The next stop in the coronavirus cascading crisis tour …

If you’re tired of hearing about the COVID-19 coronavirus crisis … get over it.

We’re on the front end of a series of cascading crises that will likely affect every investor on the planet … including YOU.

Pretending it’s not happening … or blindly trusting the great and powerful wizards behind the curtains … or pulling the covers over your head and hoping for the best …

… will NOT make any of it go away.

Of course, HOW it affects you could depend on how well you pay attention, understand what’s happening, and take effective action.

There will be WINNERS … and LOSERS.

We’re far from experts, but we’re fortunate to have access to some of the smartest folks on the planet. And they’re ALL monitoring the crisis VERY closely. Seems like a good idea.

As you may know, we’re organizing an EPIC mega-webinar featuring discussions with MANY of our big brained friends to find out what they’re seeing, thinking, and doing.

We realize you’re being bombarded with information … we all are … so rather than just pile more on, let’s focus on creating some context to process all the info better.

It’s important to think about how the crisis is likely to spread …

What started out as a health crisis quickly mutated into an economic crisis as cities, states and nations worldwide virtually shut down in unison.

These lock-downs have suppressed both the supply and demand for all kinds of good and services.

Because the decreases in production and demand aren’t perfectly synced, there have been both shortages (toilet paper) and gluts (oil) … the effects of which range from inconvenient to devastating (no toilet paper?!?).

But that’s just the beginning …

Lock-downs stop revenue, profits and paychecks … which stops debt service.

This is where the economic crisis mutates into a financial system crisis. 

But unlike toilet paper and oil, the signs of stress in the financial system are harder to see. That’s why financial system failures blind-side many Main Streeters.

Yet there are many clues in the news IF you know what to watch for.

It starts with obvious headlines …

Coronavirus-caused spike of homeowners in forbearance surges on
– Fox Business via Yahoo Finance, 5/4/20

Of course, this surprises no one.

When people don’t have jobs and incomes, they can’t make mortgage payments. For those old enough, this elicits flashbacks to 2008.

Except now, it’s not just mortgages. It’s corporate debtconsumer debtmunicipal debt, public and private pensions, and much more.

Basically, virtually all IOU’s everywhere are in danger of going bad.

This is counter-party risk … when your asset is someone else’s liability … if they fail to perform, your asset loses some or all of its value.

Even your bank account (your asset) is your bank’s liability (they owe you). If the bank fails and you have more than the insured amount, YOU could have a problem.

Counter-party risk is EVERYWHERE in today’s debt-based system.

Yet while bad debt is one level of awful, it gets worse when gamblers in the Wall Street casinos use derivatives to magnify their gains.

Of course, the extreme leverage created through derivatives cuts TWO ways.

Sure, extreme leverage turns tiny gains into massive profits … but it can also turn bad bets into a systemic crisis.

We’ve gotten into the weeds of how all that works in the past, so we won’t rehash it now.

But the first clue in the news indicating stress in the financial system is when asset prices are falling and cash is running low …

… as everyone is madly selling everything and the kitchen sink to raise cash to cover margin calls on their bad bets.

Of course, that’s also when quality assets get caught in the downdraft, so if you’re aware and prepared (i.e., liquid), you can step in and snap up bargains.

Which leads to another clue in the news … savvy investors sitting on huge war chests of cash.

According to a recent Bloomberg article …

“assets in money-market funds have soared to a record $4.77 trillion amid a flight to safety by investors this year.”

Business Insider reports Warren Buffet’s Berkshire Hathaway has a record $137 billion cash pile.

Yet as Buffet explains …

“Berkshire’s cash pile isn’t overkill given the cataclysmic risks posed by the coronavirus pandemic.”

(Buffet is the same guy who called derivatives “weapons of mass financial destruction.“)

Now, with all these demands for cash, it isn’t surprising to see headlines hinting that there’s not enough to go around.

