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HOT TOPIC Is a market crash coming? Or massive hyper-inflation?

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Timmy C

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Our government has created an epically massive bubble, and they can bankrupt everyone with a snap of their fingers by raising interest rates.
Not just the US Government, but governments worldwide.
 

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thechosen1

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Not just the US Government, but governments worldwide.
Could this be the plan of the “Great Reset?”

Royally f*ck up the global economy with loads of debt and sugar high stimulus, then pull the plug with no parachute?
 

swerving2sucess

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What can we do about this? I'm afraid these problems are a lot bigger than people even realize.
Something needs to change.
I’m sorry my friend but this problem is not gonna be fixed anytime soon. I don’t know if another crash is coming, but we’re on the verge of a huge economic crisis.
 

thechosen1

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Of course, they'd be bankrupting themselves as well... ;)
But would they?

What might they do after this in this crazy scenario? There are things they could do... and all of them would be quite bad for you and I, as owners of assets.

Seizures, nationalizations, government-owned land and leases instead of private property..

totally crazy speculation of course. Hopefully it’s a ridiculous thought or concern.

I think most people would fight tooth and nail against that (myself included), so hopefully won’t ever happen!
 

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Not to be political here, but, if 90% of the general public loved lockdowns and destroying the economy for covid...

they aren't going to say a god d*** thing about inflation/money printing, so long as your local greasy politician keeps giving out free money, bread and circus.

--
I can't tell if it's a good time to buy assets like another business. Lever up at low rates, inflation hedge against future at least.

Or be liquid and ready to buy same business at 50% discount in 2 years when the world is even more on fire.


And... the general public cheers loudly.
They are just eating it up - loving it all.

It's unreal to watch this unfold.
 

PeterBoss

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Not to be political here, but, if 90% of the general public loved lockdowns and destroying the economy for covid...

they aren't going to say a god d*** thing about inflation/money printing, so long as your local greasy politician keeps giving out free money, bread and circus.

--
I can't tell if it's a good time to buy assets like another business. Lever up at low rates, inflation hedge against future at least.

Or be liquid and ready to buy same business at 50% discount in 2 years when the world is even more on fire.


And... the general public cheers loudly.
They are just eating it up - loving it all.

It's unreal to watch this unfold.
Only issue is that you need to hold that 'liquidity' in something other than currency... unless you purchase a currency that hasn't been heavily inflated by whichever country you see fit.
Alternatively I guess you could go into crypto, but you'll be exposed to high volatility which makes it unfit for the purpose you mentioned.
Generally speaking, inflation affects all assets nominated in the base currency. It's just a logical outcome: let it be stocks or whatever else (food, your bills, taxes....), suddenly you need more pieces of paper (or zeros and ones, whichever you want) to get the same amount of something.

So, we are kind of in a rough place. I guess one strategy would be to take the countries with lower M0, go long their currencies against USD or GBP and use that as a 'liquid' hedge?
Screenshot 2021-04-03 at 13.22.59.png

Not saying this is a good strategy, didn't give it a lot of thought to be honest, and also I am a stranger on the internet, so by default I shouldn't be trusted.
It will also be the case that if one were to do something like this, one should be ready for a LOT of pain. Currencies are very hard to valuate and they will move in unexpected ways.

It's also worth noting that this whole thread could be summarised into our trust/expectation on the FED stepping in before this spirals out of control. The 10Y has moved considerably from the 0.25 lows, so there is a chance... in which case, all of the above will be rendered useless.
US10Y.png

Ah yes, the awesome world of finance, where no matter whether you are right or wrong, you almost always end up broke (when using your own money, that is...)

Oh well.... YOLO...?
 

Timmy C

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But would they?

What might they do after this in this crazy scenario? There are things they could do... and all of them would be quite bad for you and I, as owners of assets.

Seizures, nationalizations, government-owned land and leases instead of private property..

totally crazy speculation of course. Hopefully it’s a ridiculous thought or concern.

I think most people would fight tooth and nail against that (myself included), so hopefully won’t ever happen!


I think you underestimate how much of a sheep people are.

You would like to think you will fight tooth and nail, but human nature suggests at least 90% plus will do as they are told.

The statistical probability is that if you where in Germany you would have sided with the nazis as well.
 

thechosen1

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I think you underestimate how much of a sheep people are.

You would like to think you will fight tooth and nail, but human nature suggests at least 90% plus will do as they are told.

The statistical probability is that if you where in Germany you would have sided with the nazis as well.
This is true.

I think people dramatically underestimate how bad things can get too, and the awful things governments do to their citizens.

