Wednesday, January 15, 2020

What Will Cause The Next Recession & Economic Collapse ?

The US economy is a fantastic illusion of prosperity built on Debt from years of central bank involvement of depressing interest rates. The stock market advance has been fueled by over a decade of low-interest rates and records corporate debt issuance for share buybacks. The housing market is an illusion, as well. This cannot end well. There will be a reversion to the mean. Student loans, mortgages, credit card debt, car loans, etc. The bills are coming due, and people need to pay it off before they can spend money again. The DEBT is insurmountable. Medicare and Social Security are both bankrupt. This will NOT go over well with the American people. This house of cards created with $23 Trillion in Debt will eventually come down. The core issue is we allowed the political elites to devalue the true meaning of money to the point the global monetary system has turned into a massive Ponzi scheme. Here are a few truths I do know. Gold is money; everything else is credit. That includes the dollar. The US Government deficit was roughly $670 Billion during 2017. It increased to $1.2 Trillion in 2018. In 2019 it was around $1.8 Trillion. This is a trend. And Gold looks like it wants to go higher. It's a Recession if your Neighbor loses their job, it's a Depression if you lose yours, perspective is everything. Prediction? Everything will be fine until it's not! Economists are like weather forecasters. We spend about a third of our time in recessions. Recessions are hard to predict until they're upon you. I don't know the answer. These things are hard to predict. The boom has lasted since 2012, but it doesn't feel so much like a boom because it's recovery from the worst recession since the Great Depression, and I don't see the euphoria that we've seen in previous booms. The US is very late-cycle, and unless there's more policy stimulus into the market, the country looks like its headed toward a recession. Buckle up because the trickle-down debt economy is on Zombie Drive! Welcome to The Atlantis Report. The recession is here already. Everyone is paying more and more for goods and services, while wages are not keeping up with all of this. Instead, we're getting a daily diet of lies concerning the economy from Trump, and the Federal Reserve. In 2008 when the housing market crashed, one day, your house was worth something, and the very next day, it was worth nothing, and before the crash happened, the lying government and Federal Reserve were saying that the economy was booming then too. Don't let Trump and the Federal Reserve pull the wool over your eyes. Remember, Trump has been impeached and has done basically nothing for anyone but himself since he took office in 2016. So stop believing Trump's fairy tales about the economy and the lousy housing market. It's going to crash very soon, and just like every lame-duck president, Trump will continue to make false claims, and false promises, while blaming the Democrats, the Federal Reserve, and anyone who crosses his path. WE ARE IN A BUBBLE ALREADY! The long expansion in the economy, housing, and stock markets, combined with continued low-interest rates, could mean the U.S. is due for a recession. FED created this rigged game, and they have the ability to play this game for another year or so. Recession is always a blessing. Prices are out of control and not good for poor people. So what will most likely cause the next recession in the US? I'd say, Debt. Massive Consumer, Student, and Mortgage debt. Basically, the exact same things that caused the last recession are pretty much in place now. It won't be triggered by interest rates suddenly going up on Adjustable-rate mortgages as much as people making the decision to reduce their Debt. They slow their purchasing, Jobs are cut, and those people lose their purchasing power. Unemployment goes up, and the people who lose their jobs can not find new ones to pay for the over-inflated houses they bought. Recession triggers massive defaults, banks go under, and there you go. Not much has changed. The banks are STILL playing the Derivative game with your deposits. The few safeguards we had in place have been removed by this administration. The market is set for another big fall. There are market signals that show that the fall is about to happen. There is an old story about JP Morgan getting a shoeshine, and his shoeshine boy gave him a stock time… He thought if the shoeshine boy is into stocks, it was time to get out. Here are my concerns about an upcoming recession: The Debt. The $23 trillion debt represents nearly 110% of GDP. This has never happened before. Trump is creating even more significant deficits with each passing year - as he said he would do during the primaries, and, as he noted, then, "We'll just declare bankruptcy and pay off our debts at pennies on the dollar. Unfortunately, roughly half of the outstanding Debt (after what's owed to Social Security and other "intragovernmental agencies) is owed to US citizens who hold it in pension funds, ETFs, mutual funds, and so on. And Trump is raising the Debt every year at a rate exceeding $1 trillion per year. If you assume that Trump has actually created 2 