Money In 2021: What’s Next?

“I picked a hell of a day to quit drinking.” – (Randy Quaid) Independence Day

When the aliens finally decided to invade Earth, they started with Poland – didn’t want to ignore local customs.

2020 has been . . . unexpected.

If anyone would have submitted it as a draft for a screenplay, Hollywood would have rejected it since it was too farfetched.  Unless Randy Quaid was in it, flying a biplane to attack aliens.  Then it would have made perfect sense.  Oh, wait, a high ranking Israeli says we’re already in negotiations with the aliens?

Never mind.

That being said, 2020 is (thankfully) nearly over.  That gives us a chance to look forward to 2021.  Keep in mind that no one said that 2021 would be better . . . we just seem to hope it will be better.  It certainly is time, however, to look forward.

I know that whatever things we think 2021 will bring, the actual events of 2021 will be crazier than that.  Regardless of who is inaugurated on January 20, 2021, what are some of the things that we can look forward to?

Here are some of my guesses:

Congress and whatever President we have will keep spending as fast as they can.  Taxes may or may not be raised, but they certainly won’t match the increased spending.  Obama nearly doubled the national debt – he took the United States from $11 trillion in hock to $20 trillion.  Right now, after four years of Trump, we’re at $27 trillion or so in money owed.  This is completely on track to take the national debt to at least $36 trillion in the next four years, which is a little more than I have the last time I checked around the couch cushions.  But I did find out where all the spoons were going.

And to think I’d blamed Pugsley.

The Presidents of the United States must all be Irish – during their terms the debts are Dublin.

But $36 trillion in debt?  That’s certainly gonna leave a mark.  Like Oprah’s dressmaker learned after Oprah demanded Spandex®, you can only distort an economy so far and so long before there are consequences, and I expect that this is near the breaking point for ours.  Thankfully, when Oprah’s dress finally went, the injuries to her crew were covered by worker’s comp.

Of course, I’ve been wrong before.  I would have thought this level of debt was poisonous.  If it was, it’s at least been a slow poison.  The system is so broken that interest rates are low, in some places less than zero.  For now.

Is that enough of a bright side?

The biggest consequences of the money printing will first show up in third world nations with relatively weak economies.  The big consequences of COVID-19 have shown up here already in the damage to the economy of the United States.

In a globally connected world, however, the consequences of United States monetary policy don’t show up in the United States first – they show up first in economies where people don’t make much money.  The “Arab Spring” that led to revolutions across North Africa and the Middle East were a direct consequence of the United States spending money like . . . well . . . Democrats in charge of the presidency and the legislature.  The Syrian Civil War is a direct consequence of the Federal Reserve’s® response to the Housing Bubble.

If you watch an Apple® store get robbed, does that make you an iWitness®?

Don’t tell me that bad lending habits don’t have consequences.  When you see riots in the streets of Cairo or Mumbai or Carcosa, you know that the big consequences from the money printing have hit the world.

Once that happens, be prepared for inflation showing up at home.

Poverty rates will greatly increase in the United States, at least in the first half of 2021.  Sure, there have been billions spent on COVID-19 relief.  Almost all of it has gone into the pockets of big business.  People on the streets?  Not so much.  In some places, businesses are locked down.  In others?  Businesses are going, but limping along due to the consequences of previous lockdowns.

I heard Bernie likes to fight poverty – every weekend he goes out and slugs homeless people.

When businesses can’t afford to pay people, poverty is the result.  The average American had only small amounts of savings – by one measure I found, nearly 70% of Americans have less than $1,000 in savings, which is only enough for a minor emergency.  After that, who can say?

The economy is in the process of fundamental change, and the middle class will significantly decrease in the next year.  What has been conserved after the Coronavirus Collapse®?  Big business has done great.  Mom and Pop restaurants?  Horrible.  Modern Mayberry’s main business district got hollowed out long ago by Wal-Mart® – as did most business districts across the Midwest.

All of the small businesses are struggling – imagine owning a theater that hasn’t shown a movie in nine months.  The local theater was even broken into during lockdown – thieves stole $7,000 in merchandise – two small sodas, some Mike and Ikes® and a medium popcorn.

The transfer of economic power from small business to large has been going on for years.  The space for a small business to compete is getting smaller and smaller.  One local shop did 90%+ of its business in online sales.  Amazon® made one small change to the way that affiliates were paid and deleted the business in three months.

That business is now gone, but Jeff Bezos now has a net worth of over $200 billion – which we can all agree is an expensive net.

