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Apply force on the market and it will distort

When you try to force on the market any agenda you may have, the market will react. And usually not the way you want. We have seen this in 2020 when politicians decided to shut the markets and the entire economies down. They distorted not only the markets but the entire economies.

People get this wrong. They think that everything we are experiencing with the stock market results from a lousy economy due to too much money in the system. It is true, but partially. The primary reason is elsewhere. The primary cause is the abrupt stop of the world economy. The rest are consequences, like a domino.

First, they stopped the markets. Then, they had to pour trillions into the markets to save them. The pendulum was pushed toward one side. Because of the trillions in the system, people went on a spending spree. That raised inflation. Did it hurt businesses? No, companies made trillions in profits! Everyone was happy, and everyone was spending like crazy.

Inflation was rising, and politicians and FED got worried. But even during high inflation, people kept spending like crazy. Airports were full. Vacation destinations were booked months ahead. Some restaurants were booked weeks ahead (check Texas Roadhouse, for example). And politicians were worried, so they swung the pendulum in the opposite direction. And to the other extreme. Now, we have high inflation and the risk of halting the economy once again.

But the markets will react and resist the force. The question is how and which direction it will resist.

And the recent force on the markets we saw was EV. During the hype, everyone was about electric cars. Tesla was going to the moon. California applied another force on the market, approving a bill to go full electric by 2030 (or so).

The pendulum was moved to another extreme. Today, the EV pushers are surprised that no one is buying electric cars. Tesla is forced to lower prices, narrowing its margin beyond sustainability. GM just announced suspending manufacturing of EVs whatsoever, and Ford is following suit.

I do not say that there is no market for the EVs. There is. But we are not ready for it. The electric grid is not prepared for it. The charging system across the country is not ready. And customers are not prepared to pay horrendous money for overpriced cars. We need to grow to it naturally and not by the dictate of politicians (Communists tried this in their central economies and failed miserably).

Apply force on the market, which will do the opposite of what you wish for.


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