Personal Finance - Covid and a Brave New World

Covid has brought with it a brave new world. It isn’t the world of masks and social distancing, though many think those will remain, I personally think they will fade just like they have in the past. But what will stick around, and what I think truly has shifted is our view of money and debt as a nation and a world.

We have two groups now in the country, one larger group who does not know how the economy works and thinks that some how money is the economy and the other group those who do have an inkling of understanding and feel the shift that has occurred. The early 2000’s with their super low interest rates, and then the rumblings that came after the Financial crisis were only the warm up, Covid has brought the first full round of money destruction. In one swoop we have added 20 - 30% to our money supply, have printed or added to our debt $7 trillion, and have proven to all who don’t know any better that doing so is okay because nothing terrible has happened… yet.

I don’t think anyone could argue that something needed to be done to help as we entered this time, but two factors make this the pivot on which history will rest. One is prior spending, we had “good” times but chose to spend and spend and spend (some would say not tax enough but given the size of the modern government I would suggest otherwise). This put us in a precarious position to begin with… and then Covid. The second is the sheer insanity of the waste pumped into the system, In a time when we shut down the 20ish% of our economy for 2-3 months, $50,000 per family was needed to plug that hole… Some how $1 trillion of GDP needed $7 trillion of spending support.

Many out there are calling for a full shut down and for the government just to hand out the money to really get a handle on this virus. Not understanding what that could mean, they truly believe that the dollars in your account some how translate to food on the table. It is incredibly dangerous how economically ignorant a majority of the population now is, so much so that the natural conclusion I believe, is that this emergency measure of printing money will make its way into everyday life. Because, why not? There appears to be no consequences, the stock market is up, things aren’t that bad.

But those who either deeply or intuitively understand how the world works, are now tremendously uneasy. In the great recession, the printing of money made many worry but it was manageable and it was believed to be a one time deal. Covid shattered that belief, it is now on full display, printing money is the go to solution and because it will have no immediate consequences it will be the go to next time.

What does this mean? It means your cash does not have the value you think it has, we all are in the lull before the monetary storm, who knows maybe that storm is still a ways off. But the signs are now so incredibly clear that we will destroy our money for short term gain that you need to take it very very seriously.

I’m personally struggling with what to do. Having cash in my account literally makes me nervous. I want to turn it into something real before the jig is up. What does that look like, what are ways we can protect ourselves and maybe still do okay if I’m just having a panic attack over nothing? I’ll try to explore that a little and write about it here for anyone interested.