The nextt recession will be different than any of the other ones that have
been inflicted upon the world in the past 100 years. Today, I want to
drive home a point that might be controversial, but I owe you the truth
at all cost – you need to hear this.
There’s enough debt in the world today at zero rates or negative rates
to cure many of the global economy’s ailments and unleash an era of
growth, cooperation, technological development, increased productivity
and significant wealth. Governments have bought much time and at a very
low cost. It would be the greatest CATASTROPHE if the holders of debt –
our respective governments – can’t find the way to use this access to
credit and spend it in a way that generates a positive outcome.
For a number of different reasons, ranging from a belief that deflation
is coming to the belief that a severe depression is next, lenders have
been willing to finance sovereign nations’ obligations and their
administrations’ deficits in exchange for ZERO INTEREST payments, and
now, a guaranteed loss of capital, via negative rates.
We live in a world of immensely high
debt levels, mostly held by governments. If politicians and
policy-makers aren’t able to navigate the waters of capital deployment
in the realm of federal programs in a wise fashion, interest rates for
sovereign debt will skyrocket. The most dire and painful collapse in
history will then commence.
No one will be left unscathed. This will be largely determined by the
ability of top policy-makers (globally speaking) to COOPERATE actions
and COORDINATE policy.
In a nutshell, Donald Trump’s gift to the world has been his ability to
SHAKE things up – it’s also been his curse. His thought process is that
tariffs are his way of gaining the attention of leaders and getting them
to sit down and reform relations, since the U.S. was, up until now, a
provider of subsidies to the rest of the world.
In his mind, globalism has hurt the average American in a clear and significant manner.
Trump knows, as much as we know that his actions have resulted in a
global slowdown to the tune of $700B. This is the price we have to pay
if we want to pave the way to a future that doesn’t trample over the
American business landscape, in terms of loss of jobs, minds, and
Financially speaking, there is more
available credit out there in the world than government and investors
know what to do with, so what they should do is collaborate and find the
best uses to deploy this valuable money.
We stand at the precipice of either a quantum leap the world has never
seen before, or a meltdown that will make Hiroshima look like a field
The responsibility and the engineering of a great recovery have to be
conducted at the highest level, but if populism and other short-term
considerations overshadow the capabilities of administrations to act
from a place of logic, we are in trouble.
Here’s EXACTLY what I mean:
People are feeling
uncertain, plain and simple. From the president down to the layman, no
one has a sense that there’s a visible and determined path and direction
We MUST resolve this. The answer isn’t by lowering rates, or by just cutting taxes; the world needs great REFORM.
People live much longer lives than
ever before; technology is making breakthroughs, which disrupt millions
of lives. With the snap of a digital finger, entire industries can turn
180 degrees. It’s a world in which 20th century thinking won’t cut it anymore.
Corporations are REALLY
leveraged, returning more capital to shareholders than what they
generate, knowing that cheap and instant debt is readily available.
It’s like we’re reaching a point where the choice is ours: calamity or
prosperity, and in the meantime, there’s so much confusion that people
are hoarding cash.
The walls are closing in, truly. Insecurity is getting under the skin of investors.
You need to keep doing your thing; build your career and keep generating
more and more capital. There’s no replacement to a savings cushion and
never will be.
On Tuesday, I’ll explain why it
sucks that governments have all this capital instead of the free
markets, and what could happen if governments realize the policies they
can embark upon could make this world so much more abundant and
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