If you think things are bad for the first half of 2022, you better buckle up because things don't look dandy for the second half.
All signs point to a liquidity trap.
"A liquidity trap is caused when people hoard cash because they expect an adverse event such as deflation, insufficient aggregate demand, or war. Among the characteristics of a liquidity trap are interest rates that are close to zero and changes in the money supply that fail to translate into changes in the price level"
All of the end-of-cycle indicators are present and yet it seems like we are far from declaring the cycle to be over. Some of the indicators include:
- Inflationary bottlenecks
- Tight job market
- Energy stocks leading
- Commodities rally
- Asset bubble
- Growth stock collapse