Deflation Is Not Just For Balloons

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Wasn’t that a scintillating start to Q2? Just when you think you have the worst quarter in stock market history in your rear view mirror, another jolt of reality hits and it was no April Fools joke.

Although we had been getting monetary stimuli, (too much, in my opinion) now add in an emergency fiscal stimulus, (more on the way) it just isn’t enough to offset our economic dead stop. Lay blame at COVID-19’s feet all you want, but this is what happens when deleveraging occurs en masse. Simply put, too much debt.

Debt is wealth’s destroyer, especially if you cannot service it. Doesn’t matter if you are a company or consumer, if the money coming in, is less than what is going out, there’s trouble in River City.

Forget the letter of the recovery, (V, U, L…) it will be prolonged, painful and costly. Consumers make up 72% of GDP. If 40% of America cannot muster up $500.00 in an emergency, what makes anyone think the economy will snap back. Don’t hold your breath, if you want to live.

The whoosh you heard was the air coming out of the stock market, economy and everyday life, not necessarily in that order. I truly hope your financial plan allowed for the worse case scenario. If so, great, If not, ‘Good Night and Good Luck’.

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Greg Zandlo

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