I got my degree in kids’ medicine online, too.  You can call me a Wikipediatrician. 

And the people going into poverty?  They won’t exactly be customers of restaurants – eating out will become (if it hasn’t already for them) an easily avoided expense.  People will actually learn to cook again.  Which doesn’t help Mom and Pop.

China will be very close to surpassing the United States as the largest economy in the world in actual GDP.  China’s economy grew last year, while the United States contracted.  Even though China has a lot more people, this still translates into political power on the world stage.  Everyone has been predicting that China will collapse for, oh, 25 years.  Instead?  China has grown relentlessly.  Sure, there are structural weaknesses, but it’s hard to bet against that kind of economic inertia.

Why didn’t Chinese factories close during the pandemic?  Kids don’t catch COVID-19.

How does this impact the average person who isn’t Chinese?

Well the good news is that if you like dollars, they’ll still be useful.  But as other countries, like China, grow relatively stronger, the dollar grows relatively less powerful.  Especially if the United States mains determined to keep printing them as fast as it can.

I’ll toss it over to you, now.  Outside of Randy Quaid in destroying the alien mothership, what do you expect to see in 2021?

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom - How to be happy and how to be healthy. Oh, and rich.

56 thoughts on “Money In 2021: What’s Next?”

  1. The first Mad Max movie was set in 2021 so I’m betting that life imitates art.

    Opie Odd

  3. We’ve all been asking when, oh when, will this awful year end. But who says that 2021 will be any better at all? Don’t blame the calendar for what your elected ‘officials’ did.

    No predictions, but a thoughtful observation – there is a LOT more economic misery out there than appears on the surface. The shadow economy, supporting waitresses and nail technicians, landscapers and Uber drivers, anyone and everyone who (formerly) earned untaxed income through tips or cash transactions, has collapsed. People who short-circuited the legal system, paying no taxes and having no unemployment insurance premiums extracted at gunpoint from their wages, are left without a safety net or any assurance that their former situations will be restored anytime soon. Their sources of undocumented income have dried up as we law-abiding wage slaves lose our jobs and cut back on such luxuries as haircuts, visits to loved ones and mowed lawns.

    Just as one trivial example, none of my immediate neighbors have as yet had their accumulation of fallen leaves cleared from their formerly exquisitely well-maintained properties. I live in a notoriously snobbish town where keeping up appearances is considered more essential than oxygen, yet we are all slumming it today with unkempt yards. Bad news for Chuy and the cholos, who are now forced to take up residency in the Home Depot parking lot, begging for work. I am expecting border crossings to reverse direction at any moment, with the Democrats demanding that Trump get that wall built to keep the illegals in.

    I don’t know where it all ends, but I am reasonably certain I know how it all ends. Badly.

    1. Excellent observations. Here in the swamps of East-North-Central Communnesota, there’s not much dealing with South-North Americans of that sort, and those I’ve talked to around here are more concerned about ammunition supply lines for some odd reason.

      About the best article I’ve seen about the current state of Empire is CHS’s latest:

      https://oftwominds.cloudhostedresources.com/?ref=https%3A%2F%2Ft.co%2F&url=https%3A%2F%2Fwww.oftwominds.com%2Fblogdec20%2FUSSA12-20.html

      Methinks even 2020 will be looked upon as “The Good Old Days”, when one could still purchase “food” at a “store” that had a “selection” with “money” one earned from “wages”… but again I have always been an optimist and don’t think 300 million will perish from this nation in the near future.

    2. Thanks for the sitrep. Here, we never went as high up as the rest of the country, so we have so much less far to fall.

      If illegals can get welfare, they’ll keep coming.

  4. Congress Critters just can’t let all that un-realized gain in everyone’s 401K just sit there. I expect a bill to tax the unrealized gain now with a “promise” that “Just think of it as a Roth 401K. We’ll tax it now and you won’t have to pay it later…..we promise!” Failing that, the swamp will invent “Federal Shares”. This is a fiat currency where the gov’t will replace your holdings in traditional vehicles and give you the equivalent value (+20% to make it palatable) as shares. Expect a catchy name an slogan. Wall St. will still back the shares – so they buy in -but the Gov’t injects itself directly into the equation with the ability to alter the valuation. You will have the same number of shares, they’ll just be worth less (or is it worthless?) They will just devalue, with them holding the difference. A fiat tax.

    Time to stock up on tangibles: food, precious metals, ammo we might all have to become serious preppers. The most important is actually a non-tangible…knowledge.

