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Originally Posted by japhi
Cards are just a small part of a gigantic asset bubble. There seems to be unlimited availability to capital. Bitcoin, Real Estate, classic cars, boats, equities, wine/spirits. Startups with questionable futures raising 100's of millions of dollars. Sure there are new collectors, and this surge will be good for the hobby long term, but this is more about money needing a place to land.
This is the net result of the Fed pumping trillions into the economy. Depending on what you feel about monetary policy, MMT, this can either go on forever or it will come crashing down. Things that I think need to be considered; these corrections seem to be getting worse with each event. 2008 was worse the 2000, 2020 was worse (or would have been if not for massive stimulus) then 2008. This recovery is completely debt financed. Unemployment is 2.5x what it was pre pandemic, and would be 15% + without massive stimulus.
I get FOMO and I think the best stuff will always do well, but when this thing pops it is going to be legendary. I just can't believe that the US can run 2T plus annual deficits forever. When the music stops all this new money will evaporate faster then it arrived. Hard to predict top and bottom on these events but they always end the same way.
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It’s easier to spot a bubble than know when it will, if it will, pop. We are in war time deficit levels, but with rates where they are, our level is not as precarious as prior periods when borrow rates were higher. The Fed chartered this course since Greenspan and they knew going in it was a one way ticket, if their dual mandate are max employment and price stability. It’s been either the deal with the devil and the wider wealth gap / social instability that comes from it, or a second Great Depression. And it’s because of their mandate, at this point the only way out, to meet their mandate, is currency devaluation, via asset price reflation and currency race to the bottom. Add fiscal stimulus which we have not been able to pass until last year, and you’re throwing fuel to the fire.
So are we in a bubble- I refer you to Shiller’s bubble checklist and you decide... and if you think we are in one and questioning, when will this pop, another question to ponder is will this pop, because that is equally as important of a wealth preservation question as much as whether we are in a bubble.