 With trillions of stimulus, with money printing everywhere, is hyperinflation something we should expect over the next decade? I actually lived through hyperinflation and when I was eight years old, you needed seven of these to buy a loaf of bread. You needed 5,000 of these to buy a loaf of bread. So everybody was a millionaire, this is 10,000. It went to 100,000, so from the highest note being 100,000, quickly it went to 100,000. That's hyperinflation. The yearly rate was about 1,000% of inflation over two years, about 40% per month. That is hyperinflation. Will we see the same for our euros and dollars and will we all be millionaires or even billionaires? That's a topic we will discuss in today's stock market news. So if you are an investor, if you want to protect your wealth, I was a collector already at eight years old, so if you're a collector, you need to protect your wealth and you need to know what to do if there will be a paradigm shift over the next decade and how to protect yourself and how to take advantage of that. If you like that mindset, please click that like button for the algorithm, it helps a lot even better if you subscribe to the channel. Let's dig into the content. We're going to discuss the economy. First the market, how is it possible that the economy is collapsing and stocks go up? Then the economy, what's actually going on with the economy? What will be going on? What are the forecasts that will always be wrong? Then we are going to discuss the medicine. Everybody is applying always the same medicine, so more and more money, more printing. So that works until it doesn't work. We'll talk about that. Then we're going to discuss the different scenarios, inflation, deflation, hyperinflation, whatever happens so that we can be ready as we'll finish in an investment overview. So stick to this video, you'll learn a lot and it might make a big difference over your lifetime. Let's start. So we are seeing what we are seeing. Millions of jobless claims, economy, what economy? Everything is paralyzed but stocks have fallen entered into a bear market and now rebounded so that over the last years the market is just down 13%. That's normal for a stock market. So like nothing has happened but a lot has happened and many prognosticate a depression or recession or the mother of all recessions. Now how can that be that the market is down 3% over a year, 13% year to date? So the market is even over the last 12 months. Can you believe that? How can that be despite the fact that there are millions of jobless claims just in the US every week and the mother of all recessions has arrived? How can that be? Well, there is trillions of stimulus, real assets go up no matter what the economy does. So inflation is already here in the form of higher financial assets thanks to financial stimulus, thanks to the huge amount of money that is being printed that lifts real assets stocks up. So people are looking for safety into stocks not anymore into money. And we have made many discussions on Ray Dalio who has discussed over the last years that there is a lot of money on the sidelines parked on bank accounts everywhere because of the printing with low interest rates. And now that there is even more printing that money is entering the market and those that haven't been in the market because they thought it was overvalued they also might enter. So that's pushing the market higher currently. But then let's look at the economy. So annual macroeconomics forecast. I just took this from Unicredit, their macro view. Forecasts will always be wrong. Don't worry about that. But it's a good way to think about and see what they are expecting. So they are expecting US GDP down 10.8%. In 2020, Germany 10%. France 14. Italy 15. Spain 15. Portugal 15. Greece almost 20%. UK 10. Sweden 6%. And those are really, really terrible numbers. Inflation on the other hand is expected to be close to 0% not to worry and then picking up again to the normal target at 2% in 2021. If we look however at something important government budget balances those are going to be big, big in the red. So 13% budget deficits for the US, 10% budget deficit in 2021, similar situations all over Europe and the world, 12% China, which means that the governments are going to increase their debt. The US in 2019 from 107% of GDP to 143% of GDP and probably even higher if it shows that the current measures will not be enough. So debt to GDP ratios will skyrocket. However, even more important, the forecast for US analyzed GDP growth or decline rate is 65% in the second quarter of 2020. Eurozone 20%. Now we don't know when will things stabilize but if you go down 65% in one quarter hoping that it will stabilize next quarter and it will go up 65% annualized, you still don't reach the previous level. So it will take a long time to reach the previous level and probably governments are going to spend a lot of money, go into deficits, borrow as much as they can and central banks are going to print their money. So when governments have such high debt levels above 100% to GDP, what's the solution? The solution is always inflation. You take debt, you have to repay it in six years, you borrow one million, inflation 2%, the return in real money should be 1.12 million but you are only returning one million thanks to inflation. Then you have higher revenues due to inflation as a government, higher taxes which makes it easier to repay the debt. This is the average maturity of treasury notes of the United States, so 70 months and you see how they borrow now, they pay back later and paying back later is easier or refinancing should be easier thanks to inflation. That's why everybody's goal is to have a little bit of inflation. However, this is really crazy. The Fed's balance sheet was $1 trillion in 2008. Then financial crisis, okay, went to $2 trillion but it wasn't enough so it went to $4.5 trillion. Then they started, okay, let's try to lower that balance sheet and it hit a low of $3.7 billion, $3 trillion, sorry, trillion, billion, million, $3.7 trillion in August 28, 2019 only to skyrocket to the