    1. I worked for many years in the retirement plan business and the Congress has been greedily eyeing those funds for more than a decade. Sure it is all make-believe money that only exists in a computer but you can bet they will be going after it soon.

    2. Tommy – WHERE are you finding ammo?
      My thought about the future is that there will be LOTS of waitresses/bartenders running for political office since they won’t have any other job opportunities.

      1. Gunbot.net An ammo site aggregator that scours the available ammo sites and displays results buy sort criteria. Yes..it’s still expensive compared to what it was but does anybody think it’s going to get cheaper and more widely available if that senile grifter and his commie biatch get in?

        1. Riverofguns.com scans the smaller statewide gun trading sites. Most states allow sales between natives without background checks / registration. Smaller sites are also more likely to have offbeat or underpriced equipment for immediate acquisition

    3. I think that is a very attractive target for them. So much money available. They might even pick a value and give all the 401k’s a haircut.

  5. I have no idea what 2021 will hold but it is going to be worse than 2020. If I expect anything for sure, it is widespread civil unrest and a new, far worse public health crisis.

  6. Oh, one I didn’t mention. Censorship is going to be off the charts. Youtube just announced they will ban-hammer anyone even alleging voting irregularities in 2020. We just won’t be allowed to even talk about it. The same will be true with questioning the coronavirus “vaccine” and racial disparity in violent crime. We are entering a brave new era of censorship.
    https://www.arthursido.com/2020/12/dissenting-views-will-not-be-tolerated.html

    1. I was thinking about YouTube censorship yesterday while listening to John’s podcast.

      I wonder if Vimeo is better? I’m sure this was already considered.

  7. An investment in a solar array / battery combo is prudent. 26% tax credit this year and tangible useful assets that increase in value with inflation. I think one reason the market hasn’t crashed is because folks anticipate stock values will increase in step with inflation. Ultimately the only way out of our mess will be defaulting (after hoovering the 401k’s, pension funds and IRA’s into the social security black hole).Not altogether a bad thing – the US would own all its assets (warships, freeways, petroleum reserve etc) free and clear – unlike every other country stuck with our Tnotes. We’d be the safest harbor for future investment after the initial fallout. There’d be imitators. I’d anticipate China would call in all the Belt & Road notes they could before defaulting – maybe owning those assets outright worldwide. “Interesting times.”

  8. Puts on Carnac the Magnificent hat…

    Not sure about the extent of the Federal spending. Senate will likely remain Republican and will interfere with the great plans the left had for Biden. So life for ordinary people and small business will continue to grind on economically while big business does well.

    We will be horsing around with the Coronavirus throughout all of 2021. There could be waves of infection like we have seen in July and now. Additionally the vaccine comes in two doses and will likely have miserable side effects unexpected by a population accustomed to the benign flu shot. Which means a lot of people won’t bother, or won’t complete the two dose series.

    Violence will likely be less as the “moderate” Dems refuse to tolerate the antics of the left especially while they are nominally in charge. Technically Biden won’t be recognized by 70+ million people, but it effectively means nothing since everyone will continue to pay all the Federal and State taxes due. And the right won’t do anything since they are very productive and have a lot more to lose. Except for the following…

    Odds are low that President Trump will invoke the Insurrection Act and call for new supervised elections. Odds slightly improve if Texas, Louisiana, etc. are ruled against by the Supreme Court. If the Insurrection Act is invoked on a nationwide basis, that’s when CW 2 “officially” starts. Then Russia and China choose this time to engage in even greater misbehavior such as Taiwan and maybe Ukraine.

    1. Not Taiwan! Not Ukraine! Oh, no! Say it isn’t so!

      Please, stop scaring me like that. Every night when I go to sleep, my final thought of the day is all about who’s in charge of Taiwan and Ukraine. And every morning, I rush to check the news to make sure all is well in those two places.

      That’s on weekdays. Saturdays and Sundays, I also spare some time to fret about Iran, Iraq, Syria, Yemen, Saudi, and the all-important Emirates.

      1. Yeah, okay. We disagree on the importance of Russia and China fulfilling their ambitions during an unlikely US CW 2.

        That’s cool. I chose not to overdo it with Russians or Chinese parachuting in like Red Dawn.

