This is the worst case scenario I’ve worried about for several years, especially since governments threw such huge amounts of money into their economies.
Governments have been kicking the can down the road since the dot com bust of 2000. Low interest rates and poor lending standards have fueled first a property bubble (popped in 2008) and now a general asset bubble. Assuming the situation plays out in the way the author describes, what is to be done about it? I don’t know the answer to that question but I’m sure it will be a slow process that probably involves rebuilding our productive economy, such as high-tech manufacturing, and not just creating another bubble courtesy of financial engineering. Maybe the author can write an article discussing possible routes out of this mess. Good luck everyone. It looks like we’re about to face much more consequential issues than trans ideology in the near future.
Prashant Kotak
1 year ago
This is not quite so straightforward. Inflation also means a ramp in the price of many types of assets, for example commodities are sure to rise – oil, heavy metals, even grains etc. And all those are more often than not packaged the form of…. stocks. So in the first instance you get a balancing off as investors rotate out of some classes of stocks and into others. What is coming is a depressed global stock market lasting a couple of decades, but not just yet – perhaps 18-24 months away. The trigger I will look for, is when joblessness starts to rise. Until then, I suspect stocks will yoyo around.
The asset bubbles that formed since governments started printing money were the first indicators of the declining value of our money. The trillions they created from thin air had nowhere to go. Cynical political decisions to only measure inflation based on a highly manipulated consumer price index allowed them to hide and deny the destruction they were unleashing on the economy. Recent events should prove to anyone that modern monetary theory was dangerous nonsense and Milton Friedman was right. But as long as the people who told us inflation was transitory still control the narrative, there will be no such admission.
An expression about a certain animal coming home to roost springs to mind. The media and the public demanded CPC style draconianism in March 2020 and this is their just reward. A collapse in living standards is now inevitable. You will eat the bugs.
Jim R
1 year ago
I think ‘sad headlines’ may be a significant understatement. Add a self inflicted economic collapse like this to the existing toxic and fractured political climate and its a recipe for revolution. When the economic pain hits the people who were already living hand to mouth, they will look for people to blame. It may be the extreme left or the extreme right who seize the initiative and take power. The scapegoats have all been identified. As the Leonard Cohen song goes, “I have seen the future, brother: It is murder”
I would agree with you expect for two things; geriatric generations don’t revolt, and there are more of those around than the hapless and fragile Gen-Zee’s. So boomers won’t revolt and the young don’t have the skillsets or the numbers or the wealth to revolt.
I didn’t really mean that kind of revolution. Extremist elements will take control of the mainstream political parties. Pretty sure that’s already happening.
“Give me crack and a**l sex Take the only tree that’s left And stuff it up the hole In your culture Give me back the Berlin wall Give me Stalin and St. Paul I’ve seen the future, brother It is murder”
“When they said “Repent!”, I wonder what they meant?”
Nicky Samengo-Turner
1 year ago
It is unfortunately more complex than this: the advent of derivatives, indexed and tracker funds have made the old ” supply/demand/ price/ value/ p/e ” macros, all but redundant. One only has to look at the peverse reality of Tesla being worth many times Toyota, to see this. Actually pension funds are way more exposed to bond markets that have the inbuilt ” cap and collar” of coupon v pricing that move in inverse directions, and are far more stable as a result, but are affected by rising interest rates.
There will be a post summer equity markets crash, Sept- oct 2022, due to the fact that the equity is like a railway.. no matter how modern, it still has steel wheels and runs on a track and is 19th Century, and will be hanmered by 21st C instruments that reflect a fear of more real economic decline in the US and Europe, due to appalling politicians, trade protectionism, an inbalance of labour supply/demand/ pricing, and the internet distortion of supply and demand of goods, causing a very different type of ” specific area” inflation, that is not macro. QE, and Crypto will add to the fire….. but The Far East/ Asia will not be similarly affected, and as history shows, the transfer of real economic power there will continue.
