Now for something that might not be so scaryI applaud those that state their opinions on their investment strategies and where they think the market will go. Everyone has something to offer and we can all learn from others.
I respect the basis of the arguement of the doom and gloomers. Sooner or later, the piper has to be paid. No business can survive if it keeps issuing debt with no prospect of being able to service the debt when artificially low interest rates start moving back up as inflation kicks in.
However, governments are not businesses. They are never held accountable in the new normal. Debt at national levels around the globe has long passed the point of being accountable. While countries in the west account and report, China for example operates within a black box on virtually every level. The only information the world has about China is what China wants the world to know.
China has been buying up the world for the past 50 years from real estate to US Treasuries. Where did China get the money to become a financial super power when it was so poor and has been building infrastructure? My guess is that China has used and abused its two currency system. China uses the CNY which was pegged to the US dollar in 1994 for international trade, while it uses the RMB for domestic use. How convenient. China has been making fools of the west for half a century but I digress.
The west has finally started to play China's game, which is that money is not real. When all governments create debt beyond any realistic expectation of ever paying back the debt, it all just becomes nonsense.
What humans do, no matter the race, is strive to achieve and then cling to power. When someone fails (like the busineses that are closing permanently everywhere you turn), someone else will step in. When small fracking companies fail, the integrated companies will step in and take over for pennies on the dollar. When governments fail, the next power hungry guy with a gun or better hair steps in.
We all know about the story about the banks that were too big to fail. The same thing applies to governments. Short of being taken over by aliens, people will climb over the backs of others to seize power which means those in power will go to almost any means (Trump being the latest example) to hold onto power. If that means printing digital money then that is what it will take.
In March 2009 when the DJIA was at the bottom (about 7,200), Americans were probably more affraid than they are today. Five million people were out of work and one million people lost their homes. Did the world fall apart? No. Within 10 years, the DJIA was up over 300% based upon the fiscal and monetary measures that pumped $3 trillion into the system. This time around, I expect we will see 5x to 10x more money pumped into the system that we saw in 2009.
What is going to happen? Based upon the Dow increasing by 300% from the lows of 2009, I expect we will see the Dow hit 80,000 to 100,000 or higher in the next ten years.
Is that a good thing? It is if you are rich. It also means that life for the poor should get worse, but it won't. The poor live in a perpetual state of survival mode and that won't change. It is the middle class that is and will continue to get decimated.
The craziness that we are seeing on Reddit is likely to get worse as the middle class become more and more desperate. The gamblers will eventually lose. The investors will eventually win because money is how people maintain power.