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Market Crash 2021 – Will Market Crash Again?

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Is a Stock Market Crash on the Horizon? These Two Charts Must Be Seen

Market Crash 2021 : It is always impossible to outperform the market since it is designed to be correct and efficient.

You’ll almost certainly go broke fighting it, feeling it’s ineffective and 50/50 right or wrong.

The market is quite good at pricing. You may disagree with a pricing, but this is most usually due to a lack of understanding of how the market values that asset.

Betting against the market is pointless, but betting on future developments is not so pointless.

In the United States, for example, stock prices are clearly incorrect.

They’re ridiculously overpriced. Every trillion-dollar stock is worth more than $120 for every person on the earth, which is obviously incorrect, but the market doesn’t care, and you can short those firms into personal bankruptcy as often as you want.

What you need to foresee is where the market doesn’t have or doesn’t care to have a position.

Because the participants are unconcerned with what will happen in two or more years, let alone five, this is often the long-term view.

So the investor may either do the proper thing and buy a tracker and forget about it, or he can back ideas that no one cares about or has considered, or go for huge calls where the market is divided 50/50 on a key opinion and just can’t decide.

Then you have to call it and make the necessary investments.

The great question right now is whether we’ll have inflation or deflation, or, in some circles, what colour of inflation we’ll see.

So it’s now a question of inflation vs. stagflation vs. deflation.

You would believe that inflation is a consensus if you read the news, but it isn’t, since gold would be above $2,000 an ounce right now if it were.

What do people anticipate will happen to bring inflation to a halt?

The answer is that they believe central banks would intervene and raise interest rates to combat inflation, because central banks regard inflation as the terrible enemy of humanity, and would rather risk economic collapse than suffer inflation.

They believe in “temporary” (short-term) inflation now, which will be stomped on by the Federal Reserve and others whenever inflation becomes too hot.

It’s possible… But it isn’t going to happen.

Instead, select the “no monetary tightening soon” box when you hear something like this: “Inflation has been running below targets for a long time, so we can tolerate some inflation slack.”

It’s a simple thing to accomplish if central banks want to kill inflation, if they have the stomach for the pain.

Instead, central banks’ bluffing will just mean that inflation is fine with us for the time being.

The markets have grown accustomed to central banks acting as anti-inflationary forces, and a sizable portion of the market believes they will crush inflation with higher interest rates.

Others, on the other hand, believe the inflation cat is out of the bag and won’t be seen again for many years. Gold is kept in check by this equilibrium.

This is why the market trembles with each Federal Reserve pronouncement, because the old orthodoxy implies that tightening is on the way because otherwise inflation will spiral out of control.

Inflationists believe that central banks are trapped due of the worldwide economic harm caused by the “war on Covid,”

which will take years to restore, and that inflationary policies are the traditional remedy.

The good news is that we have a clear signal for bailing out if the Federal Reserve decides to yank the market and inflation with it.

The graph is shown below.

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This is an incredible chart because it demonstrates how consistent the Federal Reserve’s economic/market support is, and as long as the market stays on these tracks, the economy will be boosted by QE and the market will remain a one-way bet. If the market breaks this fantastic trajectory, it will very certainly be the end of the market for a very long time.

This is the Fed’s balance sheet, and it lays out the Fed’s strategy for all to see. The approach is to print money, endure high inflation, and give the economy time to return to normalcy, as well as for budget deficits and the national debt to return to a manageable level.

Here’s the Fed’s balance sheet, which shows how much money it’s printed.

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The S&P 500 and the Federal Balance have the same trend, and the link between the two is obvious. If they diverge, it’s a good bet that those trends are coming to an end. While they persist, inflation will heat up, and the market will finally jump off the fence and purchase gold.

It may already be started, but deflationists will continue to drag on the price until the Fed speaks dovishly for a few more weeks.

The markets are all dependent on the Federal Reserve, and if you feel they will continue to print for several months, now is a good time to purchase.