Terrified Of The Next Crash? You Must Be
The justification for the low-interest rate policy is that inflation is transitory, but it is not.
Today we have got up with the Yields higher and therefore the futures of the main indices globally falling >1%. This is not an insignificant drop since in many cases such as the UK 10y yield has risen more than 1%, which implies that this is the first time this has happened since March ’20. It is not necessary to remind you that it happened at that time.
This is because the market is already beginning to understand that we are not in a deflationary environment and that, therefore, this inflation is not transitory and that everyone's purchasing power has dropped significantly in the last year and a half. This has caused the UK's 5-year inflation expectation rate to reach highs not seen since June 2008.
The biggest losers have been the middle and lower classes who are seeing how the price of all raw materials marks historical highs and that in the case of some developed countries, gas stations and supermarkets are running out of stock. The most prominent case is that of the price of power in Europe, where, as shown below, all-time highs have been set, considerably surpassing the highs set in 2008.
By contrast, gold and silver are down considerably since their highs just over a year ago. This is because the market continues to understand that we are still in a deflationary environment (for a short time), but as soon as they understand that this inflation is stationary the price of both precious metals could skyrocket.
And the million-dollar question,
How have we been able to slip back into the debt mistake that led to the great recession?
Mainly the Crash of 2008 was caused by the monetary policies carried out by central banks and large investment banks. When at that time guilty were sought, there was no ‘scapegoat’, only new regulations were applied. These people who were not punished have even more powerful today and there is no organism that is stopping them.
This can put us right at the end of the cycle. Without going any further, the main channel has been bypassed, and looking back is a clear indication that a great recession is to come.
We continue to maintain an asymmetric portfolio that benefits from all market conditions and is prepared to benefit considerably from these abusive central bank policies. Inflation has arrived, and the value of fiat currencies will collapse further as central banks print more to “inflate out of their debt”. If you want to know more, do not hesitate to subscribe to our newsletter.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.