Interestingly, as you may recall, the current cash crunch didn’t grow out of the coronavirus crisis. It preceded it.

We noticed this back in September when the Federal Reserve started pumping billions of dollars per day into the repo market.

(The repo market is like a pawn shop for banks to hock T-Bills for dollars.)

Since then, the Fed has injected trillions of dollars directly and through Uncle Sam … driving interest rates down to zero … and perhaps negative …

… and stepping in to buy debt no one else can or will, including U.S. Treasuries, and now for the first time ever, corporate debt.

This is very similar to how the Fed put in a bottom to the free-falling mortgage-backed securities market back in 2008 … except WAY bigger.

All this suggests the financial system could be far more stressed than the wizards behind the curtain let on.

Which brings us to the final stop in our progression of dominoes from health crisis to economic crisis to financial crisis …

… a dollar crisis.

As we’ve been pointing out, the financial bondo the Fed is slathering all over the dents in the economy and financial system are dollars.

ALL the pressure is on the dollar, which should concern EVERYONE who earns, owes, spends, and denominates wealth in dollars.

The coronavirus health scare alerted the American politicians and public to a sick dependency on China for critical supplies like masks and medicines.

Naturally, Americans are uncomfortable with this dependency and lawmakers are preparing bills to bring the medical supply chain back to the USA.

Of course, as real estate investors, this interests us because it could mean the creation of new jobs in whatever regions land these factories.

But our point today is that just as Americans realize they don’t want to depend on an adversary for something as critical as life-saving medicines …

… Chinese (and Russians and others) similarly don’t want to depend on the U.S. for something as essential to commerce and prosperity as currency.

So as we first pointed out way back in 2013 in our Real Asset Investing Report, and later updated in our Future of Money and Wealth presentation, The Dollar Under Attack …

… the calls continue for a global alternative to the U.S. dollar as the world’s reserve currency.

And with the Fed conjuring trillions of new dollars out of thin air to prop up sagging asset prices, hold together collapsing credit markets, backstop virtually all insolvent corporations, states, plus the federal government, and suppress interest rates …

… the final stop on this cascading coronavirus crisis tour could be a dollar crisis.

So don’t get tired or bored of watching a slow-motion train wreck. Slow means you have time to get out of the way.

If you’ve been asleep up until now, it’s time to wake up. Because things are picking up speed.

Are you aware and prepared? Stay tuned …

Coronavirus could be coming to Main Street …

By now you’ve probably heard about the coronavirus. It’s big news and appears to be getting bigger … and there are MANY angles on the story.

Of course, we’re just The Real Estate Guys™ … not the virus guys … so we’re not qualified to have an opinion on the health risks or odds of a global pandemic.

But whether the coronavirus is truly an existential threat to all humanity … or just another run-of-the-mill frightening event that fades into obscurity …

… it’s certainly creating some economic upheavals all investors (even real estate investors) should be paying attention to.

And as long as we all survive long-term, the coronavirus crisis is raising notable concerns and creating short-term opportunities.

To be clear, we’re not making light of it … or suggesting that economic consequences are the most important aspect of the coronavirus story.

But since we don’t have the expertise or ability to change what’s happening or to advise on how to avoid the health risks … we’ll just focus on the investing considerations.

It’s safe to say the coronavirus could be the proverbial “Black Swan financial pundits constantly obsess about.

No one saw it coming, and then … BOOM! It’s here. And it’s already having a profound effect on stocks, bonds, currencies, and commodities.

Of course, the big question is … what does the coronavirus mean to real estate investors?

In the short term, it creates an opportunity …

As freaked out paper asset investors jump into safe havens, lots are ending up in U.S. Treasuries.

This is bidding bond prices UP, driving bond yields DOWN …meaning interest rates are falling.

This pulls mortgage rates down and provides real estate investors with an opportunity to restructure existing debt and take on new debt

… and lock in those low rates for the long term.

Meanwhile, some safety seekers are piling into gold … and we think there’s two parts to that story … maybe three.

