2018 will be a year of major volatility in many markets. Stocks are now in a melt-up phase and before the major bear markets start in virtually all countries around the world, we are likely to see the final exhaustion moves which could be substantial. The year will also be marked by inflation increasing a lot faster than expected. This will include higher interest rates, much higher commodity prices, like food and oil as well as a falling dollar. And many base metals will strengthen. Precious metals finished the 2-3 year correction (depending on the base Currency) in 2015 and are now resuming the move to new highs and eventually a lot higher. More on this later.
For a century, a reckless elite has controlled the system for their own personal gain and thus accumulated massive wealth. Ordinary people have been totally cheated into believing that they have benefitted by having all the material things that most of them can't afford – be it a house, car, computer or iPhone. All on credit of course.
Whilst the elite owns most of the assets, ordinary people own the debt. Not just their own debt but also the public debt burden which irresponsible governments have built up including unfunded liabilities like pension and medical care. And when the financial system fails, ordinary people will suffer the most.
THE $2 QUADRILLION SISYPHEAN TASK
We have seen a century of debt buildup from virtually zero to $240 trillion. Global debt has doubled since the beginning of the Great Financial Crisis in 2006. This has led to asset bubbles and overvaluations never seen before in history. If unfunded liabilities and derivatives are included, the total burden amounts to $2 Quadrillion.
That is the enormous Sisyphean task that the world will have to struggle with in coming years. Although central banks and the elite seem clueless, they can clearly not be unaware of the gigantic size of the problem.
We know that these liabilities can never be settled. What happened in 2006-9 was only a rehearsal. In the last minute central banks orchestrated a massive rescue programme which included interest rate reduction, money printing, guarantees, liquidity injections plus allowing banks to value toxic debt at maturity instead of market. These measures temporarily postponed the inevitable collapse. They are unlikely to work next time but since the central banks have few other options left, they will try the same things again. But this next time they will fail.
CRYPTO$ – CRYPTO€ – CRYTPO£
In my mid December article I discussed a new Phoenix world currency based on cryptocurrency technology and the likelihood of governments introducing such a system. This would have the benefit of fudging the fact that fiat money is worthless. The new "money", based on crypto technology, would have a fake value which would make it hard to relate to the "old" currency. The same happened when the Euro was created. Also, just like existing cryptos, the value would be inflated massively through manipulation as well as by demand from a gullible public. Governments would use this new office cryptocurrency to divert attention from the insoluble global debt problem.