It’s not “let’s bet some free money on the price of gas increasing”. It’s “we need to secure enough gas to keep the factory running next year, let’s buy as much as we can at any price we can reasonably turn a profit at”.
People continued to bid the price of residential real estate up solely because they believed there was a lack of housing starts?
Or maybe — just maybe — the ZIRP free money spigot had something to do with it as well.
I agree with you that the financial economy is largely divorced from actual stuff, which is why pumping money into it doesn’t lead to rising prices of stuff, just rising prices of financial instruments.
That’s the key here. Increasing the money supply should lead to increase in prices if and only if it is spent on stuff. If it’s squirreled away in complex financial instruments, we just call it “amazing returns”