No one call tell you for sure because even when things turn bad, actors like the fed can dump cash into the economy to keep it afloat for another year if it suits their interests. Your friend may have a list of things that look really bad. Maybe they cause a crash next week, maybe they cause a crash next year, maybe nothing happens at all. Whenever someone says “the stocks have to fall because of the economy” or something, just remember that Tesla is still unprofitable and yet it is worth as much as the rest of the auto industry combined or something stupid like that. I’m not saying that you can never know anything about the economy, I’m sure there’s a lot of smart people who can make decent predictions, but if you’re not an expert (and I’m definitely not) it’s best to not get too confident that you or your friend have it all figured out
"Markets can remain irrational longer than you can remain solvent." -John Maynard Keynes
I broadly agree but my understanding is that the Fed used up all it's bullets in recent years. Like how they can't really lower interest rates much more or print $ without it becoming massively inflationary. So like, dunno if we'll have a crash but if we do it might get baaaaaad since there's not much they can do to mitigate it.
Again, even with the lower interest rate bound and the inflation, no one knows. A lot of people thought all the money printing after the 2008 crisis was going to cause inflation but it didn't (at least as measured by the CPI). So yeah I second OP in saying no one really knows when or if.
I think inflation driven by supply chain breakdowns is a new phenomenon though
Supply drying up is what caused the stagflation of the 1970s but it was just supply of oil.
We're always on the cusp of a big economic crash, that's capitalism baybee
As far as predicting short term capitalist economic cycles, you may as well be tossing knuckle bones into the fire and seeing how they crack. Especially with all the federal fuckery.
More likely to trade sideways than down.
Savings have been increasing worldwide during 2020.
Eventually that money will be spent so worse case scenario is something like stagflation with minimal growth.
Fed tapering plus debt ceiling shenanigans could make things interesting later this year. Predicting the exact outcome is a fool's errand.
Yeah obviously exact predictions are impossible. A friend was telling me about the reverse repo rate being the highest ever (over 1 trillion I think?) and that this pattern is similar to the 08 crash.
Someone is always predicting a big economic crash. If we do get a crash you should start shoveling money in at regular intervals at a certain point. EX: Covid recovery.
In inflation adjusted terms, peak earnings were in 2019 and they were only about 30% higher than peak earnings before the housing bubble burst, yet stock prices have more than doubled since the housing bubble peak. Everyone seems to think earnings will go up and stay permanently above that number any day now, because earnings simply have to top their old records. But sometimes earnings are unusually high and go down for a while, even if there isn't a pandemic.
Anyway, stocks are very expensive in every measure by historical norms. But that's also true for bonds, house prices, whatever the fuck is going on with bitcoin, gold, etc. And it's been true for many years. It just gets a little bit more fucked every day. Everything has to be voluntarily owned by someone, and everything is unusually expensive. When more dollars and bonds are created, stock and house prices have to go up relative to dollar and bond because people with wealth voluntarily want to own lots of those and not that much super low yield bond or zero yield dollar, especially in a potentially inflationary environment. The federal reserve buys bonds and pushes their prices up and that has to push stock prices up because it's all relative, at least for now.
Everything is fucked and how and when things return to historical norms is impossible to predict. Maybe it'll never happen because capital markets are permanently broken and capitalism actually ran out of gas a long time ago and we're all just kind of coasting as far as we can.
Did you hear it from the same people who say gme will be going to the moon any day now?
Fed tapering could cause a stocks sell-off. But will that affect the greater economy? Hard to say.
Betting on the end of America is a billion dollar industry
