2020-12-23

Sign of the Top: Roaring 20s Meme Continues

When the market plunged in March, I expected a big rally. Not as large as the one that happened admittedly. I thought the market would fail near, but before new all-time highs. A big rebound seemed likely though because people have psychological rebounds from terror. The panic in March was as bad as it gets and it was society-wide. During the financial crisis, you could switch away from financial news and avoid negative news. You could go to the movies! This year, people were locked in their homes. The virus (the response to it) was an omnipresent force. At the start, people feared becoming deathly ill. The euphoria that followed was a natural reaction.

I see a similarity in the roaring 20s memes. Some economists and investors expect a recovery boom. First, this is peak mood behavior. If it happens, it will likely be a blow-off top. Second, calling for this is itself a sign of peak positive mood. In context, it's still a reaction to the negative trends all around. There's also some relief at the exit of Trump. The media are emotionally unstable and terrorized the world for 4 years under Trump. They are elated he is gone and htat shows up in media spreading the roaring 20s meme.

It's possible an inflationary crack-up boom fueled by monetary debasement and carbon neutral policies will create an economic "boom." It will end up being very costly, possibly even very negative impact on real growth, but over the next few years, we can make fortunes in mining. Absent that, comparisons to the 1920s are off base. The influenza back then killed far more people. It killed younger people, shrinking the workforce. The end of the war was recessionary as production shifted back to domestic demand and soldiers returned. The depression at the start of the decade was unimpeded by government support. Debt was wiped out. Balance sheets were clean. In contrast, the world will enter 2021 having solved exactly zero of the problems that trapped the economy from 2008 to 2020.

DailyStar: Roaring 2020s will be post-Covid vaccine 'sex-fest' and 'era of vice and indulgence'

The rest of the 2020s will be filled with "sexual licentiousness" after people across the world emerge from the lockdowns enforced by the coronavirus pandemic, an expert has predicted.

This exciting prediction has been made by Yale professor Dr Nicholas Christakis in his new book, "Apollo’s Arrow: The Profound and Enduring Impact of Coronavirus on the Way We Live."

Social epidemiologist Dr Christakis says society will make up for lost time as soon as it’s safe to.

"During epidemics, you get increases in religiosity, people become more abstentious, they save money, they get risk-averse and we’re seeing all of that now, just as we have for hundreds of years during epidemics," Christakis told the Guardian.

I'm not concerned with the content of the prediction. There's some truth to what's being said here, but at a higher level, the fact that the media is running these stories is a sign people are already in a good mood. They aren't sending around as many stories of doom and gloom. The media is as susceptible to social mood as the general public. Media is a reflection of social mood more than a driver of it.

It's possible some positive black swans are out there. A breakthrough in nuclear fusion could create cheap power. Absent that, the comparison for the 1920s is more like Weimar Germany. A socialist destruction of the economy and wider society that will inititally be celebrated because it will be inflationary. Or, if the roaring 20s meme is totally wrong, the appropriate analogy is 1931. Many believed the depression was over in 1931, but the darkest days were ahead.

No comments:

Post a Comment