The strategy amendment reflecting the current situation of stock market in U.S.

We have now two scenarios.

The first one is that we will experience the bubble for a while, and the other is that recession is incoming soon.

The current situation

Although the actual economy does not seem prosperous, the stock market in the U.S. is on fire. Dow Jones Industrial Average and S&P500 hit an all-time high. This is because governments of developed countries are willing to execute further monetary easing. 

Are we in a fragile economy?

The economy now seems fragile because the private sector’s surpluses and a healthy monetary policy held by central banks would define a healthy economy. The current private sector is not quite profitable, and it is unsure whether or not the ongoing monetary easing policy is healthy and sustainable enough to keep this weird economy.

In addition, to assess whether or not the present monetary policy is acceptable, understanding MMT would be essential because if MMT is the correct theory, what the central banks in the EU and Japan are doing is completely fine and helping the economy escape from this stagnancy.

I am working on researching MMT because I think it will become imperative in the future. Enjoy the result so far below:

What I have learnt about MMT So far.

WHAT is MMT(Modern Monetary Theory)? Q and A session.

Scenario 1. A flourishing economy is incoming.

If we are in the first scenario, I can say that some indices in the U.S. stock market hit an ATH with reason. Therefore, the economy might be okay, and it might start growing thanks to continuous stimuli used by the Central Banks and governments. In that case, we have a great chance because nobody seems to be aware of the dawn of a flourishing economy in the future.

Scenario 2. We are trapped in a weird economy.

However, in the second scenario, it is assumed that we are already in the bubble and waiting for it to pop. In that case, you are supposed to buy government bonds and gold, in theory, to protect your capital from devaluation caused by the coming recession. The problem is, in reality, that the bond and gold market are seemingly in the bubble as well. It smells like investing in real estate is the answer, but I have little knowledge of this field. Therefore, I have no idea what to do in scenario 2.

Conclusion

In conclusion, the first scenario seems more likely because it is the fact that the U.S. stock market is actually on fire, and there must be a reason for it. Probably the reason is more than merely the current monetary easing policy. Therefore, it is acceptable to have hope in the stock market, at least in America.