In the coming 10 years, the United States of America will undergo its biggest challenge as the world’s leading empire yet.
Though I write extensively about the analysis I conduct, which leads me to remain bullish on stocks for the meantime, I do see a giant debt squeeze straight ahead.
As opposed to the majority of commentators, though, I don’t see a repeat of 2008 happening. Honestly, if you think of 2008, monetary policy was immediately prescribed, markets began rallying, real estate prices started to stabilize and climb higher, and the rich got a hell of a lot richer – an enormous wealth transfer, basically, orchestrated by central planners.
In other words, 2008 was a credit squeeze, “solved” by monetary policy, which included lowering interest rates to negative levels, buying bonds and MBS (Mortgage-Backed-Securities), providing liquidity to institutions, and even buying stocks.
The social ramifications of this recovery, starting in 2009, are grave. The rich, who own assets, rather than work for a living, by receiving wages, are seeing their share of the pie explode in value, as opposed to hundreds of millions of Americans, who are still laughing when they hear the media reporting that the recovery is in full swing.
America didn’t recover collectively, but in spots, in pockets, in various ways, and at various levels. Each has experienced a personalized version of it, according to his starting point.
The next crisis is yet another debt crisis, but it is on the sovereign level. In 2008, individuals, corporations, and banks were maxing-out in their ability to service debt, especially the homeowners. This time, Uncle Sam will be facing challenges in paying its unfunded liabilities.
Now, some people have a childish notion of how governments operate, so I want to be perfectly clear that the U.S. Federal Government does not issue a press release one day, out of the blue, stating that they cannot meet their next interest payment on bonds or any of these outrageous theories people sometimes blurb out.
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What the government does is legislate new terms of receiving Medicare, Medicaid, Social Security, and food stamps. These sorts of austerity measures hurt the poor the most, of course, because they bank on these subsidies for their survival.
This is the reason I keep pounding the table that by 2022, you must be on the path to building an asset fortress and a thriving business, or you will be in the lower-income brackets.
There will be no middle ground, unless you work for very specific high-paying industries, doing very specialized work.
The next crisis will put into question the role of the USD, as the global reserve currency. It will also put into question, Americans’ loyalty to their fellow countrymen, as I see austerity creating major political strife.
At the end of the day, there’s going to be a shit storm, blowing through at full-speed. If you’re not spending considerable time working on your skill set, finding where your talents could be best put to use – get inspired to do so immediately.
The government will not be able to meet its obligations in their current form, and we will see people’s true colors on full display, when they understand they are getting screwed, AGAIN.
By the next election cycle, you’d better be fully conscious of your situation and how to be a value provider to your employer, clients or both, an indispensable one I might say, or you’ll be in a world of trouble.
Think of it this way – your current situation is what it looks like after 10 years of economic expansion. Now, imagine the contraction…
Research Partner, PortfolioWealthGlobal.com
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Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.