Today, I will explore the effect of an overwhelming amount of liquidity[1] on our assets and investment decisions. Previously, I spoke about how the low interest rates will affect these 2 aspects in my article: Can you find safety in volatility.

Liquidity trends in the market:

Historical trends for liquidity in the market

Source: FED The Federal Reserve (FED) balance sheet has increased from USD$900 billion to USD$7.4 trillion today over the last 13 years. Starting from the recession in 2007, the amount that has been created[2] has increased by a whopping 7 times. This great amount of money has led to an increase in asset prices; driving up the prices of stocks, properties and more.

Future trends for liquidity in the market

The FED chairman, Jerome Powell, shared on this topic at a web symposium with Princeton University recently. He stated that the monthly money creation of USD$120...