million jobs, each of those jobs has cost us as US citizens, about $500 thousand each. Is that good math? No. The logical outcome of a shrinking economy is that the Debt will balloon as federal revenues decline, and it won't take many years before we default, and it really all will hit the fan. The stock market hit its high in August 1929, then crashed in October. The markets had lost 90% of their value by the time they bottomed in mid-summer, 1932. The markets did not again surpass their August 1929 highs until 1954, 25 years later. We are, I give it a 10% to 25% chance, heading in the same direction "this time."Due to the enormous debt load, we're carrying. There is no way we'll meet our debt obligations going forward while the economy falters, and we stand a very real chance of default, which would make the greenback almost worthless on the global stage, making imported goods skyrocket in price. I don't see a way out of or around this unless we begin to pay down the Debt, and no one has the integrity to lead the nation in the direction of raising taxes and cutting expenses. The US has become the most immature and irresponsible nation among advanced nations of the world. Not a good sign. The country is in a recession because the combination of household debt and student debt is the highest it has ever been. Citing statistics that show that the percentage of monthly income needed to service existing Debt is lower than it has been in years is not representative of the millions of homeowners who lost their homes and will now be chased for the next 10 or 20 years by debt collectors. In the meantime, those who bought the foreclosed homes at much lower prices were almost immediately rewarded with tens of thousands of dollars worth of increasing home values. Home equity line of credit HELOC's have begun to reset; people mislead themselves by thinking their interest rate is only 3% or 4%. The reality is 15 years HELOC reset obligations when a homeowner also has credit card debt with interest rates in the teens and cannot afford to pay both down results in the EFFECTIVE HELOC rate actually being either doubled or tripled since the HELOC reset that is two two-three times higher than the interest. Only HELOC payments mean the credit cards don't get paid down. Now Factor in the two wars over the past 12 years that are costing the US several BILLION DOLLARS A MONTH IN INTEREST RATE CHARGES, and we see there are several brakes that prevent the economy from coming back. On the good side, there are now more jobs in solar energy than there are in coal. Renewable energy is our primary hope for lowering overall energy costs, but until consumers get some type of debt suspension rights for their unsecured debts, there is far too much zombie debt out there that is not being counted that is hurting millions upon millions of people. The recession has already started. People have not yet realized that it has. But the government bond situation is that the interest rates on long term government bonds are less than short term, and there is a huge yearly government borrowing requirement along with low private savings and high private Debt amongst younger people. It means the government will not be able to sell long term bonds as easily since shorter-term bonds pay more the result is only bad for the spending aspirations of congress. Either the government will have to increase taxes, or the external value of the dollar will drop, causing higher import prices. Also, the fact that the US relies heavily on foreign bond sales will mean the reluctance of overseas investors to buy bonds. This upcoming recession was discussed as far back as 2014 from what I remember. It's based on calculations of countless business/political/economic/world events and is pretty accurate. The recession began in 2019 and will begin to ramp up. Expect another housing crash as prices in places like the Bay Area of California are grossly inflated by Chinese buyers and Silicon Valley. Prices are $200k over true value, and this is the peak. Only idiots are buying homes right now, as the value will crash and level out, and you'll be in the hole $90-$200k. This recession will last until 2025. Expect 2022 - 2023 to be the worst of it. Greed is the engine of capitalism, and profit is the transmission of that system. The economic motto of capitalism: • Profit over humanity, Profit over the environment, Profit over safety, Profit over integrity, Profit over anything, and everything. Funny how bailing out huge banks that committed widespread and flagrantly fraudulent actions for years is considered the right thing, but giving welfare benefits to the poor is a scandal. Socialism for the rich, capitalism for the rest. Recessions are very painful for the poorest people." The only thing more painful would be kicking the can down the road for another ten years. People forget that the Black Death was succeeded by the Renaissance, and the Great Depression by an American Golden Age with low inequality and rising wages for working people. In the long-run, economic downturns play an important role in correcting obscene inequality. This was The Atlantis Report. Please Like. Share. And Subscribe. Thank You.

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