The Roaring '20s 2.0 - Get that FUD out of here

I've seen a couple posts about how the US is going into a bear market, fearmongering about inflation, the FED is going to raise rates and crash the stock market, blah blah blah. I'm here to make the counter argument that we're about to embark on another roaring '20s so buckle up buckaroo.

First off, this is not financial advice so do your own research and don't listen to random people on the internet. Second, I'm speaking about the US economy but the world's economy more or less follows the US economy so deal with it.

Now we got that out of the way, let's take a look back. The Great Recession 2007-2008 mainly brought on by over leveraging the housing market brought us quantitative easing and an opening of the flood gates of government spending. It took years to recover but we came out of it with very low interest rates, a heavy FED balance sheet, and little to no wage growth. The US was doing pretty well 2012-2015 so the FED slowly raised rates. Now when I say slowly, I mean 0.25% every quarter or so with heavy broadcasting of what is going to happen so the market didn't freak out. The market and overall economy shrugged off these increases and life was good. Trump came in 2016 and poured gasoline on an already smoldering fire with the business tax cuts so we were running hot. LFG!

Then comes COVID in 2020. Holy shit balls we're all going to die. The market crashed. Everyone stays home. Economy comes to a halt...for like a couple months. FED opened up its book of mischief and started printing money heavily, dropping interest rates, and the party started up again. The stock market recovered insanely quickly and the housing market exploded. What the hell happened.

It turns out, the US consumer has an insatiable appetite for buying shit. And we were stuck at home bored out of our minds just buying anything from baseball cards to canoes. And if there's one thing to get an economy flowing, its buying. We bought so much shit we ran out of shit to buy. Now we have supply chain difficulties in part from manufacturers shutting down during COVID, increased safety protocols due to covid, workers having to stay home due to exposure, and high demand for goods. We also have a growing sentiment of workers not wanting to put up with bullshit for low wages and demanding higher pay. SUDDENLY WE HAVE WAGE GROWTH. This is huge. More wages. More money to buy shit. LFG!

Now all of this led to inflation. IT'S NOT ONLY BECAUSE THE GOVERNENT IS PRINTING MONEY. The high demand, increased wages, and shortened supply all led to inflation. This is why the FED infamously said inflation was "temporary" and they got raked over the coals about it. Of course what time duration the FED meant is not clear so they walked back those statements.

Remember the gas shortage FUD and gas price inflation? Give me a break. It was a self-fulfilling prophecy by the media so people went out and bought more gas than they needed which was more than the supply chain could handle and prices increased. Of course it came back down but we forget things quickly.

Now we have a highly contagious omicron variant with lower hospitalization rates. We basically are given a gift to vaccinate all these mouth breathers which may be the best outcome. Supply chains will catch up and inflation WILL GO DOWN. The moment the consumer price index (CPI) numbers come back less than the previous quarter buckle up buckaroo because here we fucking go. Higher wages, high demand, and an open economy due majority of population (hopefully) having antibodies. Bring on these 0.25% rate hikes. This will only help inflation come down and the FED does a really good job broadcasting what they will be doing so the market is well prepared.

Finally, there's so much damn money out there. With low interest rates, there's no where to put it but the stock market, real estate, private equity, and of course crypto. Early stage companies are getting funded with some slideware and a nice smile. This is also why crypto has boomed in 2021. Money is readily available and it's looking for somewhere to go. Web 3.0 is the new hotness so money will come by the truck load. Financial advisors are now even recommending the average Joe portfolio to have some exposure to crypto. We're seeing all these new and exciting applications. Sure there are tons of duds and bullshit use cases but there will be massive winners.

You'll look back on these last couple months and say, "Damn, I should have bought more when prices were low." LFG!

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If you want to learn more about macroeconomics and don't like to read, listen to the following podcasts:

• All-in with Chamath, Jason, Sacks & Friedberg
• Animal Spirits
• Marketplace
• Invest like the best with Patrick O'Shaughnessy