TY - JOUR T1 - COMMENTARY: The Returns on Government and Corporate Securities with Prices Propped Up by Central Bank Purchases Using Unlimited Quantities of Currencies with Less Intrinsic Value than Toilet Paper JF - The Journal of Investing SP - 121 LP - 131 DO - 10.3905/joi.2020.1.140 VL - 29 IS - 5 AU - Austin Murphy Y1 - 2020/07/31 UR - https://pm-research.com/content/29/5/121.abstract N2 - This article evaluates several investment scenarios that could result from the rather dire economic situation existing in early 2020 caused by the coronavirus pandemic that is restricting economic production of goods and services at the same time that cost-push factors and the unlimited creation of money by central banks worldwide create upward inflationary pressures. Just as during the similar situation in Germany in 1923, the nominal prices of both equities and fixed-rate instruments might be propped up, but all security investments would generate highly negative real returns short-term. Only stock prices might eventually match the inflation rate.TOPICS: Financial crises and financial market history, legal and regulatory issues for structured financeKey Findings• This article provides a timely evaluation of the investment outlook in the context of various scenarios that may unfold as a result of the various measures implemented to prevent the spread of the coronavirus that are inhibiting the production of goods and services at the same time that unlimited monetary and fiscal stimulus is being applied.• With the economic outlook in 2020 being very similar to that in Germany in 1923, the returns on stocks and bonds in that hyperinflation over a century ago are explained to provide perspective on the potential returns on different asset types if the worldwide monetization of the large fiscal deficits continues unabated. ER -