Lowering Risk as We Enter Forced Frugality

October 22, 2023

by Charles Hugh Smith Of Two Minds

If things unravel, these risk-reduction strategies quickly shift from “nice to have” to “essential.” But by then, it will be too late to put them in place.

I would summarize the economic flow of recent events as:

2020-21: massive stimulus and pandemic restrictions build up household savings and generate a stock market “meme stock” bubble.

mid-2021-22: “Revenge Spending” splurging generates massive spike in consumption, profiteering and inflation.

2023: Renewed bubbles in housing and stocks, a classic “rebound / echo” bubble. Splurging wanes as savings and credit are tapped out, and higher interest rates finally start affecting behavior.