People need to read more history.

And anyone saying “that couldn’t happen here in the USA” is being a sheep as well (for this I am referring to communism or state ownership of assets and seizure of property, but could extend to genocide, one party rule, military rule, etc etc etc)
 
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theSandmanAT

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I'm new around here, but I'll still post my 2 (euro)cents :D

The US stock markets have been in a bullish phase for a while now (since the low in 2009).
The Interest rates have risen in March and some people expect the money to move from the stock market into government paper. This might happen on a local level, leading to a drop in price, but international players might use this oportunity to buy blue chip stocks in the US and park their money. Although the economy in the US doesn't look great, the situation here in Europe and other parts of the world is even worse, so parking the money in US equities can be very tempting.
Another factor to consider is the trust in governments worldwide, which keeps sinking every day/week/month. There is talk about turning government bonds into perpetual bonds overnight, thus solving the massive problem the low interest policy has created in Europe or Japan. This could also send the capital to equities.

I, too, consider the share market to be overvalued right now, due to several reasons:
  • ETF's following the S&P500 and other indexes drive some share prices artificially
  • there's hardly any entry barrier to the share markets (or crypto exchanges) right now
  • people have more time on their hands due to the lockdowns
  • people need extra sources of income (also due to the lockdowns)
  • companies like Tesla are WAY overvalued (like someone already wrote here) in respect to their earnings and the trend seems to be towards speculating on the share markets (buying shares with the intent to sell at a better price) rather than investing in the share markets (buying shares and expecting to receive dividends)
but if the big money has no other choice for parking the capital, we could expect another "roaring 20's" :D
 

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JScott

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But would they?

Most likely. Any new debt the government issued would be at the prevailing bond rates, which are are directly impacted by the Federal Funds rate. Raising the Fed Funds rate would lead to higher bond rates and more interest on the newly minted debt. Given how far out of control the debt has become, even a small increase in debt service on t-bills/bonds could easily have a ripple effect that leads to a currency crisis.

In fact, I believe this is the most likely scenario for a 5-10 year currency crisis in the US...
 

thechosen1

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Most likely. Any new debt the government issued would be at the prevailing bond rates, which are are directly impacted by the Federal Funds rate. Raising the Fed Funds rate would lead to higher bond rates and more interest on the newly minted debt. Given how far out of control the debt has become, even a small increase in debt service on t-bills/bonds could easily have a ripple effect that leads to a currency crisis.

In fact, I believe this is the most likely scenario for a 5-10 year currency crisis in the US...
And what happens in this crisis?

I'm just imagining that for many on the extreme political left (and some on the right who really only care about big government), some form of state ownership and control would look appealing. And that’s not good for you and me...

Because what do they ultimately have to back up all this debt and bad currency?

The asset value of the country. Your property.

...we create the value, but we are also the collateral...
 
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Marigold

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Hi All,

Recently I have been doing a lot of reading around historic market crashes, current state of affairs across a myriad of industries and economics in general.

I am interested in discussing with my fellow Fastlaners their views on the state of the economy both nationally and globally and their future predictions of what they see unfolding. I am writing from the perspective of someone based from the UK.

My research to date has highlighted the following:
  1. It is clear that we have been in a bull market for a prolonged period of time since around 2009 onwards that has only seen a temporary dip when the Corona Virus pandemic struck.
  2. Interest rates for borrowing such as mortgages are still at an all time low. This is unprecedented, if there was to be a shift in variables it could drastically effect the vast amount of peoples ability to pay on their current loans and default.
  3. The amount of relief provided in the UK and that is still on going through schemes such as Furlough has seen our national debt at an all time high only rivalled since debt levels from WW2. Additionally, I believe that I read that the US has printed 22% of all the US dollars in circulation in 2020 alone...
  4. The valuation of certain company's such as Tesla are outrageous. Don't get me wrong, Elon is doing amazing things and has interesting projects and technology's in the pipeline but no company's PE Ratio should be 1,232. So in essence the PE Ratio is currently trading at $1,232 per $1 of earning... High right?
  5. Crypto currency's in general a plethora of the coins are still seeing rises linked to a bull market even though some of the technology's behind them are not leading the charge such as Doge Coin.
  6. The property market. In the UK I work for a property developers and it is clear at the moment that the market is beginning to slow. This was artificially stimulated throughout 2021 during the pandemic when the government provided Stamp Duty and Land Tax (SDLT) relief on property purchases up to the value of £500k. For any readers from outside of the UK this can save an individual up to £15k if they were to move or purchase a property. Now that this relief is coming to a close it has resulted in a slow in demand in the market.
These are just a few of my observations but I would be interested to hear other peoples thoughts on this.

