Since the 70’s we have been treated to central planners planning our centrals. In the 60’s we had a recession that grew into the inflation of the 70’s which grew into the inflation of the 80’s. The inflation of the 70’s was attempted to be controlled by a command economy, for example you could buy gas on alternate days. Didn’t work. What we got was stagflation. In the 80’s interest rates went to 18% It broke the back of inflation. It nearly broke the country. 18% is what slopped up the excess liquidity. It was effectively the top of the mountain and we have been sliding back down that mountain since 82. We are now at 0, and once again we are flooded with liquidity.
Everybody and his brother is going to be begging for a bailout. Everybody has been practicing bad business practice except maybe Buffet and now when the piper wants paid they want YOU to pay to make them whole. You are inclined to let them because you own part of the bad business practices and their bailout is your bailout, but its stupid to bailout if the bailout doesn’t work. The central banks have no mojo. Bernake and Jellen have destroyed the world and Powell is following suite. It’s all politically driven at this point. Sending people checks won’t help.
We have been under a state of monster inflation for a long time. That inflation has expressed itself in the stock market. When a market moves over 100% off trend in a positive direction either the universe changed or the positive movement is inflation. 3394 was the peak and the inflation is now in deflation. What will happen next IMHO is we will over deflate and re-inflate again except it won’t be in stocks it will be in commodities. We will see the inflation there. We will see it in the price of bread and gas not in a return to 3394.
I read this account from a respiratory therapist treating COVID in NOLO. This is an experienced guy on the front line. RT understands lung disease cold. If I was the brain RT were the skilled hands who made my will happen in the patients life and they have my respect.
Covid-19 RT experience This article should give you some idea of what we are facing in the 20% who have a bad course. According to Cuomo, who has well over 10,000 diagnosed cases, 50% of his infected that are critical are under 50. So if you’ve been playing the odds that this is an old peoples disease and granny lived a good life, you might want to re-access your odds.
Regarding inflation v liquidity. Liquidity is what pumps inflation. So when Mnuchin writes you a check, the price of a loaf sooner or later is going to 10 bux a loaf. Stick that in the risk hopper as well. In 1980 I bought a house and my mortgage was around 12%. That really happened. Do you think you could own property at 12%? Do you think your kid could? Do you think your kid could buy your house at 12%? What does it take to break the back of inflation? What does it take to climb back up the mountain?