my beef with the CFA program

yeah boy, here it is. there is not enough in the curriculum to develop an understanding of money itself. when asset valuation is a function of money first, and only after that is it a function of fundamentals/technicals, whatever, why is the topic of money so neglected? Maybe i’ll see more of it in L2, but in L1 the only discussion was a brief description reserve ratio and technical definitions of M1, M2, etc. When asset valuation, as we saw in 2008 and will likely see again over and over, is mainly a function of money itself, this is a shortcoming of the curriculum. for example, is home equity money? sure behaved like money. one moment, it’s not there, then out of thin air, a claim to an asset (a bank lien) is monetized. maybe it is, maybe it’s not. how about subprime mortgage creation? is this not a de facto form of money creation? what about the ability of the fed to spend against future tax collection? why is M3 no longer revealed to the public? when the global amount of money goes from 40T to 60T, it will find its way into market priced assets like stocks and real estate. if that money is not explicitly created by the monetary authority, but rather by asset speculations vis a vis levered credit facilities (e.g. subprime), how can you accurately value other assets? sure, a stock may be worth $80 based on some model, you may be perfectly correct. but if $80 isn’t worth $80 then where are you? since the basel II and other capital structure rules build a framework that promotes instability and formation of asset bubbles, why is this most critical aspect of asset valuation not addressed? wouldn’t a more thorough treatment of the basic underpinnings of our global capital structure be helpful? to me it seems all this CFA stuff is window dressing–like building sandcastles amidst tsunamis. just a thought…as I go back to working to earn the much admired letters.

Solution… Read Brian Wesbury’s book, It’s Not As Bad As You Think. or, the Federal Reserve has a free pdf on everything it sounds like you are asking, on their website.

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