The US economy is overleveraged with bad debt, making accurate predictions impossible and potentially leading to a fiat currency failure and hyperinflation if governments attempt to reinflate the global financial system.
Aggressive rate cuts by the FED won’t help those with parabolic credit card expenses and zero savings rate, as lower interest rates can’t fix the situation for people rapidly going broke.
The US is facing a 1999-like scenario with unaffordable houses (needing a 50% drop) and overvalued stocks (requiring a 20-40% drop), supported by only a handful of tech stocks.
Recent flash crashes and the 2022 drawdown exemplify the volatility that could lead to a recession, with the only solution being a massive repricing through a recession and debt default.
In a potential currency collapse scenario, gold, silver, energy assets, and farmland may be good investments, but defining cautious investing becomes challenging when currencies are at the epicenter of the crisis.
The current situation differs from the 1990s due to vastly more indebted consumers and government debt 3-4 times higher, making traditional FED interventions ineffective and necessitating a massive debt write-off through default.
Massive 30% gold and 19M oz silver deliveries in August 2024 on Comex and LBMA, highest in 4.5 years, indicate structural deficits and potential draining of exchanges at the West’s expense.
Turkey, the largest gold buyer in 2024, formally applies to join BRICS, signaling a significant shift from its NATO ally status and potentially influencing other countries like Japan and Australia.
BRICS alliance offers a cooperative, non-coercive economic model with 40% gold backing for a new token currency, attracting countries seeking alternatives to Western alliances.
Daily trading of 200M oz gold and 3.5B oz silver on Comex and LBMA, with 90%+ paper contracts, creates price distortions and raises concerns about rehypothecation and reputation risk.
India’s silver imports surge 260% month-over-month in February 2024 to 2,295 tons, with an estimated 7,000 tons total for the year, dwarfing the US Mint’s 70M oz Eagles production over three years.
Growing trend of Pension Risk Transfer (PRT) sees companies offloading pension obligations to insurance companies or offering cash buyouts, indicating a shift in pension valuation and management.
According to economist Marc Faber, inflation destroys societies within 10 years by eroding purchasing power, making it a disaster that will inevitably lead to societal collapse.
The global economy is currently below 2018 levels in real terms, with 20-25% official price inflation compared to 50% in real-life experiences, severely impacting the poor who spend 30% of income on food.
China’s growth slowdown is attributed to high debt, overleveraged real estate, and a shrinking population projected to decline by 40-50% over 40 years, with growth rates expected to slow from 8-12% to 3-6% per annum.
India’s pro-business government under Narendra Modi has driven significant economic transformation over the past 8-10 years, with liberalized markets and per capita oil consumption at only 10% of US levels, indicating potential for future growth.
The status quo in the Western world is unsustainable due to unsustainable debt growth and consumption, with an impending credit bubble burst likely leading to reduced consumption and potential negative growth.
The rise of Asia and decline of China will result in a multi-polar world with more regional trade agreements, as the US and Europe focus on domestic issues and security while Asia drives global growth.
The economy is saturated in the Western world, with most goods manufactured elsewhere, and political factors like “Socialists” in power in Germany potentially contributing to economic destruction.
The credit bubble’s eventual burst will lead to a significant reduction in consumption and potentially even negative growth in Western economies.
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