First off I’m getting pretty tired of seeing a “**It’S 2008 AgAiN! HoUsInG Go BoOm!!!1!**” every couple days. Let’s review why it’s not going to happen:
* The crash in 2008 was caused by lots of things but the biggest issue was mortgage companies were handing out mortgages like beads at Mardi Gras. People who had no possible way of actually paying back the mortgage were given one anyway. So now lots of people who normally would only afford say a 130k house were getting pre-approved for 180k which lead to:
* Bidding wars on houses driving the prices up higher then the actual fair market value. Which these same people who shouldn’t have been approved for the higher amounts were buying and then:
* Huge numbers of people defaulting on loans that they should have never been given in the first place which lead to all the banks begging for the feds to bail them out and the feds said:
* Fuck yo loans, you should have known better which lead to the [single biggest drop in the Dow of 777 points](https://money.cnn.com/2008/09/29/markets/markets_newyork/)
Is this going to happen again? No. Why? [Because it was a fucking mess in 2008](https://www.wealthsimple.com/en-us/learn/2008-market-crash#what_date_in_2008_did_the_stock_market_crash) and a bunch of new regulations were put in place to make sure it doesn’t. But why are prices so high? Because Americans overall are doing better through the pandemic then worse and have more to spend. In 2008 US households **lost $8 trillion in wealth**. In 2020 US households **gained $13.5 trillion in wealth**. [The majority of Americans are doing pretty fucking fantastic](https://www.wsj.com/articles/during-covid-19-most-americans-got-richerespecially-the-rich-11624791602).
But Inflation!!! Inflation will stop everything!! No, it won’t. You know why they are saying inflation is transitory this year? Because it is. Will inflation this year be higher then a “normal” year? Possibly. Is higher inflation here to stay? Highly unlikely. Remember 30 seconds ago, the whole US household wealth thing? Turns out when we have lots of extra cash we spend it. Also turns out when there is suddenly higher demands for almost everything that prices tend to go up. Lets look at why that is:
* [Unemployment](https://tradingeconomics.com/united-states/unemployment-rate) went from a peak of around 15% in March 2020 to 5.9% currently. A “Healthy” unemployment rate is 4% – 5%.
* Up until this week most states were still offering Unemployment bonuses. As of this week [half will keep the program in place](https://www.cnet.com/personal-finance/unemployment-shutoffs-states-offer-workers-cash-incentives-to-find-jobs/) until September. Many people made more money not having a job then they did before.
* Some of those states that have stopped the bonus are offering “Go back to work bonuses”.
* About 127 million US households got stimulus checks including many who simply didn’t need them. In total approximately **$391 BILLION** was handed out.
* Many households with children started to get a advance on their child tax credit this month, which was also increased.
* Many employers, especially ones that were paying minimum wage, have increased their rates to get people back so even at the low end people are now making more then they were pre-pandemic.
Again more money into the economy = more buying = more demand = prices go up. This isn’t rocket science, it’s simple economics. People who were waiting to [buy a car](https://www.businessinsider.com/why-are-used-cars-so-expensive-now-shortages-pandemic-rentals-2021-7) now had the money to do so. Cars became scarce. Prices went up. But what about now? After peaking last month wholesale car prices are starting to come down and in the coming 6 months used cars should return to “normal” levels. People started buying houses, both existing and new, and what happened? Building materials shot up. Lumber was at a [10 year high in May](https://www.nasdaq.com/market-activity/commodities/lbs) and right now is back right around it’s average.
We are in a bull market simply because we have the cash to be in one. People are buying more. People are investing more. More people have entered the stock market [in the last year then in the 12 years before this combined](https://www.cnbc.com/2021/04/09/investors-have-put-more-money-into-stocks-in-the-last-5-months-than-the-previous-12-years-combined.html). The lowest paid people in our country are making more. 25 US states increased their minimum wage [this year](https://www.usnews.com/news/articles/best-states/minimum-wage-by-state). Inflation will subside and Americans will continue to make more money. Our biggest problem isn’t going to be inflation but actually filling all the jobs that need to be done. Once more unemployment benefits expire and more enter the workforce we are going to find that we grew during the pandemic and will have problems filling jobs as unemployment drops to below healthy levels (sub 4%).
TL;DR: Buy everything. Stop fear mongering. Also Bers R Fukd.