This is a critical update from one of the best financial commentators I know, a good friend of ours, Mr. Lior Gantz of WealthResearchGroup.com and we’re excited to share this one with you!
The next recession will be different than any of the other ones that have been inflicted upon the world in the past 100 years. I want to drive home a point today that might be controversial, but I owe you the truth at all costs – 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. 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 and their administrations in exchange for ZERO INTEREST, and now, a guaranteed loss of capital.
We live in a world of immensely high debt levels, mostly held with governments. If politicians and policy-makers aren’t able to navigate these waters wisely, 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 and COORDINATE action.
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, that has hurt the average American in a clear and significant manner.
Trump knows and we know that his actions have resulted in a global trading 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 capital.
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 trip.
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The responsibility and the engineering 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 uncertain, plain and simple. From the president down to the layman, no one feels that there’s a visible and determined path and direction forward.
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 do 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 prosperous.
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