Is the U.S. Headed Towards a Post-Pandemic Deflationary Disaster?

In this series of posts, our goal is to explain economic concepts so you can better understand the risks to your assets, whether you hold them in cash, stocks, mutual funds, real estate, or gold.

In a previous post, we discussed how the trillions of dollars in new money being injected into the U.S. economy by the Federal Reserve have sparked fears of an inflationary disaster. But while inflation could become a problem in the not-so-distant future, economic history suggests there is a more pressing—and perhaps more dangerous—concern: Deflation.

In simple terms, deflation is a drop in the prices—as opposed to inflation, where prices rise. The economic phenomenon can be caused by an increase in goods and services, a decrease in the supply of money and credit, or—as is the case during this pandemic—a decrease in demand.  

If falling prices sound like an attractive scenario, think again. While a moderate drop in prices can promote consumption...

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Helicopter Money Is Finally Here

I hope you are all healthy and social distancing and staying safe.

Karen and I have been fairly silent over the last month or so, like many of you, responding to the events swirling around us while trying to maintain a healthy dose of optimism for the future. We know this period will pass, like many of the other bleak periods in human history. We just don't know what the new world looks like. It will definitely be different than the world we left in late 2019. And I'm sure different opportunities will abound for us all.

But the reason I’m writing this post is because I’ve received calls from a half dozen people over the last 10 days asking if they should start ‘buying on the dip’ or start to ‘invest against the herd’ etc.  

Movement of the DJIA between January 2017 and March 2020, showing the all-time high on 12 February, and the subsequent crash during the COVID-19 pandemic

Remembering that Free advice is not always worth the...

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