Financial Crisis Very Similar to the 1920's. The Worst Case Scenario.
2 Assets You Should Own
In just one hour, the FED will make its decision regarding interest rates in the United States. This increase is expected to be 0.75%, but many media do not rule out that it could be as high as 1%.
Yesterday, having dinner with a friend who works in the financial sector, he told me that according to economic theory, the recession we are facing is undoubtedly the hardest from a theoretical point of view. This is because there is no economic growth, and inflation is sky high.
This situation is very similar to what happened in the famous Roaring 20s. During the '20s of the 20th Century, a very similar situation occurred. This era was marked by excessive growth, partly due to technological advances that boosted productivity and consumption. These advances meant that by the end of the decade, many people had invested their savings and even got into debt to invest, does this sound familiar?
When this growth slowed down, there was massive selling by people who "wanted to lose the least" and this triggered the Crash of '29. The Great Depression.
Fifty years in which the indices did not recover and did not reach new highs or ATH.
If you were over 40, chances are you never saw that recovery.
Throughout this week, I have received two messages with subscription updates. On the one hand Netflix, and on the other, Amazon Prime. During the famous 1920s, people skyrocketed in consumption, just like today.
These types of goods are the first to be purchased and the first to be defaulted on when the economy falters. For Amazon, it is not an essential pillar of their business. However, for Netflix, it is, and as for Netflix for many other companies, that would be the first to collapse.
This inflation is very worrying. Maybe we are coming to an end. But all the money that has been printed in the world is making this Molotov cocktail very close to exploding.
Which assets will be safe havens?
We are mainly betting on 2: