Stock markets have been down around 10% since the August inflation report is out. But it’s hardly surprising if you have been reading this blog. I feel I am repeating myself a lot here. I should probably just use GPT-3 to generate posts for this blog. Basically most of my posts are about
Inflation is spiraling out of control.
Interest rate is going up.
Real estate, stocks, cryptos and all the speculative assets are crashing.
China and Europe are in deeper trouble than America
Crypto world is crazy and interesting, crazily interesting and interestingly crazy.
SaaS companies are becoming reasonably priced
At the same time, this is kind of the point of this blog. When I started this blog at the end of Q2 this year, I saw the world was entering a new era after a long period of easy money, overinflated asset prices and a less healthy and more remote workforce due to COVID. I knew the next two years could be tough and asset prices most likely would be reset. I wanted to record my thoughts during this period of transition. I believe my predictions turned out to be fairly inline with what actually happened.
Frankly, the past few months feel like a slow motion train wreck. We know things are getting worse but there’s not much we can do about it because we are simply collectively paying down the debt we accumulated during the easy money / rampant speculation period. The teachable lesson here is that zero interest rate is dangerous for our economy in the long run. Zero-interest rate is like Adderall. Adderall improves people’s focus and attention in the short run but it has some dangerous adverse long term side effects. Our economy was quite addicted to the zero-interest rate. We need to take the bitter medicine of rising interest rates plus recession to treat this addiction. It’s going to be tough but our economy will eventually come out more healthy and resilient.
Have a look at currency volatility yesterday. Gbpusd crashed 3.8%. Bigger than covid. Sekusd, eurusd, nokusd, etc. Currency volatility of this magnitude will likely cause a large liqudity event.
Not sure if it continues into Monday, but if it does the markets will crash.