There have been many great points made on this thread and I’ve appreciated the different viewpoints and perspectives. Like everyone else, I am an armchair economist but like @Tony T. I have significant concerns about considerable inflation or, God forbid, hyperinflation in the coming years with the fed flooding literally trillions of dollars into the currency.
This is different than 2008 for many reasons, but in 2008 the currency was pushed into the markets which propped up the stock market and increased asset prices which is why over the last decade the price of assets (ie housing) has been skyrocketing. Also, amount of money the fed (and government) is promising is already at or greater than the total for the 2008 crisis….and they are just getting started. Especially with more fiscal stimulus, as opposed to just pure monetary stimulus, the inflation will hit consumer prices much harder and because of global reduction in production we have a deadly combination of trillions of dollars flooding the currency and fewer goods to purchase. This seems almost certain to drive prices up which would lead to an outcry of the public to get more money, which the fed and government has already shown willing to do, which could easily start a cycle of printing more and more worthless money to keep up with rising cost of goods. The catch being, the more money they print the more the goods cost thus leading to loss of control of the currency and hyperinflation.
The strength of the dollar is driving up hard right now because it is the world’s reserve currency and thus seen as a safe haven. But for the past decade central banks all over the world have been ditching their US dollars for more gold in a move to decrease reliance on the dollar. Yes, central banks all over the world are lowering interest rates and printing money too, but we are going to be leading the charge because our country was so levered up, overvalued, and in a poor state financially. Things were unraveling long before COVID-19 hit as the markets were already showing signs of trouble in 2018 when the fed tried to nominally raise the interest rates during a “booming” economy and the markets started to seize. In Q3 of last year the fed had to start pumping $50-250B per month into the lending markets because banks were afraid to lend….in supposedly the greatest economy ever. Things were seriously wrong before CV hit and this is now likely to unravel everything. Because our country and our corporate debt are so high, there is no capacity to handle any increase in interest rate, decrease in revenue, or loss of inflation. Savings are non-existent both for corporations and for the average American. In 2008, the fed and govt had to bail out the banks and automotive industry . Today, they are going to attempt to bail out nearly everybody. Once the federal deficits start rising to trillions of dollars per year the whole charade that we will somehow be able to pay countries back is likely to be over and if they lose faith in the dollar than our status as reserve currency is over. Right now, the safest options to me seem to be gold/silver, real estate acquisition as long as you can afford monthly payments should renters not be able to pay, and diversifying investments outside of this country so you aren't solely dependent on the things denominated in the US dollar.
Who knows how things will play out, and I love to see differing viewpoints and opinions as we all bring an array of experience, knowledge, and opinions to a very challenging and complex topic. I hope things play out better than I think.
