The Wealth-Generating Power of Stockflation In 1990, we hit a recession. And the Fed, led by Alan Greenspan at the time, started lowering interest rates to boost the economy. As a result, it injected $360 billion into the economy through 1994 - a tiny sum by today's standards. But during that same time frame, the Dow almost doubled, surging to 4,000, a new milestone, by early 1995. That's what a cash injection into the market does... It creates rapid and prolonged stockflation that rewards investors. The same thing happened during the recession of the early 2000s. The dot-com bubble was already stressing the market. Then September 11 happened and the U.S. markets crashed. Once again, the Fed injected close to $300 billion through June 2004 (another small sum compared with what's going on today). But again, this sent the Dow climbing to another milestone, this time surpassing 10,000. But the biggest injection of money was still to come... During the financial crisis, the Fed introduced $280 billion into the market from 2008 to 2009. But it didn't stop there. This time, the Fed didn't settle for just recovering from a crash. Instead, it actively drove stock prices higher for years. Massive quantitative easing and 0% interest rates kept pouring money into the economy for a decade. By the end of 2019, the Fed had pumped $2.6 trillion into the market, blasting the Dow up past 10,000... 20,000... all the way to 25,000. But what it did back then is child's play compared with what it's doing now. In 2020, any appearance of restraint went completely out the window. In just a few months, the Fed infused another $2.2 trillion directly into the market. That's 12 years' worth of additional money for the economy, pumped in over a matter of months. At the same time, it's loaned billions of dollars to Wall Street firms every single day - totaling $9 trillion - since December 2019. That's a grand total of $11.2 trillion. It's completely unprecedented. That's more money than the U.S. has produced in the last 200 years! And it's not even over... Morgan Stanley says the money printing won't peak before the end of 2022, when the balance sheet hits almost $30 trillion. At the same time, the government has basically devastated alternatives to stocks, like savings accounts, CDs and bonds. The average savings account now pays 0.2%. It would take 360 years to double your money at that rate. A 10-year U.S. Treasury pays 1.6%. Corporate bonds pay out a whopping 2.5%. I guess you could try one of those options, if you want to wait 29 years for your money to double. Or you can invest in stocks - the one asset that's generating record returns because of the massive stockflation driving prices up. (This is why we've seen a record number of accounts opened on Fidelity, E-Trade, Robinhood and other brokerage firms this year.) Investors are pouring money into stocks... which just adds more fuel to the stockflation fire. As a recent Nasdaq article put it... Investors, heeding the dollar's gradual decay, are pouring more money into the stock market... With additional helicopter money to come, this bullish bias is bound to continue.
Here's the bottom line... Thanks to the Fed, stimulus packages from Congress and a wave of new investors, I believe that not only is stockflation here to stay - but it's about to drive stock prices to even bigger highs. I'm predicting the Dow could hit 50,000 by the end of 2021. And 100,000 won't be far behind. If you're wondering how the rich seem to keep getting richer and leaving regular people behind, it's because of one thing: They know how to harness the power of stockflation. Business Insider recently explained... The tools that rescued America's economy are mostly helping wealthy Americans... The wealthy were incentivized to invest in the stock market, and they benefited as equities recovered to record highs... But most Americans don't own stocks and thus haven't profited.
But I don't want this massive trend to benefit only the most elite. I've prepared a full presentation to help everyone - regardless of background, education or income - tap into the power of the Great Stockflation. Get all the details here. Yours in smart speculation, Bryan | 
No comments:
Post a Comment