Anyone
who’s ever played a pinball machine can attest to the fact that the player
easily becomes wrapped up in it, to the point of the exclusion of all else
happening around him. He hits the flippers rapidly, glancing up from time to
time at his increasing score. It becomes irresistible to jiggle the table
frequently, in an effort to get the ball to go where the player wants it to go.
And, of
course, every player is familiar with the disappointment that comes when he’s
overplayed his body English and the machine stops suddenly, lighting up a sign
that says, “Tilt! Game Over.”
Much of
the world is now embroiled in an economic game similar to pinball. The stakes
are becoming ever greater, the flipper buttons are being pressed ever faster,
and those who are desperately attempting to keep the collapsing system going
are shoving the table ever more recklessly.
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At this
point in the world economy, the number of possible triggers that could take the
system down is growing ever more rapidly. And, for those who are paying
attention, the list of dominoes that we’ll see fall is becoming ever more
starkly apparent. Let’s have a look at just some of the more basic dominoes:
- Creditor
countries dumping US Treasuries back into the US market. (This has already
begun and will continue until the dollar crashes.)
- Cessation
of the US dollar as the petrodollar. (This is about to begin, but will
take several years to play out fully.)
- Economic
sanctions by the US against Russia and China (that are unlikely to have
the support of the US’s allies).
- Implementation
of tariffs, resulting in a tariff war.
- A
rise in interest rates (as was consciously created in 1929 by the Fed in
order to trigger a timed crash).
- Bursting
of the bond market bubble.
- A
major stock market crash.
- Dramatic
increase in mortgage defaults.
- A
spike in commodity prices, coinciding with a drop in asset values
(inflation and deflation at the same time—the worst possible combination).
- Collapse
of the paper gold market.
- A
switch to the new IMF cryptocurrency and a major effort to end the use of
cash. (This will succeed to some extent, but will create a worldwide
monetary black market.)
- US
defaults on its debt. (This, too, will occur over several years.)
- Collapse
of the dollar.
Many of
these events will be black swans. As can be expected, some of the events will
be sudden, whilst others will take time to play out. In addition, although
they’re likely to occur roughly in order, several will be in play at any given
time.
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Although
each of these events can be anticipated, they won’t come with warning notices.
Their actual occurrences will be unheralded. (As an example, when a stock
market crash occurs, investors will wake up to discover that it’s occurred
whilst they were sleeping.)
And,
just as in pinball, the end of the game will come quite suddenly. The moment
that the player will know that it’s “Game Over” will be when he goes to his ATM
and finds that the screen is dark. The machine has been made inoperative
overnight. Annoyed, he’ll go to the next-nearest ATM, but will find that that
one, too, is shut down. He’ll go to others and, at some point, will realise
that they’re all shut down.
Without
spending cash in his wallet, he’ll then go to the local gas station or supermarket
and attempt to pay with his credit cards but will find that they’ve all been
made inactive. In trying to sort out the problem with the manager, he’ll be
told that all credit cards for all his
customers have been denied that day.
The
realization will suddenly hit that money has ceased to flow. For how long? The
television news programmes will state that it will be temporary, but they don’t
define “temporary.”
Those
few individuals who understood that an economic crisis was brewing will take
inventory of how much cash they have remaining in their wallets and how much
they’ve stashed at home, and realise that this total now represents their total
purchasing power.
Overnight,
wealth is no longer measured in saleable assets, since, if virtually no one has
spending money, they have no means of payment. Therefore, the fellow who
thought that, if he found himself in a pinch, he could always sell the Harley
in the driveway, or perhaps the family boat, for some quick cash, can no longer
locate a buyer who can pay him—at any price.
Of
course, many people will do all they can to contact their bankers, demanding
that they be allowed to remove their money on deposit and extract the contents
of their safe deposit boxes, but they’ll receive a recording, saying, “We’re
sorry for the inconvenience, but the bank will be temporarily closed until
further notice.”
At this
point, “wealth” will change its definition to include only the cash in hand,
plus whatever might be bartered.
Recently,
I received an email from an associate in Canada, who asked, “When will I know
when I really have to make a move?” My answer was, “You won’t.
But there will be an actual day when you’ll know that you’ve waited too long
and it’s now too late. That day will be the day that you visit the ATM and find
it closed.”
That’s
it. “Game Over.”
So, are
we all doomed? Well, no, not at all. Those who are proactive can remove
themselves from the system now, before the system reaches the
“Tilt!”
If the
reader lives in one of the jurisdictions that’s likely to be the most impacted
(EU, US, Canada, etc.), he would be wise to liquidate his possessions there and
move the proceeds to a jurisdiction that’s less likely to be impacted and which
has a long reputation for economic stability. He should place his wealth (no
matter how great or little) in precious metals and real estate overseas—again,
in a safer jurisdiction.
He
should retain some money (in cash and precious metals) at home, or
nearby—enough to cover a few months’ expenses.
If he
can afford to, he should then create a bolt-hole in a jurisdiction that he can
go to quickly, should the crisis overtake him.
However,
even those who recognize that their home country may soon become an economic
prison camp are likely to dither, failing to prepare adequately. Sadly, they’re
likely to find themselves in the position of the fellow in the photo above,
discovering that “Game Over” has arrived before he could ready himself.