by hodlforlyfe
So for those of you who really want to know what’s going on…here it is. I implore you to actually read this even though it’s long. It will be very important to see what happens over the next couple years (or even months):
– Our Fed is either lying or is completely feckless/ignorant about the inflation situation. I think they are lying because they don’t want to incite panic. There has almost NEVER, I repeat NEVER been a time in our history when inflation has been calmed by a Fed Funds Rate below the inflation itself. In most of our history, the Fed Funds Rate has always been HIGHER than inflation, particularly during times of high inflation when the Fed needed to calm it. So to think, a hike of .25% is going to get the job done against what is now 7.5% inflation and counting is absolutely comical . A complete joke if we’re being honest 😂😂😂. They will have to raise rates MUCH faster and quicker than they’ve said. Which brings me to point #2.
– The Fed may genuinely THINK inflation will come down on its own when supply side issues are resolved, and the labor market isn’t as tight, blah blah blah. Guess what? The Fed of the 1970s said the exact same thing. Instead of admitting responsibility (the historically loose monetary policy is probably 90% of what caused this inflation), they will look to other causes to save their own asses. Well the Fed 100% perpetuated this inflation. The only way they will get it to come down is by doing what the Fed finally did in the late 70s/early 80s and that was to hike rates SO ridiculously high (it peaked around 20%), that inflation was finally defeated. By the way the inflation at that time maxed at just under 15%, so the Fed Funds rate was hiked Well above that to quell the inflation problem. Think of what 10% Fed Funds rate within a year would do…well that brings me to my next point
– Bonds will take an absolute epic shit. Followed by the biggest stock market crash in our market’s history. Short either of these with LEAPS and you will make lots of money. If you’re able to time short term moves even halfway decently, generational wealth is on the table. People will argue “but the stock market did fine in the 70s and 80s. Blah, blah, blah.” Firstly it was a very different situation. They weren’t in the most overpriced market in history by almost every fundamental metric (and not just stocks, remember we’re in an “everything” bubble with bonds, real estate, internet money, etc. even trading cards!). Secondly, they didn’t have a global pandemic that still threatens a potential recession. And lastly, the market of the 70s and 80s actually had a massive period of negative “real returns.” It was one of the worst performing markets in history when accounting for the huge inflation that wiped away the nominal returns. We may see one final run for stocks in the next couple months, but the big crash is coming and there’s no way around that.
– Lastly, I would like to emphasize the severity of the situation, not just in the US but globally. Every country is experiencing high inflation, because EVERY country instituted this ridiculously loose monetary policy when the pandemic happened (I really am shocked how they all could be so dumb…did they actually have to take economics classes to get their degrees? Unfortunately, it became a “they’re doing it, so it must be okay if we do too!” situation). The UK has already rate hiked twice and this hasn’t done shit to slow down their inflation. They are also seeing what we will likely start to see here (or maybe already have): A price wage spiral. When inflation increases, workers start demanding higher salaries to compensate for the money they lose to inflation. Well, businesses have to pass those increased salary expenses back through the sales of their goods and services, thus creating a loop of price increases and higher inflation. If you don’t believe me, google “Andrew Bailey, pay raise” and see what pops up 😂😂😂. He’s essentially the “fed char” of England’s central bank and is facing huge backlash for asking workers not to ask for pay raises. As hilarious as it is, his request would probably help slowdown inflation but we can see there is no way that’s going to happen and if Powell says that here, he will look just as bad as Bailey.
TLDR: In short inflation can only be stopped by one thing at this point. Not supply chain issues being resolved, not the pandemic going away. Fast and furious rate hikes which will ultimately crash the “everything bubble” we have had building for the last 13 years. Enter those short positions and get ready for some fun fellow bears 📉📉📉🚨🚨🚨🐻🐻🐻 But epic buying opportunities will manifest at the end of this, so be ready to scoop up your favorite equities at insane discounts!
TLDR 2: Short everything! The crash is nigh!!!!!
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.