>>1187
>Basically, do you see that the risks for hyperinflation and/or stagflation are so high that assets traditionally doing well in inflation will be destroyed?
Though I'm no expert and don't have a direct role in the forces behind the economy, yes, that is the sense I'm gathering in my research. I actually think we're undergoing some mild stagflation currently; the economy today is actually in a depression. Look at the attached chart, that is money velocity as reported by the Fed themselves, second chart shows it back to the great depression. Money velocity is basically how often money changes hands, when nobody is trading/interacting with each other there is effectively no economy.
Money velocity is the lowest it's been since the great depression. For all intents and purposes yeah, we are living in a depression, AND the central banks are undergoing the most aggressive easing policies the world has seen, ever. I'm not trying to be sensational here but this is very much a paradigm-shift kind of moment, central banks have printed more money than God himself could, and the chart I posted here >>1186
is enough evidence to show it's pumping up asset prices (via super low-interest loans to corporations who buy back their own stock/keep the market from crashing). However, consider money velocity is at depression-levels, you can infer that 1) it is not leading to real economic growth and 2) financial assets are overpriced relative to business operations/actual sales.
As Rickard's explains it, we're on the knife-edge of inflationary (yet obviously unsustainable) money-printing, or "stimulus" pressures from central banks, and deflationary hoarding of wealth as the largest investors on the planet call the cb's bluff and sell their stocks at record valuations and hoard cash/cease investing because the economy is so inundated with debt there's no real yield TO invest. The fed are stuck in an impossible situation; their moneyprinting, "stimulative" efforts are just loading up on more debt that is obviously impossible to repay, which doesn't stimulate the economy at all, it suffocates us further.
Historically it was always believable that these debts, ya know, could be repaid if we just tried a little harder (you never have to repay the debt, just make people believe you can/roll it over); well now they're trying harder than they ever have, debt has skyrocketed, and they still can't raise rates after 8 years because doing so would crush what little actual growth has occurred. This has been a bubble 30+ years in the making, just every time it started to pop some major financial firm would fail and take the hit. However, now that the Fed blew up their balance sheet (aka the $USD) to paper over the 08 margin cascade, the way of doing things that has been the norm for the past century honestly just does not work anymore. The only way out for central banks, is to print & loan money at NO interest, and use it to bridge the debt from all their money printing that was loaned at interest. This is called helicopter money, or 'financing the debt', and it will be the signal to everyone that currency itself, the underpinning of all financial assets, is no longer a real store of value and other assets are more appropriate to hold. All that deflationary hoarding will then fly out into the economy, leading to a few years of hyperinflation, and then we'll be back on track, with all this debt-crisis nonsense hopefully behind us.
SO… Now that you understand all that, realize that we are in a very tight situation, where central banks are trying to force inflation, and big money is hoarding capital because they know the system/asset prices can't grow any further because of the now-obvious unsustainable debt issue. Once the Fed starts printing money at no interest the ruse that the dollar has any integrity will be lost, capital will leave fiat into more trustworthy stocks/bonds/whatever, and we'll go from stagnant growth/depressionary/low yield environment to an inflationary one. That paradigm shift will put gold in a totally different light, and it will scream, much more so than already super-high priced assets.
That's why it's better to take a conservative, low risk, low yield position now as the market keeps selling off at these all time highs. As soon as you see central banks printing money or directly funding gov't spending you ditch cash and buy anything and everything you can.
You just can't go wrong with gold at it's current price, and given the current environment. %10 in gold is enough to shelter your wealth from any kind of market panics. Over the long run sure, an S&P ETF will keep up with inflation, but for now it's better to assume as little risk as possible until a clear path forward is determined.