8 Clues That Major Crisis is Coming

To say we're approaching a big inflection point in human history is an understatement. The next decade will shape civilization forever - perhaps even setting us on a path that ultimately ends in our demise.

I'm not simply referring to a single issue. Indeed, it is the confluence of economic, geopolitical, environmental and social problems occurring simultaneously that threatens life as we know it.

Emanuel Leutze (American, Schwäbisch Gmünd 1816–1868 Washington, D.C.)


The following list provides an overview of the life altering problems that exist on the path ahead. While each one deserves its own treatise, the point of this article is to highlight the broad and intertwined scope of shit that's about to hit the fan.

Here we go:

1. We are near a typical cyclical peak in the economy and markets. That's the best of the bad news. Typical peaks usually end in typical recessions, and if it weren't for the many other problems facing the world this is where the list would end. Unfortunately, there's worse...much worse.

2. We are approaching the economic peak at a time when monetary policy is already very accommodative. The next recession will send interest rates in the US negative. Negative rates can become an inescapable trap that destroys the economic system and worsens wealth inequality. 

3. The next recession could push the budget deficit to 10-14% of GDP. The US administration is already forecasting trillion dollar deficits while anticipating endless economic growth. Of course, the reality is the economy is fast approaching a downturn so those trillion dollar deficits could actually double. The only reason budget deficits of this enormity are remotely thinkable is because the US dollar is currently the global reserve currency. 

3b. The US dollar reserve currency status is currently under attack by China with support from Russia and other US adversaries. While it might take years to topple the dollar, when it happens America's standard of living will crater. China will not stop until this happens because they seek global dominance. 

4. US debt is growing faster than both real and nominal GDP. So 100% of economic growth only occurred because of more debt. That is totally unsustainable. Again, this is only possible currently because the US dollar is the global reserve currency.

5. The US can't materially raise taxes or cut spending or cut entitlements to escape the growing debt crisis. Any career politician that does this will be quickly voted out of office. So the US government will monetize its debt and push real interest rates negative. This will once again change the investing paradigm - what worked since 2012 while real interest rates were positive will no longer work. It could also widen wealth inequality even further.

6. America is divided and it's only getting worse. The left and right of the political spectrum are farther apart ideologically than ever. There is no compromise. There is no middle ground. Wealth inequality is close to record levels and the actions noted previously in this article risk widening it even further. Disenfranchised and polarized people are more willing to fight for their beliefs than understand alternative points of view. Beware: throughout history, such division has led to bloodshed.

7. Fascism is on the rise in America. First it was the illegal immigrants. We now have internment camps, immigration raids, kids being treated worse than animals, families separated. This treatment is starting to spill over to legal immigrants and US citizens who don't fit into the desired classification. Moreover, the US government has normalized treasonous behavior and the current administration is quickly consolidating power - possibly in the worst possible way. The apparatus, attitude and actions are in place for much worse - i.e the traditional fascist playbook - to occur.

7. The speed at which the planet is warming is increasing. Ice caps are melting, permafrost is melting. We may be past the point of no return. Some regions will fare better than others, but there will be massive unrest due to migration and wars over increasingly scarce resources. 

8. Canada is particularly in a precarious position. Canada's neighbors are headed towards some sort of unknown political insanity. Canada's neighbor is also running out of water in many parts. And many parts of the US will become unlivable as the climate worsens. So where will they look to find tons of water and livable space? Canada...the weaker neighbor to the north has everything they need. Canada could become annexed - overtly or covertly - by the United States at some point in the future. 

Of course, these are longer term trends. It is impossible to accurately pinpoint when things will happen. 

Sometimes it isn't obvious when the tide starts to come in. But the implications of not being aware of the changing water levels can be devastating.

No comments:

Post a Comment