Once upon a time, everybody knew that the earth was flat. Then they all knew that it was round, but at the center of the universe. In 1929, everybody was sure that a new permanent prosperity had been discovered. The next decade proved how wrong that assumption was.
As is repeatedly borne out in life, when everybody knows something, nobody knows anything.
This is especially true in markets and investing. The more I find that a particular idea is taken as ‘common knowledge,’ the more interested I become in the idea of figuring out what is being overlooked.
PP.com member GBCM recently wrote:
Chris & Adam, the gold blogosphere has been spectacularly wrong, misguided and misleading about the value of PMS and the likely future direction of the variables that are presumed to underpin gold, for the last 2 years.
There's no sign of inflation, the IOUSA economy is strengthening as well as the US$. The Fed is clearly in control of the agenda, and as they say, there be QE, more or less as needed, indefinitely, and interest rates will remain low for the foreseeable future! If the pundits are correct and Janet Yellen is the next head of the Fed, she is reportedly even more likely to extend QE and ZIRP to stimulate and maintain economic growth, and according to Erik Townsend (being interviewed by Jim Puplava last weekend), she has said (to him) that its proper that those with savings subsidize the economy —- how do you like them eggs?
What I think is being succinctly conveyed here is the common knowledge that the Fed has everything under control and will continue to have everything under control for the foreseeable future, if not the rest of time.
Virtually everything that is needed in the markets to convey the “right” signals is in place. Since the short ‘sell everything’ moment last week, bonds are being bought and equities are back up, while commodities remain under pressure, except for oil (which is at just the right level to continue supporting aggressive expansion of the expensive U.S. tight oil formations), and trust in gold has been soundly smashed.
In short, one could not write a better script for instilling confidence in the banking system in general and the U.S.
by westcoastjan 
