As I recall, Bob, during the 70’s it was Stagflation. The 80’s were the Decade of Greed (-g) - when things turned for the better, led by Ronald Reagan, who had a habit of keeping a volume of George Gilder’s “Wealth and Poverty” on his bedside table…
I think that the importance of discussions like these is to be emotionally and intellectually prepared to *recognize* any of the scenarios people consider - and to make decent choices in real time once one of the them becomes reality. It’s nice to be able to call the future correctly - but, imho, it’s even better to recognize whatever comes for what it is - and to make decent decisions.
I think, both history - and our current reality - offer strong arguments that our political leadership will err on the side of printing more and more money. Politically, it’s more palatable. Politicians don’t like explaining “hard truths” - and be thrown out of office. Better to show up with a bundle of billions - and save the day.
This would involve various forms of cost of living adjustments, debt cancellation (even today they’re talking about “helping out” students). Subsidies on everything that people have difficulty obtaining - food, Shelter, fuel, transportation, healthcare, you name it. It also so happens that all that is pretty socialistic.
The Great Depression in the US was deflationary - high unemployment, economic slowdown, weak and declining prices (including RE).
The 70’s were “stagflationary”. The 2007 - 10 - again deflationary - BUT, they left a legacy of things rapidly improving due to stimuli and easy money.
Deep down, I think, most people would prefer “stimuli” to tightening the belt. Likely, that’s what we’ll get. Regrettably, it would eventually end in the destruction of the currency. [which implies that most alternatives to holding dollars - not yet, but at some point - will offer a better chance]
FWIW, I recall that in the 70’s, one of the best ways to navigate was to simply hold short term debt - at the time, CDs. At some later point, the best thing would be to lock in high paying longer term. That would have been much better than dealing with the stock market roller coaster, which kept ranging up and down from the late ‘60’s to the early 80’s - while the dollar purchasing power was getting massively eroded. |
