The coming financial collapse will be much more severe than any we’ve experienced in decades. Just don’t say that you didn’t see it coming.
It is said that financial bubbles cannot be predicted. That’s only half true. Nobody can predict the exact timing of a bubble burst. But to see an actual bubble forming, as it often does in extremely slow motion, doesn’t take sophisticated theoretical insight. It takes a simple understanding of basic economic principles. Better yet, it just takes some common sense.
- Dangerously high levels of debt can lead to slow economic growth.
- Slow economic growth, when not dealt with wisely, often leads to taking on more debt.
- A repetition of this cycle eventually leads to a severe systemic crisis.
In other words, if you take on too much debt, the wealth you produce will go back into paying that debt. A large portion of your capacity to purchase and save will have already been claimed--meaning that you cannot fully deploy your wealth toward more productive and forward-looking endeavors. But if you remedy this fragile condition by accumulating even more debt, then the cycle can only repeat itself until your future capacity to pay down your debt has been depleted, and your creditworthiness shattered. Game over.
At this point, every semblance of working stability you may have had will begin to fall apart at the seams.
This example relates directly to what’s happening with the US economy. Just pay attention and look around: extreme fragility is the reality of our current economic condition, and the potential for it all to fall apart is already taking place.
US GDP in the last 10 years mirrors the 1930’s Depression Era!
A vicious historical cycle has just been repeated. If you don’t believe it, all you have to do is to calculate it yourself. You’ll see below that from 1930-1939 and from 2007-2016 the US economy grew exactly by 1.33%.
All of the brilliant economic “fixes” have given us an illusory sense of growth, wealth, and solvency at the expense of the “real economy” which, if you really look at it, is terminally ill.
The frightening fact is that the Fed’s monetary stimulus solutions have produced nothing but soaring asset prices and Depression-level growth.
This is what exorbitant debt does to a system. Sadly, it’s the system that we live in. It’s a system that has been aggressively tampered with by ultra-sophisticated monetary bureaucrats who have tried just about every approach to fixing the problem save for one critical angle: common sense.
How this crisis unfolds will be underwhelmingly predictable.
As the equities and real estate markets collapse, investors will seek safety in the bond markets. The massive flood into bonds will cause a sharp yet temporary spike. At this point, all three markets--stocks, real estate, and bonds--will tumble; the weight of debt placing the global dollar-based monetary system into a death spiral.
Investors who failed to heed the early warning signs will now seek the safety of gold and silver. But for many of them, it will be too late.
Do not allow yourself to be the victim of a catastrophe whose warnings ring clear and whose symptoms are evident.
Protect yourself by investing in the only assets that will rise in value as all other assets fall.
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