First, gold is the ultimate safe haven because there’s no counter-party risk (assuming you take physical possession) and you avoid specific currency risk.

In other words, you can store wealth in gold, and later convert it into ANY currency … not just the one you bought it with.

American brains often tilt here … because they only think in dollar terms. But the rest of the world doesn’t.

Sure, the U.S. dollar is still considered the “safest” currency … but as we explain in our Future of Money and Wealth video, “The Dollar Under Attack” … there are reasons to be careful of the dollar long term.

And enough investors in the world appear to agree … and they’re bidding up the price of gold in their flight to safety. That says something about the dollar.

But the BIG coronavirus story isn’t falling interest rates, spiking gold prices, or crashing stock markets …

As is often the case, investors and mainstream financial media pundits fixate (and trade) the symptoms … sometimes missing the real problem.

There’s a YUGE difference between a booming economy and a strong financial system.

During this U.S. election cycle, you’re likely to hear about the “booming economy” … and it’s true.

But even more importantly, it’s NECESSARY … and that’s the concern.

A global economic slowdown isn’t just inconvenient … it’s systemically dangerous on an epic scale.

This is what our big-brained friends help us understand and navigate.

The world is piled nose-high in debt … most of it at very low interest rates. And yet, it’s barely being serviced.

There are many tapped out “zombie” businesses who don’t even earn enough profit to pay their interest … which means their debt is a slow-growing cancer.

A spike in interest rates or a decrease in prices or economic velocity accelerates their demise … but that’s just the beginning.

Besides the obvious ripple effect of job losses through communities and supply chains … some of which would affect Main Street real estate investors …

… the potentially bigger problem is the ripple effect through financial system balance sheets which are holding bonds as ASSETS … assets they’ve borrowed against.

This is EXACTLY what happened in 2008 with sub-prime mortgage bonds.

It wasn’t the direct losses from a relatively small number of sub-prime defaults that imploded the system. It was the contagion because those modest losses were magnified by leverage.

But unlike real estate, when the collateral (the sub-prime bonds) declined in value …

… Wall Street loans come with cash calls when the “margin” between loan and collateral value shrinks too much.

Margin calls exploded throughout the system … forcing everyone to sell everything to raise cash. This crashed prices, triggering more margin calls …

… creating a vicious downward cycle until the bottom fell out.

So the Fed (and other central banks) stepped in with MASSIVE amounts of “quantitative easing” to put in a bottom and stop the free fall.

They printed trillions and bought the “toxic assets” no one else wanted. And as we now know, they’ve been unable to withdraw the patch.

After 10 years, the Fed tried to “shrink their balance sheet” and “normalize interest rates” (i.e., stop propping things up) …

… and they failed miserably on both counts. In fact, they recently had to take emergency action to blow it all back up.

So there’s a LOT of air in the financial system right now … all propped up by record levels of debt … which can only be serviced by a “booming economy”.

And that booming economy keeps the frailty of the system off many commentators’ radar … while “alarmists” like Robert Kiyosaki and Peter Schiff don’t get much media time to warn people.

That’s the way it was in 2008 … and that’s the way it is now.

The setup is the same as 2008 … just bigger. WAY bigger. And it’s all rooted in gobs of global debt …

China has taken on enormous debt to fund its phenomenal growth the over last two decades.

The coronavirus could push China into even greater debt … not to grow … but just to prop things up as their economy slows.

Corporations took on records levels of debt to fund stock buybacks over the last decade. Of course, this helped boost stock prices, but is it reliable wealth?

Households are also carrying record levels of debt … probably feeling rich because of high home and stock equity on their balance sheets.

Sure, inflated assets can make people feel rich … boosting consumer confidence … but how stable is it?

Equity is awesome … but it’s fickle. The coronavirus is writing a reality check for stock investors right now.

Meanwhile, the coronavirus is shutting down factories … even entire cities … which MASSIVELY slows economic activity … with global ramifications.