current $5.8 trillion just in a few months and expectations are that it will go to $10 trillion. So in just 12 years, the balance sheet will go from $1 trillion to $10 trillion, so that's 10x, 10x and it's logically that the value of money will go down. Now when you discuss inflation, you will not see that as everywhere. It will not be linearly spread everywhere. It will be somewhere, yes, somewhere, absolutely not and that's something you have to be very, very careful about. Plus if the measures that they are implementing now don't work, don't bring back unemployment to 3% as it was the case, they will do whatever it takes. They've started buying junk bonds, they'll be lending to states and do whatever it takes and if we read Powell's interview the Fed is committed to using all its powers forcefully, proactively and aggressively to help the US. So if the US's problem is not only economic activity but also debt, the Fed will do whatever it can to help it repay its debt and the best way to do is to print money, allow for more inflation and we are likely heading into a paradigm shift. After 10 years of interest rates at zero, now we are seeing economic issues due to the situation but the economic issues were already there. People were feeling that we are at the end of the cycle and the Fed will do whatever it takes over the next 10 years. When you start giving money to people, do you think there is a way back? Yes, of course. Oh yes, the Fed is still in fairy tales. I don't know, maybe when you're older than 70, like all the politicians around, you still believe in fairy tales, like when you are younger than 7. But that's something we have to take advantage of, not be scared of. Similarly, the ECB's 750 billion pandemic emergency purchase program on top of all the other purchasing programs and on top of the next purchasing programs coming and then if we listen to Lagar to her interview, she says we have more options available to respond to a worst case scenario. She's not going to tell us which options but the impact will also be linked to the element of surprise. She added that there was no limit to our commitment to serving the euro area. So printing, printing at will, that is pump it to the max, like the Saudis and Russians did with the oil. Just pump it, baby. However, this will and has led to inflation. Now, don't look at inflation from a statistical perspective. Statistics is for suckers. The important thing is what does it mean for you? If we look at Japan, everybody is saying, okay, Japan has huge debt, but it doesn't show inflation. Well, yes, it doesn't show inflation in the general statistical form, but this is statistic. If you look at the average net worth in the United States is 300K, but if you are the average US citizen, do you have 300K on your net worth? Unlikely, the median net worth, which is if you are the median citizen, so 50% of those are poorer than you and 50% are richer, the median net worth is 45K. This is statistics averages can be very confusing. Just to put this into perspective, 1% owns what? 40% of the wealth in the United States, 40% own practically nothing. So forget about statistics and averages. The same on inflation. Further, inflation, as I said, is about you. So what are the largest purchases in your life? Well, you start with a college education, you buy a home, then you save to buy yourself a retirement that also has a price, and then when you retire, you worry about healthcare costs. And those are a big chunk of your, let's say, lifetime costs. And if we look at your retirement nest, it depends on the value of what can you buy on the dividends, on the yield, on the asset prices you are buying for retirement. The SAP 500 index went up 28, 27 times over the last 40 years. So it's much more expensive to buy now your retirement nest. So your retirement, you need much more money to retire with a good yield. And if we look at the price earnings ratio, it was 7 in the 1980s, now it's 21. This means that on an earnings basis, on a business yield, the SAP 500 is three times more expensive than what it was in the 1980s. So your grandfather could retire at 30% of your cost. That's the environment that is for me inflation. If we look at home prices over the last 50 years, those went up 20 times, wages went up 9 times. Again, this is inflation above what you're making. So you have to think about that too. Healthcare costs just 50 times in the period when wages went up 9 times. So if you wanna live, be ready to pay for it. Or please stick to a healthy life, healthy diet, don't eat shit and you'll save hundreds of thousands or perhaps millions over your lifetime because since we get to an older age, it will be millions we are paying for health care, not thousands. Keep that in mind, stay healthy, eat broccoli. Then on monetary policy and inflation, we are now in incredible money printing and against the money printing, against the inflation, we have technology, we have oversupply thanks to a lot of money and Powell says monetary policy is just in the right place. However, how can it be in the right place when we have this coming? Nobody knows what will be the repercussions of this. It never happened, so we cannot know and just saying something is in the right place, of course, he would lose his job if he would say we don't know what we are doing, but you can't know what you are doing. Therefore, we as investors have to be prepared for anything. Will we have a hyperinflation scenario, like in Germany, will we have stagflation? Well, it's questionable. We don't know what will happen. The key here is to know that the Fed thinks everything is under control, the ECB too, but those things are under control, under control, under control, under control, until those aren't anymore and when they lose their control, it will all happen. Bam, bam, bam, very fast because they can keep things under control until they have their control, but it's all uncharted territory, so it's important to think it can happen and be ready for it as an investor, as a person, not think statistically, think about yourself in these times