Ok, let's talk macroeconomics.
For deflation to occur, you typically have 1 of 2 scenarios that play out.
Scenario I: Either you have an overwhelming amount of goods and services available on the market, which causes too much supply that overpowers demand and then leads to a drastic reduction in the price of said goods and services. This won't be the case because our supply chain is broken and Russia and China aren't too happy with us.
Scenario II: You have a drastic contraction of the currency supply, which forces prices of goods and services to go down because there's just very little available currency to use for trade. I'm assuming this is the scenario you see playing out. If so, what would be your catalyst?
Are you leaning on the idea of the FED doing 3 things? Those 3 things being (1) Stop quantitative easing (less money creating), (2) reducing their balance sheet through reverse repo market (taking money off the street) and (3) drastically raising rates (making money expensive to borrow out, which translates to less money in circulation).
If not for the FED bringing deflation about or at least contributing, what else will do it? Further mass resignations? Businesses going out of business due to cost of raw resources and lack of cheap labor?
Definitely see this coming.
"1"
When I say deflation think money supply reduction.
Nothing wipes out the money supply faster than the financial markets because of the leverage.
Don’t worry about consumer inventory so much. In other words, we have a GFC then immediately back it up with global food and energy shortages and it’s the maximum pressure you can apply.
The 2022 mass resignation is going to happen as cost pressure and lack of wage inflation force employees to look for work from home arrangements. Business will adapt.
But, the assumption is war therefore it’s primarily hurt the opponent.
Look at the market ‘soft’ unloading onto retail who have been ‘trained’ to buy the dip. Retail is last bag holders before a crash and we’ve had record Jan and Feb retail buying in shares. Yes it’s fucked. CDS tells us it’s fucked. Credit crisis inbound now.
We can limp along but for China and Russia on the other hand…… they’ll be stuck addressing proper starvation mode.
My strategy for 2022 is this:
Financial deflationary event triggers a GFC
Fed let’s the market go down further than people think
Buy the dippers get wrecked coming in too early —> perhaps a 2 wave crash?
Certain crypto purchases
I already have nice cars but I will buy a couple of Ducati motorbikes this year.
I already bought property so issa Ok
I already bought luxuries so issa ok
I already moved to regional but I will purchase land much more regional and perhaps in NZ. Country folk always faired the best in crisis because they make the food. City folk got wrecked.
