The coronavirus pandemic is not just a 100-year crisis. It is an accelerant — one could even say a hyper-accelerant — of already existing trends.
A number of momentous sea changes, which were already happening slowly, wound up happening faster — in some cases much, much faster — because of the pandemic.
Take teleconferencing and remote work for example, with meetings happening via Zoom Video Communications (ZM) and employees working from home. The business world was already moving in this direction, albeit slowly and with a fair degree of friction.
Many companies believed that, for their line of business at least, remote arrangements were a pipe dream. But then the pandemic forced these companies to try remote work arrangements — and many were pleasantly surprised.
Physical office space will make a comeback, but it won’t be like before. Then, too, high-priced metro areas like San Francisco are seeing a tech worker exodus, as hundreds of thousands of well-paid workers get permission to keep their jobs while moving away.
Something like this was already going to happen. A combination of remote work capability and a staggeringly high cost of living was going to redistribute workers out of urban centers, eventually.
But the pandemic accelerated things, taking a trend that could have stretched out over years, or even decades, and compressing the kick-off into months.
Or take the rise of e-commerce at the expense of brick-and-mortar stores. Again, this trend was very much already happening. E-commerce sales were gaining ground on brick and mortar sales, year in and year out, but the trend was still measured in the big scheme of things. E-commerce growth looked slow and steady.
Then the pandemic hit, and e-commerce growth exploded. Companies like Amazon, Shopify, and other e-commerce winners may have picked up a decade’s worth of gains over brick and mortar stores — again compressed into just a few months.
Or take one of the most unfortunate trends in the world today — a dangerous inequality gap, in which the gap between “haves” and “have nots” becomes explosively wide.
Inequality was a problem well before the pandemic. Macro thinkers like Ray Dalio repeatedly warned that, if 60% of the country is left behind economically, and things continue to worsen, social unrest could follow.
As with other trends, the pandemic was a kind of hyper-accelerant for the inequality problem.
Thanks to unprecedented pandemic-response actions from the Federal Reserve — and a balance sheet expansion running into the trillions — equity markets have remained well supported, with more speculative areas of the market showing mania-like price moves.
As a result, the world’s richest individuals have increased their wealth by tens of billions, and owners of U.S. equities in general have done quite well — even as collapsed stimulus talks threaten to leave millions of Americans newly homeless.
Before the pandemic, being able to work from home, even if most of the work was still done from an office, was a sort of “nice to have” knowledge-worker perk.
After the pandemic, that same ability to work from home — which applies to roughly a third of U.S. jobs by various estimates — became a lifeline, and another form of inequality dividing line, as the other two-thirds of Americans found themselves either braving COVID-19 risks daily, or lacking a job at all.
It’s useful to think of the pandemic as a trend accelerator because, in many ways, while the pandemic is a crisis in and of itself, in other ways it is merely a catalyst, like an earthquake that pushes a tidal wave.
This is one of the reasons the U.S. dollar is in so much trouble — and, conversely, why the outlook for precious metals and Bitcoin is now so profoundly bullish.
The U.S. dollar does not have a bleak outlook merely because of the pandemic, or because of one-off crisis response actions taken by the Federal Reserve and the U.S. government.
Instead, heading into 2020, the U.S. dollar was already in dire straits.
Even before COVID-19 ravaged the globe, there were signs that the post-Bretton-Woods era — the fiat currency regime that kicked off with President Richard Nixon shutting the gold window in 1971 — was coming to the end of its useful lifespan, with the U.S. economy at the tail-end of a 40-year long-term debt cycle.
n December 2019, we published a 140-page e-book called “The Deadly Decade Survival Guide.”
It explained, among other things, why the 2020s would be a decade of crisis; why the price of Bitcoin would head to the stratosphere; why energy stocks could collapse; how the U.S. dollar could get “dethroned”; why treasury bonds weren’t safe; why multi-trillion bailouts were coming; why a retirement crisis was imminent; and more.
All of those trends were visible — with clear and notable signs of unfolding, as we detailed in the e-book — before anyone had even heard of the coronavirus, or a lockdown in Wuhan, or COVID-19.
Then the pandemic came along and acted like a hyper-accelerant for every single one of those trends.
The multi-trillion bailouts, for example — which we expected to take a few years, or otherwise materialize in fits and starts — were fully manifested in March 2020, thanks to the pandemic. Because of COVID-19, the Federal Reserve had to very much do sooner what it otherwise would have done later.
And things only got crazier from there — and the craziness yet continues, as of this writing, because there is no possible way we get out of this pandemic without trillions more in stimulus, perhaps trillions upon trillions more.
The pandemic, in a way, has pulled the future forward, and compressed the timeline for a number of “endgame” type events that were already within reach, having to do with the outer limits of sustainable debt levels, the maximum levels of debasement a currency can experience, and so on.
Macro-level changes that would have been slower moving, like a glacier traversing a landscape, were triggered with an explosive burst because of COVID-19.
The world is still figuring out what all of this means.
But we can already say, with a firm degree of certainty, that the old “normal” is gone forever — and whatever the future holds is coming straight at us with frightening speed.
In practical investment terms, there are ramifications here for the key transmission vehicles in terms of market prices sending signals: Gold, silver, Bitcoin, and the U.S. dollar. (Treasury bonds play a major role too, but their prices are openly manipulated, in order to keep interest rates low.)
It is in the price and perceived value of the first four vehicles — gold, silver, Bitcoin, and the U.S. dollar — where years of regime change could manifest before our eyes at breathtaking speed, thanks to the pandemic serving as a hyper-accelerant and catalyst.