Thank you for the post, Chris. Beautiful to see the animals, and Plato is always a delight to read. I agree that the media and debt have both fuelled the extent of this economic shock compared to the 1918 Spanish Flu.
I will add that the levels of greed and speculation in the world have contributed significantly to the size of the 2020 shock. Throughout history markets have been driven in yin/yang fashion by greed and fear, where the one has always contained the seed of the other. In 2020 asset prices have been pushed to delusional heights by greed. This was not the case in 1918. For example, US stocks stood on a cyclically adjusted price earnings ratio (CAPE) of only 5 in 1918. In 2020 the number reached 32 (and is currently sitting on 25 -- still high compared to its long term average of 17). Using another measure, US stock prices relative to the size of the economy reached a historic high in 2020. Simply put: stocks have never ever been this expensive. The stage was set for a spectacular collapse; only a trigger was needed for the Seed of Fear to sprout.
Interestingly, John Hussman wrote a well-reasoned piece in 2018 called “Measuring the Bubble” in which he came to the conclusion that stocks had to fall by two-thirds. It is still worth reading today (as the crash is possibly not over yet). It can be located online with a simple google search. The economic situation may become quite serious.
Thank you for the post, Chris. Beautiful to see the animals, and Plato is always a delight to read. I agree that the media and debt have both fuelled the extent of this economic shock compared to the 1918 Spanish Flu.
I will add that the levels of greed and speculation in the world have contributed significantly to the size of the 2020 shock. Throughout history markets have been driven in yin/yang fashion by greed and fear, where the one has always contained the seed of the other. In 2020 asset prices have been pushed to delusional heights by greed. This was not the case in 1918. For example, US stocks stood on a cyclically adjusted price earnings ratio (CAPE) of only 5 in 1918. In 2020 the number reached 32 (and is currently sitting on 25 -- still high compared to its long term average of 17). Using another measure, US stock prices relative to the size of the economy reached a historic high in 2020. Simply put: stocks have never ever been this expensive. The stage was set for a spectacular collapse; only a trigger was needed for the Seed of Fear to sprout.
Interestingly, John Hussman wrote a well-reasoned piece in 2018 called “Measuring the Bubble” in which he came to the conclusion that stocks had to fall by two-thirds. It is still worth reading today (as the crash is possibly not over yet). It can be located online with a simple google search. The economic situation may become quite serious.