As Bloomberg noted in “Get Ready For The New Normal 2.0:” “The U.S. economy post-Covid-19 will look a lot like the one that struggled to recover from the 2008-09 financial crisis –- only in some ways worse. Growth will be disappointingly tepid after an initial rebound and, for a time at least, inflation dangerously lower and unemployment heartbreakingly higher than they were back then.Government debt -– and the Federal Reserve’s balance sheet -– will be much bigger, while interest rates stay low.”
Bloomberg noted that the “New-New Normal” would consist of even more massive debts, deficits, and Federal Reserve monetizations, with sustained interest rates near zero. Such will see the trend of economic growth step down again to below 2%.
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Read the last para again. The New-New Normal = massive debt, deficits, Federal Reserve monetizations with sustained interest rates near zero.
Translation IMO:
1. A Likely Outcome being a massive spike in asset inflation - everything from equities to gold to bitcoin and property all Melting Up [beginning with an euphoria when Trump concedes or vacates ] as massive amounts of money flooding away from zero yielding saving accounts or USD into those assets
2. A Likely Continued Disconnect between Wall St and Main St for up to possibly a year , and unfortunately impoverishing the have-nots even further while enriching the haves
3. Americans will seek capital gains in the reflation process to make up from a large anticipated USD depreciation (start looking at Beta AUD)
4. Initially inflation won't be present but after the Melt-up event, feeling wealthier Americans would cause velocity of money to turn higher resulting in higher inflation. At that point we could see the final phase of the Precious Metals Melt-up, the second phase to likely occur if and when the Dems win Georgia (just 1 out of 2 will do) Senate race to clinch the Senate majority (which means BIG STIMULUS ! )
So at this point, as long as Trump does not steal democracy from the American people, we could be on-course for a super Melt-up. But that does not mean we won't or cannot suffer a short hiccup while he is in office. And remember by definition a Melt-up means a Melt Down follows subsequently.
As I told you , one can be a Bear but there is a place and time for everything. Now is the time IMO to position long to profit in the forthcoming Melt-up.
And look I am not the only one saying this. It was Dr Steve S who convinced me, then we have Whitney Tilson, Shah Gilani, Dr Barton and now Motley Fool's Scott Phillips. Of course, we dont yet have Jim Rickards on this side yet, he still rues over Trump's loss.