      1. Think of all the Green and Environmentalist pieties that got junked by Coronachan. It’s plausible.

  9. As I type this from CA, I have been thinking about the coming year. Our former small businesses are going underground. My wife has to bring cash to get her hair cut and colored now. This is to avoid the tax man telling our king that the business is open and him sending the sheriff of Nottingham to brutalize the shopkeeper. What we need is Robin Hood. Bread lines is what we will have in CA, lots of bread lines.

  10. re:
    <us$1,000 in savings

    Nobody in their right mind holds cash!

    Durable tangible goods… In Your Possession.
    No scribbled promises to warehouse 'it' for you, then obediently deliver 'it' to your door any time you ask for 'it'.

    * I think the richest person has a couple-three years of food and medical supplies, durable outdoors clothing and boots, gardening tools, and the security and hard heart to keep them.
    * I think the richest person lives in invisible concrete structures with invisible steel roofs far away from cities.
    * I think the richest person built a tight community of like-minds a decade ago, and do everything in my power to maintain them.

    No acts by anybody outside my wire has any effect on me.

    (Irregardless, I sure hope WilderWealthyWise keeps magically showing up!)

      1. Might want to put together something like a protonmail list serve where folks pass things along off the Google search path.

  12. Huge national debt is a poison, but it seems to be a poison that only works effectively when the person holding realizes that they are being poisoned. So it kind of works like an avalanche, or a run on a small local bank in 1930. First, a trickle, then picks up speed. There are things that could accelerate that realization, of course. Like the rest of the world deciding the US dollar will no longer be the world reserve currency.

    1. That’s the key. If we can still send computer numbers to China and they send us stuff, it’s all profit . . . until they don’t take it anymore.

  13. When people say that they’re eager for 2020 to be over, I say that “2020 was the year the brakes failed as we rolled down the mountain. 2021 will be the year we lose steering control, too.”

  14. In the not so distant future, keeping money in savings will cost the saver when interest rates fall below zero. As it is right now, they are at .01%. That’s darn near zero. What’s the point of having a savings account if you’re not going to make any money on it.

    1. The point of having a savings account, even without interest accumulation, is to prevent a home invasion to steal your wealth, in whatever convenient form you keep it, at home. It’s worth paying a small fee, as long as the savings institution (a credit union, I hope, rather than a bankster) can stay in business (or get bailed out by the FDIC, or NCUA). Simple savings accounts, as far as I know, have NEVER paid more in interest than the money lost in inflation, but with inflation (apparently) very low, savings account interest just had to go lower.

      If you don’t like low-interest savings deposits, you probably don’t care for low-interest government bonds, either, and the financial services industry would just love to service you in some more sophisticated fashion.

  15. RED ALERT FROM ZH:

    Get ready for some fireworks.

    The state of Texas (along with Alabama, Arkansas, Florida, Kentucky, Louisiana, Mississippi, South Carolina, and South Dakota) is suing the states of Georgia, Michigan, Pennsylvania and Wisconsin in the Supreme Court.

    Texas is arguing that those four states violated the constitution when they passed new election laws to allow mail-in voting and other changes to their election process.

    The Constitution of the United States is explicit that only state legislators NOT state governors, attorney generals, or secretary of states can change how elections are processed.

    The media is keeping pretty quiet about this, or attempting to frame it as nothing, but it is a HUGE deal. The Supreme Court has already docketed the case meaning that the SCOTUS will hear it.

    If the SCOTUS rules that of Georgia, Michigan, Pennsylvania and Wisconsin did in fact violate the constitution (they did), then either:

    1) Those votes that were allowed under the new laws are thrown out.

    Or…

    2) The elections in those states become null and void.

    If the outcome is #1, then President Trump wins all four states in a landslide.

    Remember, the mail-in ballots were pro-Biden by a massive margin (90%+). If those votes no longer count, Biden loses tens of thousands of votes in all four key states (his margin of victory is only 1% or lower in all four of them).

    If the outcome is #2, then 62 electoral college votes vanish from the vote count.

    This means NO ONE hits the required 270 electoral college votes to win the election outright and the election moves into Congress as per the 12th Amendment.

    There, the House of Representatives votes for the President on a one vote per state basis. The GOP has 26 states, the Democrats have 24 states.

    This again, means Trump wins the election.

    You can be furious at this all you want, but it’s the law. The fact the media doesn’t bother explaining this only reveals that they’re ignorant of how elections work in the U.S. or are so biased they can’t be bothered to consider an outcome in which Biden doesn’t win.

    So, like I said… get ready for some fireworks. The odds of President Trump actually winning the election are the highest they’ve been since the election itself.

