An event like a war or something of this magnitude is called a “Black Swan” event. And there’s a lot of talk about these kinds of things. And I think there’s something to this. Since it’s controlled entirely by people rather than nature. But it’s also very political, and politicians are always gauging what the polity can tolerate. And I think they know our appetite for conflict is very low right now.
I think there’s something worth considering in this concept of deflation and devaluation…prices.
This seems like what we’re really all concerned with since it is the reflection of purchasing power as well as how well are our investments are storing/holding value.
From my experience, prices are all about supply and demand. Supply is huge out there in the world today. For prices to rise, there needs to be demand from somewhere in the world or shrinking supply. I see niether at this time. Too many homes, too much capacity in factories around the world. Wages not rising, credit being pulled back at an alarming rate. debt being defaulted on at an alarming rate. I’ve heard all about “moral hazard”. This is BS as there’s a consequence for defaults. It is credit destruction. And that’s pretty lethal in today’s world.
So, from my perspective, we are out of balance in a big way. wage stagnation, rising unemployment and credit destruction verses huge supply capacity. This is why I have such a strong belief that we’re in deflation. Not to mention that prices are falling like rocks all over the place. The main arguement everyone is using for inflation is that there’s a lot of new currency being created. I still contend that this is nothing compared to what’s being destroyed. And furthermore, this new currency has to be employed towards something to have an effect on supply/demand. I dont see it. There’s no velocity of this new currency. Debt defaults are stalling everything. The Fed can cut all they want and congress can pass all the crap they’re busy doing. Until the govt steps in and starts spending like there’s no tomorrow (Artificial demand), these things will have no effect on the market. Or, the world finds a new object to become the next bubble.