and prepare for anything. The world does not change slowly, the world changes in big jumps, so that paradigm shift that Ray Dalio has been discussing will happen quickly, will not happen or it's starting to happen. No, once the world understands it's happening, it will happen extremely fast. So we can have inflation, we can have stagflation, we can have hyperinflation, we can have deflation. Also, if there is less demand possible, we can have deflation, if there is less demand, especially temporarily, but one thing is certain, the value of money, currencies will go down over time, faster or slower, who knows. There has been situations where actual currencies went up in value, some currencies, etc. But the thing is that governments and everybody wants their currencies to go down to ease the debt repayments and refinancing. If there is inflation, everything is easier. Italy, just look at the inflation rates in history, now it has been lowered due to the implementation of the euro, but we were always at 5, 6, 7, 8%, with peaks of above 15% for a long period in the 70s and the 80s. Further, development of beer prices in Europe, look at what happened from the 1970s up 7 times, respective to gold. So, that is inflation, 14 times since the 1950s and that is something you have to expect. Whether it will be faster or slower, nobody knows. Will we see deflation over the coming months? Well, that depends on the supply chains. If there is disruption in the supply chains, we might see prices going up. With an economic depression, that's stagflation. And if they print more money, they cannot move something that's blocked with money. So, I would love to go to spend now a weekend with my wife in a five-star hotel on the coast, but we can't go there. So, if they push money towards that hotel, they will not create economic activity. So, that's something that also can happen. We are going to see what scenarios will happen. The likely long-term scenario is inflation higher or lower with high jumps when the paradigm shifts actually happens. So, inflation is likely to come. They will be solving their issues with the same medicine that probably also created those issues, not the temporary issues, the long-term issues that are key when it comes to such situations, because people are indebted and then problems arise. And in such a scenario of whatever it takes, I made a video, I think it was a year ago, about how the SAP500 will probably be at 5,000 points by 2030, but not everybody might be happy about it. With the Marni printing, with what's going on, I think that is a more likely and likely scenario that we see the SAP500 at 5,000 points in 10 years. Mark my words and I'll be really interested to come back to this video and that one in 10 years. Subscribe and stick to this channel for the next 10 years. So, if financial assets are real assets that give you protection on inflation because they have pricing power, then it's smarter to be invested in real assets than to save your money for a rainy day, because, yes, I was picking this up on the street because everybody was throwing money. Banknotes, for me, are always banknotes, so I'm still keeping them. But that's something we have to think. Okay, how can I protect what I'm having, what the wealth I'm having, not to lose it and how can I, let's say, take advantage of this? Stocks, businesses, good businesses, especially those with real assets, even those that have a little bit of debt because if refinancing gets cheaper and cheaper with inflation and they produce, have pricing power, that will be even more leverage on the bonus side. But they have to survive the current volatility. Then, what am I doing? We are now looking for real estate. We've been discussing with the bank a little bit, informing myself. They are giving me a mortgage for 25 years for 3% with the euro. I think that the dollar may be not, but the euro in 10, 20 years will be having nodes like this of hundreds of euros. And that's something that is possible that can happen. So I want to lock in that mortgage. My wife has found a nice real estate property. We'll probably make an offer and then we'll see how it goes over the coming weeks. It's a little bit difficult to look for real estate in this lockdown. But that's what we are doing. So financial assets, stocks, real businesses, real estate with leverage, and then we'll see how it goes. But I think it's a good preparation for what is about to come. And I know it's going to be volatile, but long-term is what I'm investing in. I just need to survive the short-term volatility. We have seen it with stocks. It's volatile. It has been volatile over the next last three months and it will remain volatile. But long-term, thanks to inflation, home prices in the US, $3,000 in 1940, $120,000 in 2000 and $217,000 in 2020. So up almost a hundred times. This is the long-term investing. Similarly with stocks, $1 from 1801 till now would be $11 million. This is investing in businesses. This is inflation protection. So this is what I'm going to do. This is what I'm doing. But I remind you, it will be volatile, but you need to buy value. When you find it, if the value goes down in price, you simply buy more, you reinvest the dividends. And long-term, it will be the best because the best investments are made in crisis times. Keep that in mind. Now we can discuss statistics, Japan, macroeconomics, still judgment day. However, the key is investing through thick and especially thin is what emphasizes your long-term investing. Returns gives you wealth, it's great businesses and accumulating real assets. That's the key. If you enjoyed this, please subscribe, click that like button. If you want to see whatever I do, please check my website, www.svencarlin.com. There is my research, the stocks I'm buying, my portfolio, my research platform. There is my charity that we are doing. My book, Modern Value Investing. So feel free to check whatever I do if you like this investing mindset. Thank you for watching. I'm looking forward to your comments. I always live, love reading them and I'll see you in the next video.