Quick Take
- Many investors try to pinpoint the exact times we are in previous cycles or decades.
- Every cycle and decade is slightly different in some way, but we have similar narratives to the 1970s of high inflation and elevated interest rates.
- Similar to the 1940s of financial repression, i.e., inflation is a lot higher than interest rates hence negative real rates.
- A comparison to the 1970s saw colossal inflation, rising interest rates, and an economy in stagflation. However, unemployment is still at record-low levels.
In the 1970s, this is how some assets performed;
- Gold appreciated: 1718%.
- Fed Funds % change went up 121%.
- US CPI grew by 108%.
- S&P appreciated 27%.
In the 2020s, this is how some assets have performed;
- Fed funds have appreciated by 189%.
- Bitcoin has appreciated 146%.
- S&P: 28%.
- Gold: 17%.
- US CPI: 16%.
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