Year to date total returns: US & non US equity and fixed income

Year to date total returns on broadly indexed funds comprising US & non-US equities & bonds are grim. In crisis, perhaps an inappropriate word at this point, all correlations seem to converge to 1. In addition to the nominal losses in portfolio, the investor, also incurs loss in real purchasing power of wages, savings, and investments. Yes, it's a double whammy. The loss of purchasing power by inflation is seperate and in addition to any nominal loss induced by price declines. 

  

We're not done yet. We're at the front end of the process of wringing out two decades of errant monetary and fiscal policy, marked by massively increasing leverage, and cumulative mal-investment. Leverage increases our risk, and cumulative mal-investment is dead weight economic loss and decreases our ability to recover economically. The way forward will be neither pleasant nor over quickly. And the costs will be huge.

Something that neither the media, your advisor, nor any politician will tell you: there is not a good solution here. There is no happy song, no quick fix, only a grinding market solution which prices every mistake we make. And between the Biden administration and Congress that's a costly & vast universe. 

Absent prudent and co-ordinated policies that reform the complex crossing fiscal, monetary & regulatory domains, there may not any cure, just the long slow bleed of lowering our standard of living by consuming our capital until there is none. It will destroy our social fabric which has already shown itself to be thinner that we would like. And we're already in the danger zone as you can see below. Geopolitically our allies, if that's the proper word for them, are weak and generally in worse condition than we. So if we can't get it done... things might get chippy all over pretty fast.