    2. There’s actually nothing magical about the number 270. Constitution says “a majority of the electors appointed”. If a state were to fail to appoint electors, then the number required for a win goes down.

      At least that’s my reading.

  16. “Time to stock up on tangibles: food, precious metals, ammo we might all have to become serious preppers. The most important is actually a non-tangible…knowledge.”

    @tommyrot, respectfully, it’s long past time to become a serious prepper. All those things are now high priced and scarce. Have you actually tried to buy gold? There is almost none at our local shop. I’ve been watching people pay far over spot in estate auctions because there isn’t any inventory elsewhere. Remember Ferfal’s advice, gold chains can be sold an inch at a time. Cheap wedding bands are alot easier to sell than maple leafs…

    I’ve been watching gun sales in those same estate and consignment auctions, and prices are just going up. The safe queens came out first, and sold for reasonable money. Then the shotguns. Now a ratty old shotty or a 70 yo .22 wooden rifle is selling for premium prices. Tonight’s auction – and keep in mind an additional 25% in fees and taxes, and $30 transfer each…

    Lot 1 | Used Zastava M75 16-Ga. Shotgun Price Realized: 385.00 USD

    Lot 2 | Marlin Glenfield Model 60 .22 Lr Semi-Auto Rifle
    Price Realized: 170.00 USD

    If you want a modern sporting rifle, you will need to buy a super premium brand at their typical $2000 price point, or assemble a PSA rifle yourself, and pay $200 extra for the privilege. I saw a Del-Ton AR15 go for $800 a couple of weeks ago…

    Ammo is selling briskly in the estate auctions. People are selling pawpaw’s ammo drawer and it’s going for 4x new prices of just a few months ago. Random boxes of odd calibers are selling. 70 yo boxes of shot shells are moving quickly. Some 50 yo .22 came up in an auction this week and sold with a ton of bids. In the past, no one would have listed a single box of ammo. Now, bidders are fighting over it.

    No matter what the prices are today, I’m pretty sure they’ll be higher Jan 21 so factor that into your plans.

    And serious preppers? They’re buying bulk cloth, seeds, fertilizer and bug spray, treadle sewing machines, hand powered woodworking tools. Needles and thread. Boots. Eyeglasses. Safety glasses and gloves. Water filtration, catchment, storage. Bar soap. Charge controllers. Solar panels and batteries are everywhere if SHTF, but charge controllers? Cases of nails, screws, units of plywood and 2×4; pallets, piles of rock and chicken wire for homemade hesco barriers. You can still get body armor and AR500 even has it on sale. Rolls of black and clear poly sheet. Freezers. Dehydrators. Pressure canners. Freezers are just now showing back up in stores. There was a cheap dehydrator at the local goodwill store today, but I haven’t seen a pressure canner in ages. Maybe someone has a profile for instapots?

    Antibiotics/fungals/etc have been in short supply since March, but you can usually get some from a doctor that specializes in travel medicine. Wound care uses up a huge amount of supplies- far more than first aid. Look to Venezuela for the future of medical care… Cholera and other hygiene related diseases will be back with a vengeance, better get some ORS recipe’s and ingredients.

    Serious preppers have a way to heat water for household uses, and a way to wash clothes. A rolling poly bucket with a mop squeezer might be a good idea. Soap water clothes and two fist sized rocks in a five gallon bucket, shake for a while, will reportedly do a good job with little effort. Squeeze them with the mop bucket, hang to dry.

    Serious preppers have been buying bike tires and tubes, patch kits, tire plugs and spare tires for their vehicles. Bikes and said supplies have been in very short supply until just recently.

    Got a hard copy of a pre-70s major encyclopedia? That’s pretty serious. What’s the rest of your library look like?

    I could/have/and do go on, but this is John’s place and this comment is already long.

    If you haven’t started, START. It’ll just cost more, and you don’t have as much time. If you have started, KEEP STACKING. I’ve got a feeling we’ll need it.

    nick

    1. Can’t argue with you there Nick. All good recommendations. about prepping..time to get serious about it is past but better to start late than not at all

  17. I expect ISIS / Al Qaida to re-emerge from hibernation if Biden becomes 46 President. I strongly believe terrorists discovered Trump would be a bad enemy and would fight far more than Progressives / Liberals. Obama and U.S. policy towards inciting Middle Eastern unrest fueled the population moving to Europe / U.S.A.

    I also share Arthur Sido’s opinion – personal savings accounts which were tax deferred will cease to exist. The government needs the money and they will change the law.

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