It’s like if you had a gigantic credit card with triple your annual incomes in consumer debt …

… but are barely able to make the payments working 60- or 80-hour weeks … and then your hours are cut.

Now instead of just getting by … you’re being swallowed by the debt.

Except it’s not just you … or a single corporation … or a few thousand sub-prime homeowners … or even a tiny country with a small global economic footprint.

It’s the ENTIRE globe … and it’s emanating from the second largest economy on the planet.

It’s hard for China to be the manufacturing engine of the world with closed factories and entire cities quarantined.

That means they use less energy, buy less commodities, export less products … which means shippers have less to ship, retailers have less to sell, and on and on.

ALL those businesses and employees in the chain … many of which are loaded with debt … take a big pay cut … putting all that debt in danger of default.

To “save” it all, central banks will need to print like crazy … and gold prices tell us smart investors are concerned about that.

Gold is at record highs against EVERY currency in the world … except the U.S. dollar (yet).

Ironically, the financial contagion has the potential to spread FAR faster than the coronavirus itself.

YIKES.

Okay, take a deep breath. It’s not Armageddon.

But as you might guess, a scary place to be is in investments that are front-line to fragile financial markets.

That’s probably why alert investors are exiting into safer havens.

Well-structured real estate investors are likely to fare better than most paper asset investors … because real estate’s fundamental model is far more stable.

Think about it …

Do you see any headlines that say, “Rents are crashing as coronavirus spreads” or “Tenants break leases to escape coronavirus”?

We don’t.

So while paper asset investors are watching their 401k wealth go up and down like a roller coaster …

… real estate investors are quietly endorsing rent checks.

But it’s not just the cash flow of real estate that makes real estate stable …

It’s the priority in people’s lives to make those rent payments … and the ownership of a physical, tangible asset that doesn’t disappear in crisis.

Yes, if the coronavirus destroys humanity, demand for rental property will implode. But that will be the least of your worries.

And if the financial system implodes … as bad as that sounds … it will be bumpy for awhile … but a new system will be put in place.

So as long as you’re structured to weather the storm 

… with competitive rents and great customer service in markets with solid infrastructure and fundamentals …

… and stable underlying financing with enough cash flow cushion to absorb temporary softness 

… you might not get richer on your current holdings, but you can probably ride out the storm.

Of course, if you’re properly prepared, you’ll be in position to go bargain shopping in such a storm … which is exactly what Ken McElroy did in 2009-2012.

The world is volatile. Real estate is relatively stable compared to most other investments. But you still need to see the big picture and think ahead.

That’s why we hang out with people like Robert Kiyosaki, Peter Schiff, Ken McElroy, Brien Lundin, and other super-smart people.

After all, it only takes one good idea or heads up to make or save you a LOT of money when things get crazy. And you never know what that’s going to happen.

Until next time … good investing!

 

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The horrible housing blunder …

If you sometimes feel like a small fish in a very big ocean … it’s because you are.

There are LOTS of big, bigger, bigger-still, and downright ginormous other fish … some with very sharp teeth … circling all around you.

There are also mostly hidden forces creating powerful currents and waves … speeding you up, slowing you down, or taking you completely off course.

That’s why we look for clues in the news.

And because mainstream financial media doesn’t cater to Main Street real estate investors, we need to stay alert to notice things often hiding in plain sight.

In a recent trek through an airport on our way to speak at an investment conference … a notable magazine cover hit us in the face like a brick …

The Horrible Housing Blunder
Why the Obsession with Home Ownership is So Harmful
The Economist Jan 18-24, 2020

If you’re not familiar, The Economist is one of those highbrow publications ginormous fish and wave-makers are reading.

The Economist articles provide insights into how powerful people think about small fish like us and the things we care about … like housing.

In The Economist table of contents, the housing blunder topic is introduced this way …

“The West’s obsession with home ownership undermines growth, fairness and public faith in capitalism.

