In the figure it is represented the historical diagram of the 10 years US bond. 

According to the cyclical analysis, rates are expected to reverse in 2021. If the forecast turns out to be correct, the surge of the yields will force the Federal Reserve to an early rise in rates, a scenario that terrifies the markets, which survive thanks to the promise of "long-term low rates".

We fear that, in the face of the next wave of panic, central banks will create more trillions of currency. This time the currency will also be addressed in the real economy. The entire population will receive a non-repayable cheque for several thousand euros. 

Yes, one fine day in your mailbox you will find a free five-figure check. It may seem like a dream but It’s actually a nightmare. It’s repeating a failed scheme that led, among many, to the fall of the Roman Empire. The same pattern that, in Weimar’s Germany, led thieves to prefer wheelbarrows to the banknote pallets that were placed on them. We’re talking about hyperinflation.

The graph compares GDP and US stock market capitalization. No company has a higher capitalization than GDP; this means that when the stock market capitalization exceeds GDP, we are in a bubble. The last two overtaking events were the dot-com bubble (2000) and the subprime mortgage bubble (2007-2008). Today the capitalization of the American market is equal 180% of GDP. The stock market is worth more than all of the U.S. How is that possible? It’s not possible.

This is due to the continuous injections of liquidity by central banks. These are trillions of dollars not guaranteed by anything.
These maneuvers, however, have only a palliative effect, as well as causing addiction: if to raise the markets today "enough" 2 trillion, tomorrow we will need 3, the day after tomorrow 4 and so on. Whenever a central bank places these sums in the market, the currency in which the sum is denominated loses value.

Where to invest

1) real estate
If you succeed in immobilizing a fixed and low rate mortgage, the real estate may turn out to be profitable. The risk relates to liquidity. During hyperinflation their price will rise but it might be hard to find a buyer. Not to mention all the taxes you’ll have to pay on them. I believe that by investing in metals today, you will in future be able to buy more real estate at a lower price.

2) bank deposits
In these situations it is not recommended to keep the liquidity fixed, even in view of a possible capital. The only alternative to the stock is the metals, having the government bonds yields zero or negative. Do not forget that the recovery of the stock was only possible thanks to the quantitative easing. The fundamentals of major societies remain alarming.

3) government bonds and refuge currencies.
Bonds and currencies issued by high-rating states fall into the category. In reality, all currencies of today are fiat currencies; there is no substantial difference between the US Dollar and Kenyan Shilling. Therefore their aura of solidity is only conventional.

4) shares
Too much overvalued. In the today’s quotation of many Stocks the profits of centuries to come are already incorporated. It means that, if you buy a stock today at 1000, in a century the stock should be worth the same sum; provided that the issuer maintains the current growth rate.

Research on Plasticity,  Financial Section 2021 © - january 11th 2021

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