Home > Predictions > What’s going to happen?

What’s going to happen?

I can’t tell you WHEN this is going to happen but I can tell you WHAT is going to happen:

Western govts continue to deficit spend.  Massively.  Just like Japan.  They save the TBTF banks.  Everything gets massively concentrated.

The “periphery” countries that borrow in foreign currency face blow ups and funding crises as govt debt balloons out of control.  For these countries interest rates SPIKE up and currencies COLLAPSE.  You must stay out of debt and be in gold if you are in these periphery countries.  Hyperinflation via currency depreciation (similar to Venezuala) or crushing deflation via high interest rates (similar to Iceland) is inevitable for these countries.

For the large “central” economies, govt simply continues to grow.  Nothing stops it.  Like Japan.  The private economy shrinks.  The govt economy expands.  Deficit spending is financed by the central banks.  Interest rates do not spike up (even though they should). 

Shortages and dislocations and sporadic crises increase.  Food prices soar.  Production isn’t valued so its price will go up. 

You will end up with two economies:  A very sick weak private economy.  A very strong healthy public economy.  If you are in one of these economies, run to the center, or run as far as you can from the center.  Don’t be caught in the middle (like in California).  Better to be in Washington or in Canada than California.

This continues until something breaks.  The most likely fault lines: gold, oil, food, unemployment, govt bonds (eventually) or interest rates.

Stocks will go down (the private economy will die) but govt bonds could be a buy for many years if the central banks support the market.

Japan is our future.  Japan and Kabul.  Strong govts, weak private sector, corruption, weak paper currencies, rationing, power will matter greatly in this world.  If you don’t have power, run.  If you can’t run, buy gold and save and stay low profile and obey orders.

In this environment, cash and gold are best.  Stocks are worst.  Property can be terrible if chosen badly, OK if chosen well.  Anything geared is trouble given the volatility.

Get a govt job, wait for assets to be cheap and fall from the tree and buy them up slowly one at a time. 

If you can’t get a govt job, get one as close to the govt as possible.

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