Friday , 19 July 2024

A BIG Fire Is Needed To Get Rid Of All the Financial & Social Excesses – Here’s Why

We are now at the end of a secular bull market in the world economy which on a global level has reached extremes never seen before in history.

  • Stock markets are on fire
  • and so are property markets,
  • as well as bond and debt markets.

The problem is that fires are initially explosive but always end up implosive [and,] right now, we are in the explosive phase of the fires with markets all going parabolically exponential (or should it be exponentially parabolic!).

…[Unfortunately,] explosive fires always end in everything burning down or imploding eventually and this is just what is going to happen in the next few years. A massive forest fire is not just totally inevitable but is also an absolute necessity

We need a big forest fire that gets rid of all the excesses, be they financial or social. Only then will the world again create new green shoots, free from debt and false values, both moral and financial. Before that, however, the implosion of most debt and asset values will create a very difficult period of transition for the world. It could last one decade or several. How long it will actually last, only future historians can tell us.

There will be major suffering around the world which will not just be financial but also social. We will see wars, civil wars, famine, disease and migration. There will be virtually no money for social security or aid of any kind, no pensions and very limited Medicare

We know that cycles are part of life and that some cycles are more extreme than others but what has made this one worse than the world has ever experienced is that governments and central banks have interfered with the natural cycle of ebb and flow.

The fatal interference in the natural cycles, especially by the U.S., will be very costly for the world…By foolishly trying to abolish cycles, governments have exacerbated the problem to a degree that will create unnecessary suffering for the world

The Dow has lost 60% against gold since the year 2000. That trend will accelerate in the next few years and I expect the Dow/Gold ratio to reach the long term trend line as shown on the chart below. This means that the Dow will lose another 97% from here against gold.

Gold and silver have not reflected the massive creation of money in the last 50 years but that catchup phase is likely to start very soon based on both fundamentals and technicals. [As such,] the upside potential for gold and silver is multiples of the current prices at today’s price levels and hyperinflation could take the metals to unfathomable heights

Editor’s Note:  The original article has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity to ensure a fast and easy read.  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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