“Housing is the world’s biggest investment class … at the root of many of the rich world’s social and economic problems.

Wow. We didn’t know home ownership is so harmful to our fellow man. We’re ashamed.

But before we dig in, take a minute and simply consider their conclusion …

…and what happens to YOU if powerful people decide to implement policies to protect the world from the evils of housing.

Now you know why we pay attention.

So, on page 9 of The Economist, under their “Leaders” section (think about THAT) …

… they assert housing markets CAUSE both sudden economic crashes AND chronic economic “disease”.

Then they support their conclusion by claiming “a trillion dollars of dud mortgages blew up the financial system in 2007-08”.

Maybe you’ve heard that one before.

Of course, they make no mention of the trillions of dollars of Wall Street concocted derivatives of those dud mortgages …

(Warren Buffett called derivatives “weapons of mass financial destruction” … NOT the mortgages underneath them)

They also don’t account for the dangerously weak lending “standards” (we use the term loosely) Wall Street used to entice weak borrowers.

Nor do they mention the reckless, speculative and highly leveraged bets placed using those mortgage derivatives by arrogant gamblers in the corrupt Wall Street casinos.

Of course, the greed behind all of it is simply a “derivative” of the moral hazard created when everyone in the market KNOWS the Federal Reserve will paper over any problem with freshly printed “money”.

Back to The Economist special report on the horrible housing blunder …

Besides the terror of housing threatening the entire financial systemThe Economist says …

“… just as pernicious is the creeping dysfunction … housing created …” which they define as …

“… vibrant cities without space to grow; aging homeowners sitting in half-empty houses …

… and a generation of young people who cannot easily afford to rent or buy and think capitalism has let them down.”

So it seems cities which selfishly vote to preserve green space for themselves, their families, and the environment are … financial terrorists.

As are old folks who have the gall to stay in the homes they raised their children in … long after the children have successfully (and presumably permanently) moved out.

And speaking of all those independent young people … apparently because of these selfish homeowners, they can’t “easily” afford to put a roof over their head.

Of course, there’s no mention of the terror created through government sponsored student debt which both inflated the cost of college and enslaved a generation into inescapable debt …

… making home ownership … or even renting … far from “easy”.

Ummm … sorry, but how is that housing’s fault?

And what do the social scientists at The Economist suggest is the answer to the horrible housing blunder?

For that we need to flip over to page 44 where we discover that …

“Over the last 70 years, global house prices have quadrupled in real terms.”

For those keeping score, 70 years ago was 1950. Store that for future reference.

“Real terms” means adjusting both incomes and prices for inflation. In other words, prices rose four times faster than incomes.

The solution to all these ills is threefold says the author …

First, is “… better regulation of housing finance …” so that “… people are NOT encouraged to funnel capital into the housing market.”

Yes, every business person knows when you need MORE of something you should starve it of capital. Brilliant.

Next is … wait for it … a better train and road network” to “allow more people to live farther afield.” …

… because who doesn’t enjoy riding public transportation 100 miles a day to go to work?

And last but not least, our personal favorite …

“… abolishing single-family-home zoning, which prevents densification …” and “…boosting the construction of public housing.”

Makes sense (not) because clearly, the only thing better than riding public transportation to and from work for hours a day is coming home to relax in “the projects”.

Of course, as you’ve probably discerned, we think the whole thing is absurd.

But while it’s laughable, it’s also scary … because this is the way those ginormous fish think.

Worse, they’ve assigned the symptom (high housing prices and stagnant real wages) to the wrong disease … so they’re prescribing the wrong medicine.

Housing prices took off in the ‘50s because Bretton-Woods handed the U.S., and then in 1971, the entire world, a completely unaccountable ability to go into unlimited debt.

Worse, it requires the perpetual, unrelenting growth of debt … or the system collapses.