In my opinion something has to give at some point... It can't be good times forever. The pandemic's effects I don't believe have still not truly been felt as there should be a spoke in unemployment rates once the Furlough Scheme comes to a close, in the UK anyway. 2022 I think will prove to be an interesting year.

Just my 2 cents.

Best,

S
Thanks for this. I'm in the UK too and I'm wondering if I should pull out the markets before furlough ends. I'm erring on the side that I should. I've started buying physical gold and silver but then I'm a conspiracy theorist at heart ;) All in for the zombie apocalypse!
 

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I believe we are witnessing a massive hyperinflationary event underway as prices continue to skyrocket in all asset classes. Of course, this doesn't happen in 1 day or 1 week, but over the course of a year or two.

Meanwhile, the Fed continues to say inflation is under control. :rofl:

Of course, they'd be bankrupting themselves as well...

Which means absolutely nothing.

When government/politicians who make the laws are not subject to their laws, allowing themselves to go bankrupt would be seen as a means to an end to leverage the crisis for more power, and likely a new fiat debt scheme. Simply put, Kings and Queens will allow whatever they want to happen because in the end, they're the ones the hold the puppet strings. People who control the rigged game won't allow themselves to be the losers.

Kinda like arbitrarily releasing and ending all student loan debts simply because you find it prudent to do so.

They'd do the same for themselves.

I'm guessing the end game here is a massive crisis resulting into the emergence of a new fiat while bitcoin would undergo either a ban, or a massive government regulation to take it over - Americans and Canadians!! Introducing, the New Ameridollar! Exchange 1000 of your old dollars, for 1 new Ameridollar! Stores will no longer accept your old USD starting Jan 1, 2023! Convert your dollars now!
 

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I'm guessing the end game here is a massive crisis resulting into the emergence of a new fiat while bitcoin would undergo either a ban, or a massive government regulation to take it over - Americans and Canadians!! Introducing, the New Ameridollar! Exchange 1000 of your old dollars, for 1 new Ameridollar! Stores will no longer accept your old USD starting Jan 1, 2023! Convert your dollars now!
I wonder what would happen to debts and mortgages in this scenario?
 

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I wonder what would happen to debts and mortgages in this scenario?

The soverign debts disappear, your debts do not -- they would officially convert to the new currency, as per the new laws adopted by your Dear Leaders in the The Uniform Currency and Stabilization Act of 2022.
 

PeterBoss

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I believe we are witnessing a massive hyperinflationary event underway as prices continue to skyrocket in all asset classes. Of course, this doesn't happen in 1 day or 1 week, but over the course of a year or two.

Meanwhile, the Fed continues to say inflation is under control. :rofl:



Which means absolutely nothing.

When government/politicians who make the laws are not subject to their laws, allowing themselves to go bankrupt would be seen as a means to an end to leverage the crisis for more power, and likely a new fiat debt scheme. Simply put, Kings and Queens will allow whatever they want to happen because in the end, they're the ones the hold the puppet strings. People who control the rigged game won't allow themselves to be the losers.

Kinda like arbitrarily releasing and ending all student loan debts simply because you find it prudent to do so.

They'd do the same for themselves.

I'm guessing the end game here is a massive crisis resulting into the emergence of a new fiat while bitcoin would undergo either a ban, or a massive government regulation to take it over - Americans and Canadians!! Introducing, the New Ameridollar! Exchange 1000 of your old dollars, for 1 new Ameridollar! Stores will no longer accept your old USD starting Jan 1, 2023! Convert your dollars now!
As someone who lived a fair share of time in South America, I've seen this happen. I've also seen what 40-50% inflation means.
This is EXACTLY how it goes down. They just scratch a bunch of zeroes from the former currency, call the new one a fancier name and, of course, profit from all the suckers that were holding either the currency or any kind of credit denominated in it.
Which goes again to what we were discussing above: as long as you are able to hold anything different than the devaluated currency, then you'll be a winner. If you had outrageous levels of debt in said currency, you'll also be a winner as you will be able to pay it back at a heavy discount.
For eg. If you had 1000 sh*t coins at 1 USD, you now have 1M Ameridollars and if you had a debt for 1000 USD, you now only owe 1 Ameridollar, which should be relatively easy to pay with your sh*t coins.
You'll also be able to buy A LOT of defaulted assets from people, as not all debt is denominated in the now defunct currency and not all interest rates are fixed (specially inflation adjusted loans will be FUBAR).

