Buying Stocks & Crypto In 2022? DON’T.

If you are planning on allocating more to assets like stocks and crypto for 2022, you may want to reconsider. Here’s why.

Background

To understand this perspective, we have to look at where we are on the economic cycle. To do that, let’s go back to 2020. After the pandemic rocked businesses and consumers, we saw an unprecedented expansionary monetary policy (printing). While many see this as bearish, this is actually a good thing and is the way the financial system is supposed to work.

Back in the ’20s, most of the world used a commodity-backed currency system. For the United States, that was the dollar being backed by gold. What this meant was that when the economy took a hit, they were unable to just create new gold, so the losses were permanent and recovery was significantly harder. Shortly after, the government decided to switch to the current federal reserve system we have now. So when crises like pandemics hit, we can print money to keep the economy going. But this is not where the risks for stock and crypto lie.

When the federal reserve increases the money supply, this has the effect of inflation. With more money in the system, the dollar becomes weaker. This led to 2021’s inflation being 7% higher year-over-year. But the federal reserve expects this to happen, which leads to the next…