The Biden Tax and Spend Plan & The Big Cycle Swing

[bryant.coleman]

It's much better than not having any investment at all, I mean if you know that inflation is going to make your money really useless then you better find some way to at the least curtail the effect. Crashes aren't a permanent thing to happen in a market so when that happens, just hodl and wait for it to bounce back or better yet, buy some when the crash happens.

I posted that because the markets are already at ATH levels. That doesn't mean that they won't go up further, but the potential upside may be more limited. If I have the choice, then I would rather go for some asset which is protected against inflation. I am talking about assets such as Bitcoin or Gold, which are suitable for very long term investment. Going for stocks at this point is not preferred. Because in most cases, you can't hold stocks for more than 3-4 years. And that means that you won't be left with much returns, after the tax cut and inflation.

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[NotATether]

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Trust in the dollar will gradually shift to other assets such as real estate, stocks and cryptocurrencies.

You slightly misunderstood the US debt situation. Debt is actually the lifeblood of the US economy.

If you think of it in terms of US consumers buying other people's goods, designer clothes, phones, cars, fast food, basically anything that's been manufactured abroad, then dollars are going to those foreign manufacturers.

So more and more dollars are exiting the US economy to non-US foreigners, and this sending money thing is what gives the US its financial power in the first place.

Now somehow the dollars need to find their way back to the US so they are stored in "offshore corps" incorporated in the US and things like that. That's how rich people like Jeff Bezos are able to hide away lots of their money from taxes without leaving a huge hole in the money circulation.

If there was no debt then US wouldn't be able to keep sending dollars since consumer purchasing power will be curtailed (kinda like what covid19 is doing worldwide). So as surprising as it sounds, the world economy needs US debt to keep going.

That's also why the US keeps getting more and more in debt.
 
And as far as corporations are concerned, inflated dollars don't affect their bottom line much because they can just hike up prices. This is why corporation figureheads don't feel the brunt of inflation but a regular person does.

Inflation is also good for banks, who typically charge high interest rates just to make an inflation buffer, and of course the gov. But it silicons for people like us.

And as far as switching to other assets and currencies is concerned, these entities will never let it happen. Not merely because of political influence (most corps actually derive no benefit from that), but because it'll lower the consuming power by makig US debt worthless, so dollar prices will go into freefall along with the rest of the world economy (remember that all MSRPs and prices are denominated in dollars). That's why US is fiercely fighting attempts to make Chinese yuan a world reserve currency for example.

[bitmover]

If there was no debt then US wouldn't be able to keep sending dollars since consumer purchasing power will be curtailed (kinda like what covid19 is doing worldwide). So as surprising as it sounds, the world economy needs US debt to keep going.

That's also why the US keeps getting more and more in debt.
 
And as far as corporations are concerned, inflated dollars don't affect their bottom line much because they can just hike up prices. This is why corporation figureheads don't feel the brunt of inflation but a regular person does.

Inflation is also good for banks, who typically charge high interest rates just to make an inflation buffer, and of course the gov. But it silicons for people like us.

Inflation is basically a tax increase. When you live in a country where inflation is not controlled you can really feel that. Here in Brazil we have about 6% inflation per year. When you pay the taxes of your gains, you will need to pay taxes over that 6% inflation as well, of any investment. If you sold a stock or a crypto with 10% gain in a year, the real gain is only 4%, but you need to pay taxes over 10%.

Not only investors but the whole population suffer the problems of inflation. However, governments all around the world keep paying for academic studies explaning why inflation is good for the economy.

Maybe all this debt increase in US will make the inflation go to uncontrolled levels (like 10% a year), maybe not. Anyway, diversifying is different currencies, such as YEN (from japan) or gold or bitcoin might be a good way to protect small investors from inflation problems.