Having said all of the above, inflation at the beginning always boosts the financial markets, as people try to park their money anywhere other than their wallets. Eventually it hurts companies, as there is no real growth and they start 'underperforming' expectations.

Guess we'll have to wait and see. As the saying goes: markets can remain irrational longer than you can remain solvent.
 

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Thats with assets. They decrease. But debts styay. They find a way that your debts stay!
So invest your money in debts, they will survive! :))
 

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Bankers pretty much own our media, government and academia. If you looked at everything around you through this paradigm then things will begin to make sense.

Gee you can create money out of nothing? Loan me some of that by buying my bonds so we can start a cable news network. Or loan it to academia or the government.

No surprise these entities lie about inflation and push socialism and lie about college degrees. Think about it.

Biggest mistake of all human history to let these douchebags print and control money like that. We can’t let these corrupt lying bankers and politicians continue doing this.
 

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I believe we are witnessing a massive hyperinflationary event underway as prices continue to skyrocket in all asset classes. Of course, this doesn't happen in 1 day or 1 week, but over the course of a year or two.

Meanwhile, the Fed continues to say inflation is under control. :rofl:



Which means absolutely nothing.

When government/politicians who make the laws are not subject to their laws, allowing themselves to go bankrupt would be seen as a means to an end to leverage the crisis for more power, and likely a new fiat debt scheme. Simply put, Kings and Queens will allow whatever they want to happen because in the end, they're the ones the hold the puppet strings. People who control the rigged game won't allow themselves to be the losers.

Kinda like arbitrarily releasing and ending all student loan debts simply because you find it prudent to do so.

They'd do the same for themselves.

I'm guessing the end game here is a massive crisis resulting into the emergence of a new fiat while bitcoin would undergo either a ban, or a massive government regulation to take it over - Americans and Canadians!! Introducing, the New Ameridollar! Exchange 1000 of your old dollars, for 1 new Ameridollar! Stores will no longer accept your old USD starting Jan 1, 2023! Convert your dollars now!

So, is there a safe place to store a bunch of cash?
 

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MJ DeMarco

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So, is there a safe place to store a bunch of cash?

I'm looking to dump cash into a large property that I can deem my primary residence, not as an investment, but merely as an insurance policy. If I get caught buying at the top, I don't mind losing a few million since it will be home I plan to live in for the rest of my life.

Unfortunately, here's just a little insight into how CRAZY the RE market is.

Saw a house in SLC that came up for sale. Mind you, it was listed for $4.8M and these higher price ranges (at least in the past) tend to stay on the market for a few weeks. It was a bit out of my budget but I'm chomping at the bit to unwind cash so I decided I would go look at it. Before I could even book a flight and get more details on it, it went Under Contract.

Even in these high prices ranges, houses are flying off the market. Bidding wars are not happening just at the $500K level, it is now transpiring in the mid-7 figure range.

In similar vain, I saw houses that didn't sell two years ago listed @ $2M now being relisted at $3.5M. Why not? If you can make $1.5M doing nothing in two years, can you blame them? But inflation is well contained.
 

biggeemac

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So, is there a safe place to store a bunch of cash?
I'm building a house with cash for my wife and I.....using the proceeds from our government backed business. I'm also nearly a million dollars in debt. I actually look at debt as a potential safe haven if bad things happen. Maybe I'll be wrong, but we will have a house that is free and clear, with land, plus plenty of debt in the form of mortgages, and maybe some other diversification. Mortgage/private lenders could be the big losers in a dollar-death scenario. I have two private loans and two bank loans currently. Again, I might be wrong, but at this point......my bet has been placed.
 

JScott

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Which means absolutely nothing.

When government/politicians who make the laws are not subject to their laws, allowing themselves to go bankrupt would be seen as a means to an end to leverage the crisis for more power, and likely a new fiat debt scheme. Simply put, Kings and Queens will allow whatever they want to happen because in the end, they're the ones the hold the puppet strings. People who control the rigged game won't allow themselves to be the losers.

If that were necessarily true, we never would have seen the fall of Rome... Or China... Or India...

All massive world superpowers with economic control more widespread than what we have in the US today...

Economies -- and governments -- rise and fall. Including the Kings and Queens who rule them.

I would suggest anyone interested in learning some economic history (and how to profit from the lessons from it) read some Ray Dalio...


I believe we are witnessing a massive hyperinflationary event underway as prices continue to skyrocket in all asset classes. Of course, this doesn't happen in 1 day or 1 week, but over the course of a year or two.

