The following article is pure opinion and speculation. All information found herein is 100% fake news.
At this point it is very well established that all the dumb money is in the stock market, and by "dumb" I simply mean the pension funds, the index funds, and other automated investments. You can also throw individual investors into that mix, as buying overpriced dividend stocks to get the dividend is the very definition of being penny wise, pound foolish.
But there are two likely different scenarios for 2020-2021 that are going to play out, and one of them is bad in the short-term, and the other is devastating in the long-term. I personally am in favor of short-term pain and sacrifice to keep things going long-term, but there are a lot of people who are banking on short-term gain for long-term pain, and that frightens me because in a way I understand why.
The first scenario is simple. The US stock market crashes within the next few months, the Dow Jones index corrects to 14K(ish), the West experiences a financial recession that lasts for a year or two maybe, and after that we repeat the credit cycle. Instinctively, I want to see this outcome because this is all I've ever known in my lifetime. Without the business cycle, there is no middle class, and capitalism as we know it becomes a relic of the past. I mean, if we're being honest it kind of already is, as the system went on life support over a decade ago and hasn't been taken off since.
The second scenario is also simple. Central banks continue to light everything on fire until there is nothing left of the current system, and then they usher in a new system (as they've been planning all along) where private banks no longer exist, and owning things of value (wealth) is a privilege of the top 0.1% in society. Essentially, Lords and Serfs. Land barons and renters. There is no middle class, there is no "american dream," and every aspect of your life is surveilled and your actions predicted before you even think about doing them.
I hate to say it, but it appears that a good chunk of people in the west want the second scenario to take place. They want to see the system of checks and balances burn to the ground. They want so badly to get out of the frying pan of the credit cycle, and hop right into the furnace of totalitarianism. Those on the far left and those on the far right are fighting over the new system and how it will play out. Thing is, I don't think we have a choice in the matter, as the new system coming will work on the terms of the elite, and not voted on democratically.
Scenario two is inevitable, and it's not favorable over our current system of credit cycles in my opinion. It might seem like a great thing to burn it all down, and leaders like Trump make it sound so great and wonderful to have negative interest rates and direct central banking for the people, but I would rather stave off that outcome for a little while longer, as nothing is free.
I like the prospect of starting small, accumulating capital and eventually using that capital to elevate myself out of needing to work to survive, and instead invest in the next generation to keep the cycle going. This is the cycle of wealth and capital that has built the world up to where we are now, but like all systems there is no such thing as perpetual motion, and there are too many billionaires on paper, and too many people living on the bleeding edge of poverty.
Take a look at the parabolic curvature in the US stock market. Pick a stock, and you'll see how manic things already are. Can this mania really continue for another year or two, or even longer?
This is what dumb money looks like:
We saw this behavior with Bitcoin and crypto in 2017, and many (including myself) argued that it might be a sign of things to come in the equity markets. Back then, big wigs like Jamie Dimon were calling Bitcoin a tulip bubble. Where is he now, and why isn't he making the same comparison for large cap US stocks? I think the answer is pretty clear, and Jamie Dimon would not dare become the scapegoat for whats to come, at least not willingly.
Consider this bitcoin chart since 2013 with the Federal Reserve balance sheet superimposed over top:
Tell me that's a coincidence. The Federal Reserve's manipulation of asset prices reaches much further (in my opinion) than they probably realize, or are willing to admit to.
You might ask, but what if things just keep going the way they are?
The answer is if things keep going as they are, scenario two plays out because that is the current trajectory we're on. The business cycle is being replaced with the Quantitative easing cycle, or in other words the death of the current system.
Some applause this idea, believing that the grass is greener on the other side without thinking about what gives grass a super green and lush appearance (it comes out of your rear end).
The surveillance state is coming globally, but it will happen through monetary policy and central banks on steroids.
The fools that want to march in Virginia over their gun rights are simply supplying data to the new system, revealing themselves as the enemy of the new system. Predictive AI will see any kind of rebellion coming a mile away, and anyone who is a part of the current uprising will at some point in the future have their bank accounts frozen should the system determine they are a threat in any way.
That's the future. Meanwhile, the left will accuse the right, and the right will accuse the left, and the ruling class will ensure both sides never unite against the only enemy they actually have. Both sides will gladly give up their rights and freedoms to prevent the other side from getting what they want, and in doing so both sides are currently giving up their rights and freedoms to the same people at the top. In the US it doesn't matter who sits in the white house, the wealth and freedoms of Americans are being stripped in equal measure from the left and right of the ideological spectrum.
The rest of the world already accepted the inevitable. There will be no revolution in the US, or the people taking back their government. They never had it in the first place. Divided and conquered, they fight each other like the good sheep they are until both ends of the political spectrum are completely dominated, gutted and betrayed from within, never having saw it coming. But, that's life, and history has repeated this cycle for thousands of years, and probably longer.
Thanks for stopping by.