Originally published at: https://peakprosperity.com/can-a-market-meltdown-be-avoided/
The Trump revolution is going to have an enormous impact on everyone’s finances and sense of wealth.
Will things simply take off from here, crash, or crash first and then take off?
Paul Kiker and I discuss these possibilities and how he approaches managing money during times like these.
With all of the DOGE efforts by Trump and Elon, coupled to the most bitterly divided and dysfunctional DC political landscape of my lifetime, the chance of a government-led recession are pretty high.
Complicating the recovery plans is inflation which just came in hotter than expected and is headed the wrong way (higher) over the last 6 months.
Despite dishonest, or ignorant, attempts by democrats to pin the sour report on Trump, the fact is it’s Biden’s report card. After all, it was January’s CPI report and Trump wasn’t even sworn in until Jan 20th.
During the Biden tenure, inflation kicked everyone’s butts:
Ouch! That’s painful. But live with it we must, and we still have to try and stay ahead of the pain which means we have to try and grow our saved up wealth at a faster pace than inflation.
What if history rhymes and inflation repeats the old head fake down followed by an even more punishing few years of misery and stagflation?
Investing during stagflationary times, defined as the sad combo of high inflation and low (or negative) GDP growth, is both very different from the bubble investing we’ve been through and its tricky.
Here’s what worked in the 1970s:
Will that work next time too? For the average family, stagflation is the worst outcome because jobs are scarce, pay is stagnant, and prices keep climbing. Let’s hope that can be avoided.
Tune in to hear the podcast.
