Smart Investor,
IMO the next economic down cycle will involve deflation, Big Depression / Japan style bad deflation.
With 0% net savings rate, rising credit, and counting on equity gains, the American consumer will suffer an abrupt liquidity problem when the bull market ends (it will end sometime, won't it?). Overcapacity will be the next problem, as lowered demand (positive savings rate) will force production cuts, and then snow ball will get bigger with rising unemployment, falling consumer confidence, rising savings rate again, and down the hill we go.
Inflation was feared so much in the last decade that there was no real reason to believe that there wouldn't be action in ample time to prevent it.
In the mean time:
This was going on for a long time
marketgauge.com
But now there's even less buying power
marketgauge.com
I'm expecting a 25-50% crash drop within months, meaning we will see the S&P 500 below 1050 before Q3 begins.
ATG |
