One year check on 2021 predictions
Let's just start by saying that I wish I was wrong.
At the beginning of 2021 and for the first several months of the year, I have had many Macro conversations with friends and peers, especially on the subject of inflation and Money stock. Almost nobody was either willing or too blind to admit that we would have a massive problem in front of us if governments around the world would continue on their reckless path of indiscriminate money printing. And here we are.
The picture below is a snippet from the post:
Scary to think that this is what M1 looks like just 12 months later:
Yes, you are reading that correctly, we added 17 Trillion $ in liquidity in the past 24 months. To put it in simpler terms:
80% of all the US $ ever created were printed in the last 24 months
Ok so you may ask, how has this affected me?
You might have noticed that prices of pretty much everything moved up quite a bit in the last 6 months, and frankly you have not even seen the full extent of the damage yet as companies are forced to raise prices in 2022 as a result of their Financial plans. There is another Tsunami of price increases reaching us shortly.
Inflation always shows up with a lag, and it is always too late to stop it if the amount of fuel put on the fire is too large. I hate to say it, however the damage has been done. Too much money has been printed and there is no going back. Inflation will stop when open market forces will cause demand to collapse, thus mitigating price increases. As demand collapses, government will print more and this cycle will continue for just a little bit longer, as we look at what will probably be the longest recession of the last 100 years.
Just to put in perspective the scale of additional money printing necessary each time there is trouble in financial markets, look at the blip on the M1 graph above that corresponds with the great 2008 recession. A joke right?
Look at the size of current experiment compared to the 2008 one and reflect on it. It is important that each and every person understands what is happening and prepares for what is to come.
Based on current data, it is my belief that the "Top" in the asset bubble we live in will be sometimes in the next 18 months. For now, enjoy the first half of 2022 as it will most likely be plastered with euphoria.
My game plan remains to save as much as possible and convert the quickly depreciating US $ into property (both real and digital) that will protect me as much as possible during the next inevitable downturn.
Remember that Bitcoin is digital property and regulated pretty much just like land, a house or a car. If nothing else, and if you are risk averse, a small allocation to this asset is still a solid idea. Just remember that holding dollars is extremely risky right now and it has been for quite some time.
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