Are we heading down a path of destruction?
Are we heading down a path of destruction?
Institutions?
Currencies?
Countries?
Democracies?
The West?
Are all of these going to be re-shaped over the next few years?
History says yes.
We’ve had it too good for too long.
The US money printer, aka QE, has been running 24/7 for 15 years.
Boosting asset prices to levels we’ve never seen before.
Disproportionately benefitting the rich, major corporations and banks while leaving everyone else behind.
Western capitalism has won since the USSR fell.
Capitalists and asset holders have won for generations while labour has lost.
Things are turning.
America’s spent trillions of dollars on the military-industrial complex on wars they’ve never won.
Rapidly increasing the cost of education.
Outsourcing jobs.
Destroying unions.
Getting bailouts from the government.
The wealthy have won the last 40 years.
Decreasing interest rates with increasing asset values.
Values that far outpaced inflation.
Meanwhile workers and savers got destroyed.
The value of their money got eroded with all the printing in the last 15 years.
Their quality of life has suffered.
Meanwhile the rich keep buying stupid shit.
Deciding the world based on their opinion and a number in a bank account.
The US is an oligopoly.
We just don’t see it like that.
Corporations, Wall Street and pharma companies spend billions of dollars a year on lobbyists and politicians.
Burn this into your brain - lobbying is legalized bribery.
Nothing ever gets done.
Each political side has gotten more polarized.
More vindictive.
More ideological.
More stuck in their own ways of thinking.
The left and right are fighting while it’s really a fight between the ultra-elites and everyone else.
With corporations and billionaires able to spend limitless amounts of money to put people in power, how is this system ever going to change?
Their job is to protect their interests.
To distract people.
They do that by lobbying and paying for politicians.
Trump was the best at that.
Say whatever stupid shit is on your mind to distract the media and broader population while you execute the Republican game plan.
He got 3 judges on the supreme court.
That’s a generational presidential shift.
He cut corporate taxes.
For all his rich buddies on Wall Street and the executives at the corporations, they spent those trillions of excess dollars into stock buybacks.
Lining their own pockets.
Not investing in capital equipment.
Not investing in labour.
Not investing in their workforce.
Elites have spent trillions making themselves richer.
Historically that’s a problem.
It’s happened with failing empires before.
The rich get greedy.
They design everything to benefit them while substantially hurting everyone else.
But it doesn’t happen overnight.
It’s happened over decades of policy.
Since world war 2, how goes America is how goes a lot of the world.
Central bankers have taken over.
They’ve racked up too much debt at 0% interest rates.
Too much money was printed.
All of a sudden inflation came.
A problem that hasn’t happened since the 1970s.
50 years.
Most people alive and working have never lived or invested in that environment.
It changes everything.
As rates have gone up the fastest they have in history, it means interest payments on the debt skyrocket.
So mortgages, car loans, bank loans and credit card loans all become more expensive.
What happens when people start losing their jobs because companies are cutting costs?
Even while raising prices?
People won’t be able to afford their payments.
It’s happening.
Thousands of people have been laid off since the boom of 2021.
Sadly there’s more coming.
The reason why this recession is different than previous ones is the level of debt.
When Paul Volcker killed inflation in the early 80s when he raised interest rates to 20%, the US debt to GDP ratio was 30%.
It means the interest on the US debt was far below the production of the whole US economy.
They could survive those level of debt payments.
Today it’s over 100%.
If the interest on your debt goes up 5%, which is what’s happening in America right now, you are fucked.
You either cut rates and print or you default.
The US has told us what path they’re taking.
They’re printing.
Bank bailouts have already happened.
It’s just not called a bailout.
It’s called the BTFP - bank term funding program.
Read this to get up to speed.
The US Fed is saying all asset prices we’ll value at par, no matter how far it’s dropped.
It’s a free handout for banks and bankers.
And they make money on it.
This is what the media isn’t telling you.
The West is on a path down while a lot of the world is moving up.
The US is burning through billions in Ukraine.
They blew up the Nordstream pipeline, an issue no one wants to talk about.
Mass shootings are happening.
They’ll be more.
Especially when the next crisis comes.
It’ll be here soon.
We’re sadly too far down the path.
Ray Dalio has been talking about the Changing World Order for years.
Jeremy Grantham has been warning the world for 2 years.
Same with Stanley Druckenmiller.
The poor policy decisions of the last 40 years of decreasing interest rates, increasing access to credit, corporate and bank bailouts and running up a debt bill at 0% interest rates post Covid has brought us here.
History tells us the next period will be rough.
Geopolitics will shift.
Inflation will run out of control.
Businesses will go under.
People will be on the streets.
Governments will be overthrown.
Uprisings will happen.
Charlie Munger told the world - inflation is how democracies die.
Unfortunately, the US Fed is leading us towards that choice.
They’ve chosen inflation to save the current system.
Sadly, given where we are historically, we’re on a path to destruction.
Hopefully we make it through it.
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