This is the worst case scenario I’ve worried about for several years, especially since governments threw such huge amounts of money into their economies.
Governments have been kicking the can down the road since the dot com bust of 2000. Low interest rates and poor lending standards have fueled first a property bubble (popped in 2008) and now a general asset bubble.
Assuming the situation plays out in the way the author describes, what is to be done about it? I don’t know the answer to that question but I’m sure it will be a slow process that probably involves rebuilding our productive economy, such as high-tech manufacturing, and not just creating another bubble courtesy of financial engineering. Maybe the author can write an article discussing possible routes out of this mess.
Good luck everyone. It looks like we’re about to face much more consequential issues than trans ideology in the near future.
This is not quite so straightforward. Inflation also means a ramp in the price of many types of assets, for example commodities are sure to rise – oil, heavy metals, even grains etc. And all those are more often than not packaged the form of…. stocks. So in the first instance you get a balancing off as investors rotate out of some classes of stocks and into others. What is coming is a depressed global stock market lasting a couple of decades, but not just yet – perhaps 18-24 months away. The trigger I will look for, is when joblessness starts to rise. Until then, I suspect stocks will yoyo around.
The asset bubbles that formed since governments started printing money were the first indicators of the declining value of our money. The trillions they created from thin air had nowhere to go. Cynical political decisions to only measure inflation based on a highly manipulated consumer price index allowed them to hide and deny the destruction they were unleashing on the economy. Recent events should prove to anyone that modern monetary theory was dangerous nonsense and Milton Friedman was right. But as long as the people who told us inflation was transitory still control the narrative, there will be no such admission.
v good!
An expression about a certain animal coming home to roost springs to mind. The media and the public demanded CPC style draconianism in March 2020 and this is their just reward. A collapse in living standards is now inevitable. You will eat the bugs.
I think ‘sad headlines’ may be a significant understatement. Add a self inflicted economic collapse like this to the existing toxic and fractured political climate and its a recipe for revolution. When the economic pain hits the people who were already living hand to mouth, they will look for people to blame. It may be the extreme left or the extreme right who seize the initiative and take power. The scapegoats have all been identified. As the Leonard Cohen song goes, “I have seen the future, brother: It is murder”
I would agree with you expect for two things; geriatric generations don’t revolt, and there are more of those around than the hapless and fragile Gen-Zee’s. So boomers won’t revolt and the young don’t have the skillsets or the numbers or the wealth to revolt.
I didn’t really mean that kind of revolution. Extremist elements will take control of the mainstream political parties. Pretty sure that’s already happening.
spot on!
“Give me crack and a**l sex
Take the only tree that’s left
And stuff it up the hole
In your culture
Give me back the Berlin wall
Give me Stalin and St. Paul
I’ve seen the future, brother
It is murder”
“When they said “Repent!”, I wonder what they meant?”
It is unfortunately more complex than this: the advent of derivatives, indexed and tracker funds have made the old ” supply/demand/ price/ value/ p/e ” macros, all but redundant. One only has to look at the peverse reality of Tesla being worth many times Toyota, to see this. Actually pension funds are way more exposed to bond markets that have the inbuilt ” cap and collar” of coupon v pricing that move in inverse directions, and are far more stable as a result, but are affected by rising interest rates.
There will be a post summer equity markets crash, Sept- oct 2022, due to the fact that the equity is like a railway.. no matter how modern, it still has steel wheels and runs on a track and is 19th Century, and will be hanmered by 21st C instruments that reflect a fear of more real economic decline in the US and Europe, due to appalling politicians, trade protectionism, an inbalance of labour supply/demand/ pricing, and the internet distortion of supply and demand of goods, causing a very different type of ” specific area” inflation, that is not macro. QE, and Crypto will add to the fire….. but The Far East/ Asia will not be similarly affected, and as history shows, the transfer of real economic power there will continue.