So the wizards must continually find new ways to fabricate affordable debt 

… through mortgages, student loans, government spending, endless wars, or (insert boondoggle of your choice) …

… plus, 40 years of falling interest rates … to zero and beyond!

It would take so much more space than this modest muse permits to delve deeper into the mindset, motives, and methods of the wizards behind the curtain …

… and to explore the MANY opportunities for Main Street investors who are aware and prepared.

For now, we simply encourage you to PAY ATTENTION and THINK. And look for every opportunity to talk with others who are doing the same.

Way back in January 1988, the cover of The Economist boldly warned the world to “Get Ready for a World Currency”.

As we chronicle in our Future of Money and Wealth video, The Dollar Under Attack, and is easily seen through MANY headlines since …

… the dollar’s role as currency of the world is steadily being attacked RIGHT NOW by both friendfoe, and technology.

Here in January 2020, The Economist is overtly prodding the world to take on the threat of housing …

“Bold action is needed. Until it is taken, housing will continue to weaken the foundations of the modern world.”

This hits us all right where we live and invest. We should all be paying attention.

The world has gone MAD …

In case you haven’t noticed, there’s a LOT going on in the world as we sail into a brand new investing decade …

In addition to wars and rumors of wars, a growing number of notable people are publicly expressing concerns …

… not just about the economy and financial markets, but the system itself.

Perhaps the most notable is Ray Dalio of Bridgewater Associates, the largest hedge fund in the world.

In a recent article, Dalio warns …

“The World has Gone Mad and the System is Broken”

Dalio’s essential thesis is the system of free money has created a series of negative trends that will eventually converge into a fundamental and epic re-set.

“This set of circumstances is unsustainable and certainly can no longer be pushed as it has been pushed since 2008. That is why I believe that the world is approaching a big paradigm shift.”

Of course, just because he’s successful doesn’t mean he’s right. But Dalio is certainly well-qualified to have an opinion worth paying attention to.

But as we’ve learned from studying smart people, understanding what they’re saying takes some time and effort.

We think it’s worth it. Because any “big paradigm shift” involving the financial system affects EVERYONE … including lowly Main Street real estate investors.

If you’re new to this discussion, consider making a modest investment of time and money to watch our Future of Money and Wealth presentation, “The Dollar Under Attack”. It’s helped a lot of real estate investors see a bigger picture.

It’s important to understand the difference between the “economy” (activity) and the “system” (the structure supporting the activity … including currency, banks, credit, and bond markets).

Remember, the economy was humming along leading into 2008 … booming, in fact. But the system was faulty under the hood, and ultimately broke down.

Just like a car, the economy can go faster or slower … but only while it’s mechanically sound.

If the vehicle’s systems fail, then the car is incapable of speed … and may not even run at all.

Then, when the car breaks down, your skill as a driver is meaningless, except perhaps for avoiding catastrophe when it happens.

In all cases, you end up on the side of the road going nowhere.

The same is true with the financial system and your skill as an investor. If the financial system fails, it can sideline a lot of people … including you.

Of course, the financial system, like a car, has gauges … indicators of performance, health, or impending failure.

But not all gauges are easily seen. And reading them requires education.

That’s why we hang out with smart people like Chris Martenson, Peter Schiff, Brien Lundin. G. Edward Griffin, and Robert Kiyosaki.

Even better, each of these guys are connected to lots of other smart people like Danielle DiMartino Booth, Mike Maloney, Grant Williams … and many more.

You may not yet be familiar with some of these names. Except for Kiyosaki, none of them are serious real estate investors … and that’s GOOD.

As we learned (the hard way) in 2008, when you live in an echo chamber of people who all hope … even need … the economy and financial system to be functional …

… there’s a tendency to ignore or discount even the most obvious problems.

As Upton Sinclair said …

“It is difficult to get a man to understand something when his salary depends on his not understanding it.”

There were warning signs leading up to 2008. Peter Schiff and Robert Kiyosaki both saw them and publicly warned people. Very few listened.

