Get Outta Cash

I’ve been thinking about the stock market today and it’s enormous “V” shaped recovery over the last 6 months.

Despite its recovery, a lot of people have an extremely gloomy outlook on the stock market. I used to share this feeling, but now I’m not so sure.

What we saw in March was an extraordinary panic and liquidation event across both the stock market and the economy. By many metrics, stocks should not be back near all time highs. But the actions our “dear leaders” took in order to help the stock market recover can help explain why they are.

The stock market today is backstopped by the federal government and our non-elected governing body The Federal Reserve. To an extent, the economy is as well. We’ve pushed into full blown Modern Monetary Theory (under a Republican President!) by sending everyone $1200 checks.

The U.S. Dollar’s reserve status has been weaponized to prevent a loss in our nation’s financial well-being. A much needed moment of austerity has been avoided.

In an environment like this, you’re a sucker if you’re sitting on the sidelines with your money. Our “dear leaders” have made it clear that they would far prefer to erode the value of the dollar over letting equities return to a sane price level. And in the next big stock drop you can bet our “dear leaders” will throw even more money at the markets.

The losers in the next few years will be the people sitting on a pile of cash instead of investing it.