The coming crisis

Back in 2013 I wrote some articles about a new financial crisis that are on its way. A crisis that is going to be worse than the global finance crisis we experienced in 2007-2008. Now it looks like it’s very close. It’s hard to time these collapses, but it is coming for sure.

The common beliefs these days is that everything looks great. The American stock market is at an all-time high, Trumps tax cuts are great for the US economy, unemployment is low and it’s not a cloud on the horizon. The same thing every expert told before the last crash. After the crash in 2008 we were told that no one could see the crisis coming. The same people that today are saying that everything is great. But now things are starting to change and no one seems to notice or address it. The dollar is steadily weakening, commodity prices like crude oil, gold etc. is rising, and the US treasury yield is rising. The US are going to struggle with runaway inflation and high interest rates, or the dollar is going to collapse if the central banks is trying to fight rising prices and interest rates. Then the party is going to end. The problems in the US are going to spread to the rest of the world like we experienced in 2008, and this is going to be very bad. I hope I’m wrong, but it seems like at mathematically certainty. The only question is how long it can be pushed into the future. The central banks artificially low interest rates, quantitative easing programs and money printing for so many years, is going to have grave consequences.

Yesterday I read an article in Dagens Næringsliv, a Norwegian finance newspaper, that Wall Street beat a 54-year-old record and that people with money in the bank is going to feel stupid. Statements made by Rai Dalio, founder of world’s largest hedge fund. He is predicting that the US stock market is going up in 2018.

US Treasury secretary Steven Mnuchin told the other day that a weakening dollar was good for the US! This is a statement from the experts running the “show”. The truth of course is that a weakening dollar will put pressure on the inflation. It’s already happening, commodity prices is rising, oil is now at 70 USD and the consumption of imported goods are getting more expensive. How can that be good for the economy when you have huge trade deficits? Everything is getting more expensive. Still the stock market is rising and the prediction from the experts is to put money in the rising stock market. The same experts predicted that the price of oil would be at 30-40 USD for a unforeseeable future.

What we are seeing today, is probably a result of “normality bias”. Humans have a strong tendency to believe that nothing going to change, and it’s extremely hard to see disasters that are coming. It’s hard to convince people that they are driving towards a cliff, because they are going to say that “you have been waring about this the last 10 minutes, and nothing has happened”. Car runs great and everything is normal.

“Two things are infinite: the universe and human stupidity; and I’m not sure about the universe”
– Albert Einstein

Update 31/1-2018

In Davos Trump claimed that the US experience strong economic growth after several stagnant years. But really? During the last 4 years the GDP averaged to 2,2%, and in 2017 it was 2,3%! This Trump calls “roaring back strong economy”? And now the US is facing rising oil prices, falling dollar, increased interest rates, huge budget deficits etc. If one look at the government debt and the interest rate alone, an increase to 6,2% like it was in 2000, only the interest payments would triple to 1.3 trillion USD.

Trump also claims that America is getting its lost wealth back through trade. How can this be when the trade deficit is record high?

Kelly Anne Conway said that the US is enjoying unparalleled prosperity!

There is a huge gap now between reality and common beliefs. It’s hard to understand how this can be and that practically everyone is of the same opinion, especially main stream media.

“During times of universal deceit, telling the truth becomes a revolutionary act.”