A New Monetary Order
Recessions have become a source of wealth
What happens in a world where money is free? The answer is simple, and we've been saying it since August of last year. Whether you buy a rock at NFT, an exercise bike company, or a pair of vintage Nike sneakers, everything will multiply in value several times over.
This is what happens in the short to medium term until, in the medium term, we reach a rate of inflation not seen in the last 40 years. Without going any further, 51 years ago, the dollar was separated from the gold standard. This gave the FED a lot of leeways to play with interest rates, with the economy, and with a prosperous future for the whole world.
This was the beginning of the end, a world totally controlled by the G-7 and mainly by the US. Where the economy can be played with at the pleasure of the politicians. A really good book called "The Alchemists" explains how Ben Bernanke of the US Federal Reserve, Mervyn King of the Bank of England, and Jean-Claude Trichet of the European Central Bank. Over the next five years, they and their fellow central bankers showered billions on the world economy to stem the waves of panic that threatened to bring down the global financial system, much like what Powell and Lagarde are doing today.
As the name of the book implies, these are people who tinker with the economy, just as a researcher does in a laboratory, and this usually results in ending up with a big bang.
Now, the Fed has announced the biggest hike in two decades. The ECB will raise interest rates for the first time in 11 years. Of course, there are many uncertainties.
As we announced to you more than half a year ago, the best alternative was to raise interest rates and risk a recession, which is also painful but probably necessary in order not to completely blow up the financial system. The problem is that in a recession, there will also be a lot of unemployed people, failing businesses, and a shrinking economy.
On average, the market usually takes about 12-16 months to recover from a bear market, leaving more than 30% down along the way. Going by averages, there is a good chance that we are halfway through this recession.
A world full of opportunities
There is the fact that no one learns from, well, yes, a few. And because of that, only a few have a lot of money. One of the biggest lessons in making money is that money is made during bear markets. There are many memes about it, but the vast majority of them have great value underneath.
However, it is still a good time to be positioning yourself either with very OTM options or with "Hard Assets". There is a lot of fear in the markets, and it is an excellent opportunity to increase certain positions in your portfolio for the next bull market.