Sort of agreed with this part. I disagree with hyper-inflationary -- as the world's reserve currency, there are artificial ways to stop hyper-inflation -- but definitely inflationary.

Which is why I'm telling everyone who will listen to put their cash into leverageable cash-flowing assets, for three reasons:

1. Asset values will rise;
2. Cash flow will rise;
3. Debt will be arbitraged by inflation.

Over the next 5-10 years, there will essentially be free money flowing to those who know how to take it.

Btw, I was on this forum back in 2008 when lots of people were screaming about "hyper-inflation" and how we were going to see a collapse of our currency, blah, blah, blah back then... Not saying it won't happen at some point (it will), but people tend to get swept up in emotion during tumultuous times, and forget that seemingly once-in-a-lifetime economic events actually happen pretty often.

The oil crisis of the 70s, the savings and loan collapse of the 80s, the tech implosion around 2000, the Great Recession of 2008... And now the "Covid economy"...

Could this be the beginning of the end? Sure... One of these times it will be. But statistically speaking, this probably isn't it...

So, just assume inflation is coming, invest your money in a way that leverages that inflation, and then enjoy the profits...
 
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JScott

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In similar vain, I saw houses that didn't sell two years ago listed @ $2M now being relisted at $3.5M. Why not? If you can make $1.5M doing nothing in two years, can you blame them? But inflation is well contained.

What we're seeing with real estate values is purely a supply issue...

 

Timmy C

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If that were necessarily true, we never would have seen the fall of Rome... Or China... Or India...

All massive world superpowers with economic control more widespread than what we have in the US today...

Economies -- and governments -- rise and fall. Including the Kings and Queens who rule them.

I would suggest anyone interested in learning some economic history (and how to profit from the lessons from it) read some Ray Dalio...




Sort of agreed with this part. I disagree with hyper-inflationary -- as the world's reserve currency, there are artificial ways to stop hyper-inflation -- but definitely inflationary.

Which is why I'm telling everyone who will listen to put their cash into leverageable cash-flowing assets, for three reasons:

1. Asset values will rise;
2. Cash flow will rise;
3. Debt will be arbitraged by inflation.

Over the next 5-10 years, there will essentially be free money flowing to those who know how to take it.

Btw, I was on this forum back in 2008 when lots of people were screaming about "hyper-inflation" and how we were going to see a collapse of our currency, blah, blah, blah back then... Not saying it won't happen at some point (it will), but people tend to get swept up in emotion during tumultuous times, and forget that seemingly once-in-a-lifetime economic events actually happen pretty often.

The oil crisis of the 70s, the savings and loan collapse of the 80s, the tech implosion around 2000, the Great Recession of 2008... And now the "Covid economy"...

Could this be the beginning of the end? Sure... One of these times it will be. But statistically speaking, this probably isn't it...

So, just assume inflation is coming, invest your money in a way that leverages that inflation, and then enjoy the profits...
What book would you recommend by Ray Dalio?
 

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Anything that’s basically an input/output in economic productivity will survive a hyper inflationary event. Hard assets, land, businesses etc. The monetary wealth will be destroyed but the economic infrastructure will still be there.

It’s also helpful to make the distinction that there are basically two types of inflation. One where prices are driven by pricing dynamics and the other where currency is devalued due to money printing.
 

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What market are you talking about? There are thousands of "markets" and not all of them are doing well.

Several are doing tremendously poorly (check out most of the commodities markets).

And, if you're talking about the economy as a whole, an argument can be made that it's currently pretty crappy, other than a few specific asset classes.
Yes. Paper money outperformed a lot of investment vehicles. Commodities were hot from 2000-2011. Every cycle is not the same. Jumping into the market just for the sake of fearing inflation could have a bad surprise.
 

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Talking about inflation... Im in Idaho, probably the gnarliest housing market in the country.

I almost bought this POS warehouse for 3M last year, owner got called feet... Sold it 1 day on market this past week for 4M... 3m was absolutely batshit

The house I bought last March for 230 I could sell tomorrow for 530.

Houses go 50-100k over asking with 10+ offers within the first week here. Im not exaggerating.

Own assets.... businesses, crypto, real estate, stocks. Cash is literally 50% more worthless than it was a year ago
 

Kevin88660

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Well. In my opinion big crash unlikely.

2008 and 2020 covid were once a ten years event.

2015 correction was triggered by Fed signaling rate hike. That was the time when the economic outlook was still fairly okay.

We just had a March major correction that is much needed to balance out with the Jan and Feb euphoria.

Downside risk at this point is pretty low. At worst a choppy market ahead.
 
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