A client of mine told me that she recently read the book called “The Death of Money”. She asked my opinion on it. She stated that she found the book “frightening”. This book is a classic example of Doom and Gloom propaganda. The book describes in detail what central banks do and how they affect currencies and global economies. I have not read it, but I think it concludes that the central bank’s policies of excessive money supply could lead to outcomes like hyperinflation or devaluation of currencies (thus, “the death of money”).
I am generally weary of any extreme predictions or economic forecast. Doom and gloom and apocalyptic economic predictions have always been around. I’ve heard it all over the years, the fall of currencies, countries, capitalism, disruptive technologies. It’s normal investor behaviour to worry about investments and there are a lot of sources that try to pray on those fears, even profit from them. Just like there are also “euphoric” and “sky is the limit” type economic predictions.
I always remind myself that stock markets have been around for 100+ years. In the past century we’ve gone through events like the great depression, world wars, civil wars, cold wars, oil crises, financial crashes, rise and fall of emerging market nations, fiscal cliffs, the shift from British Pound to U.S dollar as the world currency reserve, etc… In spite of all these events, markets are still around. The financial crash of a 2008-09 was the most significant bear market event since the great depression of the late 20’s. Six years later, the S&P 500 has not only recovered but is currently trading at record highs.
I also remind myself of the companies that make up the various markets. Companies like Royal Bank, Telus, Coca Cola, Apple, Canadian National Railway, Fortis, Shopper’s, Amazon, Tim Horton’s, Suncor and so on. Do we stop talking on cell phones, buying soft drinks and groceries, pumping gas, using bank accounts, drinking coffee, buying goods online, paying heating bills, and requiring medication because of central bank activity? The economic backdrop is important, but it is the ability of a company to make money that drives its stock price. A bad economy will have a impact, but I do not think we should worry about all major companies disappearing overnight.
I hope this makes sense to you and give you a more rational look at things.