There is a crash coming, and I’m not talking about the big, overall collapse of the Western world, which has already begun in earnest and I think will most likely be something that slowly happens over time instead of all occurring with one big, scary event.
Instead, today I’m talking about the coming economic crash/recession that is most likely going to occur within the next 24 months. There is absolutely no way to predict this with any accuracy of course, and perhaps this crash will come tomorrow or five years from now. However, based on all the data I see before me, and based on the predictions and analysis from men who I read and who know a lot more about these topics than I do, I think it’s more likely than not this recession will occur within the next year or two.
As to the specifics of what will or will not happen, again, there’s no way to know for sure. What is most likely to occur is that the over-bloated stock market in the US will crash, dropping the Dow and S&P 500 20% or more, causing a panic. This will not likely be the first thing that happens. Instead, it will more likely be the result of problems in the banking sector. As I’ve talked about before, Deutsche Bank, one of the largest banks on the planet, has literally hundreds of trillions of dollars in derivative exposure (yes, that’s trillions with a “T”). This can (and will) pop at any time, imploding the bank like Bear Sterns before it, and sending the already collapsing Suicidal Europe into a tailspin. This will affect the world, namely the US, and the stock market and/or bond markets will also crash. The US stock market is at an all time historic high, and most of these growing stocks are not backed by any real cash or liquidity. Not good.
Then we have the averages. We average one recession/crash every 4-10 years or so (depending on how you define “crash” or “recession”), and our last one was 2009, which was eight years ago. That means we’re due for one pretty soon.
There are numerous other reasons for the likelihood of a big recession coming, and I could spend the next several pages talking about them. Feel free to do your own research and draw your own conclusions. My point here today is that it’s definitely coming, and likely coming in the next year or two (though that’s only a guess; I could be wrong).
Such a crash will whack Tantrum Trump right in the face. Very stupidly, Trump immediately took credit for the booming stock market the split second he became president, while just a few months before denouncing the same stock market as a dangerous bubble. Of course, as I’ve said before, a booming or collapsing stock market has pretty much nothing to do with whatever the current president is doing. The problem is, since Trump has taken ownership of the good stock market, if/when the stock market collapses on his watch (which it is likely to do), he will then take the blame for the stock market, even though it won’t be any more his fault than the booming stock market is right now.
This is not good news for a president with record-breaking, historically low approval ratings when the stock market is doing great. I’m mean seriously, Tantrum Trump has a shockingly low, 33%(!) approval rating while the Dow just cracked an all-time high of 22,000 last week. Simply amazing, but we are in uncharted waters these days. Just imagine what will happen to this terrible 33% when the stock market crashes!
Normally, this would damage his chances for re-election. However, since my fellow Americans lost their minds long ago, and since Americans now have a 25 year habit of re-electing the current president no matter how bad he is, how much he lies, or how much he screws over his own base, one never knows if a collapsed economy will affect Trump’s re-election chances or not. Trump worshippers are likely to just vote for him again anyway, and Trump knows this (just as Obama knew it about his supporters, and Bush knew it about his; both of these bastards were re-elected when they should not have been).
A more relevant question is how the coming crash will affect you. If you’re already poor and/or unemployed and/or have a very low income, you probably won’t notice a difference. However, if you work in the corporate world and/or if you have real investments or assets, you’re likely looking at some serious trouble ahead. Most traditional investment instruments pushed by Societal Programming (stocks, bonds, 401K’s etc) are going to take a serious blow.
If you’ve followed my advice and built an Alpha 2.0 financial structure, with diversified, international, location independent sources of income, as well as very boring, safe investments, particularly if you have zero debt and a low monthly expense footprint, you’ll probably be just fine. If you have a lot of money in cash, you may even be able to take advantage of the crash and invest in things when their values are ultra low, then cashing in a few years later when the economy has recovered (which it will).
For you more risky types, there are some investments that may actually do very well during the next crash (gold, silver, bitcoin, ethereum, inverse ETF’s, etc), and these investments may explode in value, making you a nice hunk of cash, or they may not. I have a percentage of my investments in these kinds of vehicles; we’ll see how much money I make when the crash happens and all the normal people are freaking out about losing their jobs and how much money they’ve lost in the stock market.
