Could be 100% wrong, but here's my wag, as a retired professional trader & investor. If Biden wins? Worst case is we get a stock market correction lasting into next year. Not a Bear Market. After that? Higher & higher & higher for stocks though leadership sectors are likely to change some.
Why?
1. Because the FED will buy the trillions & trillions more Tsy debt, & gov. backed mortgage debt, Biden & the Dims create AWA more corporate debt from big politically connected corporations.
2. There's nowhere else for the liquidity that massive FED debt buying can go but the financial markets, real estate, & some essential commodities. The rest of the real economy won't generate enough credit demand for the banks to lend as much as prior economic cycles. Every cycle for many decades has logged in serial slower GDP growth. Don't see this time being different. Banks will just continue to enjoy the financial market orgy. An orgy which may begin to look - to perma bulls - like the world's first "perpetual motion machine". <g>
How does it all end? May take years. Eventually, the dollar loses sole reserve currency status. That's when things get "difficult". And why is that?
Because odds R the dollar reserve currency is followed by reserve currency basket composed of various weightings of other major national currencies. Or the SDR, which is also essentially a basket of currencies.
For many decades the FED could (and still can) debase our currency by buying up AKA monetizing larger & larger quantities of debt. That allowed gov & private businesses borrowers to pay debts back in cheaper dollars. Nice deal for America. Problem is, we can't debase other nations currencies once a currency basket is established. If we continue to debase the dollar? We have to pay back debts in more expensive foreign currencies ex. the dollars share of the basket.
Unlimited borrow & spend politics & businesses buying back their stock comes to an end. At 76, don't know if I'll live long enough to see it. Many here, however, will.
Have to leave it there. Time to go outside & get the usual harvest chores done in this beautiful weather. Ah, they joys of living in the country......
Iso
P.S. Please excuse any typos. My proof reading/editing always stinks. Especially today fighting a nasty sinus infection. |
