The Independent Market Observer

This Is the End (Again)

Posted by Brad McMillan, CFA, CAIA, MAI

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This entry was posted on Jul 23, 2021 3:13:05 PM

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world newsFor some reason, I have been getting another round of questions about the end of the world. The dollar is collapsing, the IMF is devaluing the U.S. currency, the deficit and debt are blowing up, inflation is rising, and so forth. These end-of-the-world worries usually happen every couple of years, driven by some outside anxiety, which is, at the moment, COVID.

Looking for Something to Worry About?

The irony is, these kinds of questions often come when the underlying conditions are, like now, quite positive. It's almost as if investors need something to worry about. When the usual suspects aren’t available? They reach for the more out-there candidates. I also think it has something to do with summer (i.e., the silly season), when there is less real news available. Here, too, investors seem to need something to worry about. In the absence of anything more compelling, they will go to out-there theories. And so here we find ourselves again.

It helps, of course, that there are always people looking to exploit those fears. People who (for a small annual subscription fee) will tell you all about things to worry about and (for only a small additional amount of money) will advise you on how to avoid these fears. Funny enough, none of these people actually seem to be betting on the events they are forecasting. It’s almost as if they don’t really believe what they are saying.

End of World Still TBD

I don’t want to sell you anything, so consider this my regular update on the end of the world. Once again, despite the many real things to worry about, it has been postponed. The dollar is not collapsing. The IMF is not taking over the world economy. The deficit and debt, while real problems, are no more urgent now than they were the last time the discussion blew up around them. Inflation, while high on a one-year basis, is still at reasonably normal levels on a two-year basis and is headed down. And all of the other worries, while real, are also not looking urgent. Lots of things could happen, but most things won’t. And even the ones that do will give us warning signs ahead of time—warning signs we do not see right now.

The one thing I am worried about in the near term is the resurgence of the pandemic. Even that is not primarily an economic worry, but a medical one. The economy can likely power through this, as I have discussed before, but the medical damage will be real and significant in many areas. Once again, it’s a problem and a real one, but not another economy killer. If we are careful and get vaccinated, this will be a manageable situation and not something to panic about.

Out of Office!

So, enjoy your summer vacation. I will, as I am headed out of the office next week and handing the blog over to my colleagues. I am vaccinated, I will be careful, but I won’t be worried. Even for the real risks, we have at least a week before the world ends again, so I am going to put off any worrying for at least the next week. I advise you to do the same. See you soon.

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