes to forecasting the economy. We've recently looked at two indicators which we believe help forecast U.S. growth and, so far, one indicator, based on copper prices, which we believe helps to forecast global growth.
We've looked at ways in which the behavior of investors can help signal future economic expansion, or contraction, of the United States. Investors are a large group, a majority of Americans by some estimates, which means tapping into that group means tapping into a wide network of knowledge. This idea is called “The Wisdom of Crowds,” which we discussed in an earlier piece.
We're getting a little tired of using the word "unprecedented," but no other word captures the recent trends in both deficit spending and money supply expansion. Also unprecedented are the stratospheric prices for cryptocurrencies. And there are good reasons to believe that these violations of precedence are not merely coincidental, but rather logically related to one another.
Remember early last year when oil prices 'went negative'?
Well, despite scary headlines, the actual prices themselves didn't go negative, but there certainly was a major drop in the value of oil. Markets often get the direction of the economy right, but they also can go too far.