Just be aware that there’s likely a recession coming around the corner in the next year or two, and signs point it being pretty bad. As always, get to work and start building your financial foundations now, so that you’ll be protected from any and all future recessions that are regular occurrences in our slowly collapsing, corporatist world.
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What do you think is going to happen in Germany specifically?
Are most companies going to stop hiring during this period?
I don’t understand why more people aren’t talking about this. Last time the economy peaked in December of 2007 (http://www.nber.org/cycles/dec2008.pdf), and as you noted the longest period we’ve had between recessions is 10 years. It seems very likely that we will experience the peak in the next 6 months. Personally, I’m cashing out my 401k partly for this reason. And I’m actually excited. I invest in real estate, but the current market makes it hard to get good deals. Once the economy takes a downturn I should be able to pick up some nice properties.
There are many Societal Programming reasons, but at the moment it’s mostly because of misplaced enthusiasm over Trump.
Yes! A significant portion of my investments are in cash. I intend on doing the same thing (though not with real estate).
Recessions are great for those who are prepared.
You know what politicians should do to prevent this? Legalize prostitution. I live in Germany and prostitution moves so much money it is incredible. There are places called partytreffs (the prostitution equivalent of all you can eat buffets), lots of prostitution webpages, lots of brothers, etc. It would give unemployed women a great work oportunity and reduce police spending.
Is there a way to tell when the stock market has reached its “rocket bottom’ point during a recession (i.e., the optimal time to purchase equities)?
Is there a way to tell when the stock market has reached its “rocket bottom” point during a recession (i.e., the optimal time to purchase equities)?
Also what Germany should do is legallize weed. They would make a ton of money from weed tourism just like Holland.
On the other hand, weed kind of lowers your energy, so they have to take that into account too.
Hey Caleb,
Could you let me know which economic and financial resources you consider to be relatively more reliable and helpful, especially the ones you use to predict the economic collapse. For instance, blogs, books, podcasts…you know.
Still in school here, so I’m less than familiar with how real world economics actually work. Well, beyond the standard textbook concepts on macro and micro.
Where would you say is good place to buy precious metals or crypto-currencies?
Do you buy metals physically or do you have bonds which say they owe you that amount of said metal?
If I had an answer to that question, I’d already be a billionaire. My suggestion is to not try to “time” or “play” the market, and either invest for the long term or don’t invest in stocks at all. (I never invest in stocks at all, since I don’t like losing money. That’s unless I’m shorting the entire market, which I am doing, but that’s a speculation, not an investment.)
There’s a hell of a lot but here’s a few off the top of my head:
Jim Rodgers
Peter Schiff
Motley Fool
Investopedia
Jim Rickards
…as well my own research (economic news, money supply, equity in the markets, etc).
There are many others but those are just off the top of my head.
Metals – Local dealers that you trust, and pay them cash. Do not use the internet to purchase precious metals for the purposes of investing, because then there’s a paper trail.
Cryptocurrencies – Anywhere you want; it doesn’t matter where you purchase them unless you want to purchase a lot (thousands of dollars worth).
The actual metals. I don’t invest in things like gold ETF’s since those are mostly related to mining and are thus speculative. I’m talking about metals there, not commodities. On those, ETF’s are fine.
Chaos is a Ladder.
…although the ultimate reality may be irrational, yet man’s relation to it is not. It means that as a sentient being, we are more sensible to identify that life is a tiny corner of casual order in a universe of chaos.
All men are aware of that chaos; but some insulate themselves from it and refuse to face it.
Instead, DO courageous things..
by understanding reality as it is.
Remember, Chaos is a Ladder.
I’m in that category right now, doing what CJ suggested and taking some time off life so that I can develop a way to systematically make location free income. This makes me wonder if it is actual benefit to be close to the poverty line as the US becomes more and more like a poor man’s USSR? I mean the only debt I have is from student loans and I literally just give them whatever they want, since I don’t have much to take (I stockpile my cash and don’t have a savings account that the state can steal from whenever it wants).
