The U.S. Economy is on a tear – just one month away from being the longest running bull market in U.S. history. This bull run is longer than any in U.S. history with the exception of the 1990 to 2000 bull run which was one month longer. Records are made to be broken and to be honest, the careful work over the past ten years building a sustainable recovery from the ashes of the 2008 market crash has been yielding results – so why shouldn’t this break the record?
One reason. President Dumbfuck. He came into office with everything moving in the right direction. All he had to do to keep the economy going was maintain the economic policies of his predecessor or at worst just let things truck along. The economy was on auto-pilot and would have carried him through his term. Unfortunately, dismantling the other policies of his predecessor was not enough. It seems that he is being directed to actively sabotage the U.S. economy through maligning American juggernaut companies, creating a tariff war with largest lender, creating diplomatic rifts with our largest import and export partners, and most recently by encouraging a currency war.
So, as the U.S. economy gets bigger and bigger – the fundamentals that it is built on are becoming skinnier and skinnier. Think of it as a rapidly growing bearcub climging ever higher on a tree. The higher it goes, the bigger it gets, and the smaller the girth and holding capacity of the tree becomes. So, essentially, we’ve got a bloated bear on a skinny and increasingly brittle trunk. Let’s look at some of the fundamentals.
Inverted Yield Curve
Currently we are sitting on a yield curve where yields on long term bonds are close to dropping lower than yields on short term bonds – what this means is that institutional investors have lost faith in the strength of the economy. This is a reliable indicator of a coming recession and we are almost in the zone where certainty on that is 100%. Think of it this way – the number of people betting on the short term future is much higher than the number betting on the long term future. We are the closest to the point we reached in the last recession that we’ve been since…the last recession
It’s not just you and me that are getting record numbers of offers for loans, financing, new credit cards etc. It’s also big companies and while everyone loves to talk about the amount of cash in corporate coffers, there should also be balanced with that. There are record amounts of debt which means that hoarded cash is already spoken for. In addition, the U.S. government is at record levels of debt and spending. Turns out draining the swamp was a lie, go figure.
Notice how much an apple costs? It’s not because apples became more rare. It’s because the dollar doesn’t buy as much as it used to and this is happening very rapidly. It’s not just you- it’s everyone and everything and that includes the cost of doing business. It means that companies have to make more to earn the same amount…and so do you. And, it’s not sustainable. Just as Zimbabwe or Venezuela.
Trade War and Currency War
Now, what happens when you put tariffs on cheap products? They become more expensive right? So the cost of business goes up and inflation rises. What happens when you devalue your currency? Well, it means that inflation is accelerated and it costs more to do business and go about daily life, right? So, your money is worth less and goods cost more. Pulling both ends against the middle. And what happens when you do that far enough? The same thing that happens when you put a bloated bear on an ever more brittle and thin twig – it snaps.
Economists are looking for gradual signs of an economic collapse, but it’s my opinion that this time (even more so than last time) they are not going to get it. If you are looking for the warning signs that a collapse is imminent or for someone to call out that it’s about to happen – then here you are. This is it. We are on the edge. All it is going to take is one event – a terrorist attack, a bank failure, a disaster. The only thing that might possibly save us is the Obama-Era policy of raising the Federal Reserve lending rates. The reason is because if the rates are raised enough, then the Fed has the most powerful tool available to encourage more lending, more spending, and less panic. President Dumbfuck is now calling for this policy to be reversed and criticising it – even though it his his appointee, Jerome Powell, who is continuing it. This can end up being a disaster.
What can you do? Buy Bitcoin. Seriously. That’s all you can do.