So... the Fed has continued to drop "helicopter money," though not as much as last year, to prop up the economy as a whole. Assets are overvalued in dollars that are quickly losing value. My predictions for early 2021 didn't really happen. I still expect a 30%+ drop in stocks in 2021, followed by a much needed real estate crash, down to realistic (sort of) prices. That's what recessions and depressions do (This IS officially a depression- Over 10% drop in GDP last year, Q2).
But The Fed's unparalleled creation of new money in the last year and a half has completely warped financial reality. We're in a recession (actually a depression), but Warren Buffet and Charlie Munger at Berkshire can't find major things to invest in? That shows something is seriously wrong. Everything's out of whack, it's financial Never Never Land. All traditional rules are out the window, and the entire economy, and especially asset prices, are complete riding on The Fed's continued drops of new money into the system, and buying garbage assets (corporate bonds, mortgage backed securities, and student loan backed SLABS??, etc.)
Today's paradox: If The Fed STOPS the massive money creation ($120B a month, plus 3/4 trillion dollars every 2 days in Repo/Reverse Repo market, asset purchases, etc.), then stocks, real estate, and most all asset prices fall off a cliff, immediately. The economy tanks in another huge drop. If The Fed KEEPS GOING with the current level (or larger) of new money creation, then asset bubbles continue to grow (though more slowly), and we have high inflation in 2021, really high inflation (20%-40%?) in 2022, and on into hyperinflation. Then they try to throw a NON-blockchain, black box hidden, digital dollar at us, and most people bail off into crypto. Two bad choices. Average people lose either way. Somebody give Janet Yellen and Jay Powell a coin to flip. Best 2 out of 3 wins which lame fate we all get...