I’m just afraid that the US is going to be a cashless society (which it will be by 2030; India already will be by 2020). Cuz if that happens then guess what happens to freedom?
I feel bad for my mom and stepdad since they both are stupidly relying on what’s left of their savings and their retirement benefits. But its like I said if the US becomes a poor man’s USSR, then perhaps they won’t be so bad?
I haven’t ever thought of this stuff until this year started, I feel like a fool for just now learning about it :/
Why is it bad that there is a trail? Or are you talking about if there is a big profit so I dont have to declare it? But then I have to store the metals at my house, which could be ok for silver or gold but what if you want to invest into lithium for example?
Would you also say trading commodities is a good idea, or do you recommend only physical metal storage at ones house + physical cash at home as I understood. This seems quite risky for obvious reasons.
But I guess combined with some of the cash on bank account and some in crypto currencies it spreads out the risks.
Because then the government is either involved or could be involved. You don’t want your government involved in your personal finances (unless you’re forced to by law).
Lithium is not a precious metal, it’s a commodity. As I said above, those are okay to purchase as ETF’s / mutual funds.
1. Only purchase precious metals as the real thing (gold, silver, platinum, etc), not commodities. I’m not going to buy chunks of coal or uranium.
2. You don’t need to store the precious metals in your home. I certainly don’t. There are many other options.
Yes, but I don’t recommend keeping any long-term cash in a bank. Store it in cash form or use a money market fund at a big investment firm (Fidelity, Vanguard, Schwab, etc).
so even a young 20 something with debt and low income has the potential to soften the blow of this so long as the work is put in? just have to get out of debt and generate this alpha 2.0 stream(s) of income.
@Caleb Jones, do you think I’ll be safe in the general financial aspect in the coming crash in America if I’m a doctor. Or will I suffer like the average person in America? Applying to med school next summer. Please explain in your opinion, and recommendations.
P.S. I will have no debt just to clarify that aspect.
Yes, having low debt will actually help you (most likely).
And have some emergency funds saved, yes.
That depends on your lifestyle. If you’re a doctor who lives very simply, has no debt (you say you have no debt NOW, the issue is how much debt you’ll have THEN, after medical school), doesn’t have any kids, etc, then you’ll be fine. Healthcare is the biggest growth industry in the US and doctors are always in demand.
If, on the other hand, you’re the typical doctor (high income but massive debt, huge house, legal marriage, kids, piles of bills, no real wealth), then you’re in trouble almost as much as everyone else.
I’m thinking this coming September or October is going to see some kind of calamity. Could be the NK situation that acts as a catalysts. Either way, if we saw a repeat of the 08 autumn in the markets it wouldn’t shock me in the least.
I have a big chunk of cash right now!
I am going to invest a 10% in cryptos
Do you think I should wait 1-2 year for this recession to buy assets: mainly different ETF´s (like Vanguard´s S&P500) or should I start investing right now?
Regards
Oh man, I’m scrambling to see what investments will do well if the two babies (Tantrum Trump and Kim Jong-un) actually engage in military action with each other. Likely oil, but I’m not sure yet. If the missiles fly I at least want to at least make some money while they’re doing it.
Too general a question. There are many kinds of ETF’s (stocks, bonds, commodities, inverse, etc).
I see the prices of both gold and cryptos seem to continue rising at the moment, albeit slowly.
I dont know much about it btu seems like not the best time to invest, or am I wrong?
In fact looking at prices of oil seems like its really at historic low, probably best to invest there. And I do not think that its likely that it will continue to fall long term, after all, its oil.
For physical storage of precious metals – are you able to give advice on different storage options and their pro / min?
There’s no way to know for sure. I explain my attitude about it here.
Yes, but there’s technology to consider. One of the biggest reasons oil prices have dropped recently is because they invented fracking.
Not here in public. If you’re really interested, join my membership program where we talk about that in great detail.