As we said in Part 1, what now passes for financial “markets” have been been infected by a toxic financial pathogen in the form of Fed-driven, systematic mispricing. The result has been the literal obliteration of financial rationality, prudence and common sense. So when the imminent inflationary blow-off and panicked Fed retreat sends markets into a tailspin, there will be few safe harbors, if any, for investors to repair to.
Indeed, the corollary of financial asset prices over-performing income growth by orders of magnitudes during the last several decades is that the post-crash bargain basement will be unusually bereft of product. Cash, gold and preservation of capital will be about all she wrote because it will take years, nay decades, for incomes and profits to catch-up with even the marked down asset values lurking just around the corner.