Unsurprisingly, both Schiff and Kiyosaki stopped getting invited on to mainstream financial shows. Wall Street’s not likely to advertise on programs outing a failing system.

And people making millions in the mortgage business weren’t interested in hearing how the mortgage markets were about to implode. Ditto for real estate, stocks, and bonds.

However, smart investors are wise to look beyond their own normalcy bias and the filtered news which is produced by people whose livelihood depends on a rosy narrative.

Risks are ever-present … and the worst are those you don’t see coming.

But before you go full fetal freak out, we’re NOT saying the end of the world is nigh. After all …

“A bend in the road isn’t the end of the road … unless you fail to make the turn.”
Helen Keller

But if Dalio and others are correct, then there’s more than a reasonable probability of substantial changes to the financial environment we’re all operating in … then it’s worth preparing for.

After all, it’s better to be prepared and not have a crisis, then have a crisis and not be prepared.

Remember … ignoring risk isn’t optimism, it’s foolishness.

Legendary real estate investor Sam Zell says one of his greatest assets is the ability to see risk and move forward. You can’t navigate a hazard you don’t see.

So what are some things our smart friends are watching heading into 2020?

Gold, oil, debt, the Fed’s balance sheet, bonds, and interest rates.

These are like the dashboard gauges for the health of the financial system.

Right now, at least three are blinking red … gold, debt and the Fed’s balance sheet.

It’s also important to note that those three are also leading indicators for bonds and interest rates.

That’s because if the world loses faith in the dollar, they won’t buy U.S. debt, which is growing at a staggering rate.

In spite of all their bickering, Congress and the White House manage to agree to big time spending.

And if the world loses its appetite for U.S. debt, then either interest rates rise (something which directly affects nearly all real estate investors) …

… or the Fed needs to buy up the new debt with freshly printed money. This is called “monetizing the debt” … and would show up on the Fed’s balance sheet.

Some say this “monetization” could lead to hyper-inflation. Others think it means the U.S. could go into decades-long stagnation like Japan.

Maybe.

The difference is Japan doesn’t issue the world’s reserve currency and enjoys a friendly relationship with the country that does (the United States).

So we’d say the United States situation isn’t exactly the same as Japan. But what do we know? We’re just two dudes with microphones.

Maybe there are clues in the news …

The world’s super-rich are hoarding physical gold
Yahoo Finance, 12/10/19

Hmmmm … it seems the “fear” trade … those looking to park wealth someplace “safe” are choosing gold … in addition to, or instead of U.S. Treasuries.

If instead of Treasuries, you’d expect interest rates to rise as bond prices fall due to less bidding.

But while there’s currently only a little upward pressure on rates, it’s not much … so someone must be buying them. Chris Martenson says it’s the Fed.

In other words, the Fed might be starting to monetize the debt.

So it’s notable the “super-rich” are following the lead of the world’s central banks in acquiring gold. No surprise, as of this writing, that gold is trading at a 7-year high.

In other words, if Chris Martenson is right, everyone (except the Fed) would rather own gold than U.S. debt denominated in U.S. dollars.

But we know Uncle Sam can’t default. The US can print an unlimited number of dollars. So no one is avoiding Treasuries because they don’t think they’ll get paid back.

The concern must be the value of what they’ll get paid back with … the dollar.

Think about your paradigm of wealth. Do you denominate wealth in U.S. dollars? Are you ready for a “big paradigm shift”?

Buckle up.

The new decade should be an exciting ride … scary and dangerous for those not strapped in with the right education, information, portfolio structure, and tribe.

Education, preparation, and tribe have never been more important. If you’re not seriously investing in those things, perhaps now is the time to start.

Meanwhile, we’re bullish on Main Street.

We think real people who do real work and own real assets will fare much better than those counting on paper promises from Wall Street, bankers, politicians, and pensions.

If you’re a fan of real estate and other real assets, you’re already on the right track. Now it’s time to take it to the next level.