America’s main financial paper has warned millennials should prepare for a lost decade in US stock markets.
Columnist Chris Bryant reminds readers that for example UK’s benchmark of main stocks is lower now than it was two decades ago, while Japan’s is -40%.
The same can happen to US stocks, he says, and he argues it is actually something that should be expected:
“Value-orientated asset managers like GMO’s Jeremy Grantham think something similar could happen again, but it’s not just well-known Cassandras who worry. Hedge fund billionaire Ray Dalio of Bridgewater Associates and Blackstone’s vice chairman Tony James have both warned about a ‘lost decade’ for equity investors,” he says.
Why? The game is up and everyone knows it: Fed is out of ammo. There’s no one left to prop up the artificial stock market restricted to a few monopoly companies through a discriminatory century old act, the Securities Act 1933.
Fed was always there when needed. Putting up interest rates to lower them for rainy days, but the near zero interest rates since 2008 can’t quite go any lower.
Germany is trying deflation through negative interest rates. That’s monetary contraction. It can work there a bit for the big savers, but in debt ridden spend spend USA, there’s no room left for propping up the stock market.
So a bear market in stocks might be coming after a decade of bull, with the European and American economy expected to contract certainly this year, but perhaps even next year with these new lockdowns.
That will have ripple effects, and the biggest question may well be: how will it affect bitcoin?
The Bitcoin Dimension
Bitcoin has briefly touched $14,000 as the alternative to fiat money greets again the fallacy of a committee based valuation of value.
We start with the velocity of money, and this shows in a graph what we have suspected in words for months:
Money is simply not changing hands, and that’s a very big problem, if not the biggest, because if money does not move, there is no value being exchanged, and effectively there is no value being created.
Money is not moving because the game is rigged. Starting with credit scoring, to the nature of interest rates which require more to be paid back, to the discriminatory law mentioned above, to the unresponsiveness of a bureaucracy which says they won’t innovate for us, to a captured media and political system which has no real representation of the people, and thus no real democracy, through say a jury house.
All that translates to the rich get more money, while the rest get more taxes as the $40,000 circa 40% tax rate remains unchanged for decades despite inflation making today’s $40,000 what in the 80s and 90s was $4,000.
This creates two systems or two lanes. Bear market for many, and some $2.5 trillion held just by the German savers waiting to be invested.
ECB’s Lagarde: Headline Inflation to remain negative until early 2021.
That means the donkeys that are in these committees either don’t know the basic of velocity of money times supply, or they know perfectly well and are giving free money to their buddies while they charge the rest 3% for mortgages and 20% for credit cards.
Whichever way, it’s good for bitcoin because their buddies know very well the value of an unreplicable fixed asset with a fixed supply.
Unlike stocks, bitcoin doesn’t need the fed prop. The fixed limit is the fed.
Thus, in an age of artificiality, bitcoin is real. And since much of this fiat money is fake, many will want to get rid of it in exchange for the real value measurer.
So millennials won’t see a decade of bear. Boomers maybe will with their stocks. Millennials instead will see the birth of new money, real money, god’s money.