Post 1919 pandemic (Spanish flu) and world war I (100 years ago)
One Hundred years ago, America had an inflation problem and was a debtor nation. The newly formed fed (earlier in the decade) raised rates to 7 % to combat inflation from World War I and easy money. The stock market dropped by half, and we had about a 2-year recession in 1920 and 1921. Prices came down and the fed dropped rates but only after a long brutal recession. (See the chart above)
Then came the long spending spree and America emerged as a great investment for foreign gold and a lender to Europe who was digging out from the long and very destructive war and the Spanish flu pandemic. The US entered the roaring twenties and the electrification and reindustrialization of American homes and industry. We had a tech boom. There was a great debate if it was an outlier of pent-up demand and innovative technology (light bulbs, refrigerators, airplanes etc.) or back to the normal economy. Either way we had a massive boom, and the economy grew over 40% until the Crash of 1929. What a party!!
America became a creditor nation and world leader, or at the very least, had a seat at the global leadership table
Post 2019 pandemic (Covid19) and Russian invasion. (TODAY)
Today, America has an inflation problem and is a debtor nation (what a coincidence) - The central banks around the world have started to raise rates to combat inflation from the easy money of the global pandemic and global supply shocks that followed including the recent energy shock from the Russian invasion of Ukraine.
(The comments going forward are my opinions or speculation on my part)
China, who is watching the Russian play book for breaking a democracy in Ukraine, will of course invade Taiwan and break that democracy. This will cause more global shocks and supply issues as countries raise tariffs and boycott Chinese goods.
The global rate raise, now underway, will eventually cause a slowdown and some countries will experience deep recessions. However, I think the US might squeeze by and not see the same pain. After a global recession and an easing of rates, global liquidity will find a home in re-electrification of the US and Europe and many other industrialized nations. We are set for a new tech boom in renewable energy and efficient electrification (new refrigerators and HVAC, etc.) around the globe. We are set for localization of factories and supply chains as recent technology developments in AI and robotics has shown tremendous efficiencies in construction, management, and operations of manufacturing. (This will fix the two big weaknesses that have become known in global industrialization. Supply chain issues and energy dependance.)
Biology is set for a boom as technology has made scientists see DNA as similar to computer code that can be rewritten or enhanced with impunity. Robotic cars and transport, more efficient infrastructure and a massive global infrastructure rebuild for renewable energy will create projects around the globe. Many of these initiatives have already been started by billionaires and governments in India, America, Europe, and southeast Asia. South America is lagging but is also a huge opportunity.
The commercial space race is already profitable and set to expand rapidly.
Robotics and artificial intelligence are already growing quickly, and longevity is just emerging as an enormous potential industry.
This will usher in the roaring 2020s. Most of this technology is already on the shelf and being used by early adopters, like it was in the 1920s. The light bulb was invented as we know it in 1880s the refrigerator 1851 (long development history on both) The fast adoption just came in the 1920s.
Industries that will roar in the 2020s (I will continue to update these and look for individual companies)
Commercialization of space
Robotics - from transport to labor
Reusable and new energy solutions – including Fission
Biotech
Ageing and longevity
Blockchain and related data and technology
Artificial intelligence and general machine learning solutions
Connected tech
Extended reality – including VR, AR, and mixed immersive tech
Efficient construction – 3d printing and related building supplies
Materials science revolution – nano tech and commercialization of new materials
Manufacturing technology and management processes (building the machine that builds the machines)
One final note. All of these innovative technologies will be widely adopted at some point along with renewable energy, the time and global circumstances are simply perfect now. Like the boom of the 1920s, the 2020s will be the beginning of a new era and a new economy.
While it is not always easy to take advantages of substantial changes in economy, if you are aware and know what to look for, it makes it a little easier. Let’s trade!
Thomas Rehberger