Recently a number of investors asked me about the “timing” of the next significant economic crash, citing the multitude of imbalances present in the world today. There is a prevailing belief among them that the continuous influx of money into the system will inevitably cease, leading to an end to the current financial party.
I know, I know. Debt is going to keep piling up all around the world for political purposes, most of it will not be paid back and certainly not in our lifetimes. At some point in the future, the world will see another major economic reset. Here is another recycled post which I have picked for new clients who may have missed it.
I’m “free” that I can write about anything as long I think it is realistic and can help my investors make some money to pay off their bills, enjoy their retirement, and the list goes on. I don’t have the pressures of a broker, or a magazine, or TV channel that relies on revenue from advertising from the investment industry.
Emails, emails, I get emails. On a daily basis, I receive emails from my investors asking questions related to the global economy and markets. I really enjoy hearing from them because I learn from their questions at the same time. One of the common questions I get from time to time is will the Great Depression happen again.
The Great Depression of the 1930s had a devastating impact on the entire world. Lasting almost 10 years, the period was marked by steep declines in economic activity, plummeting equity prices, mass unemployment, banking panics, and sharp increases in rates of poverty. In our business of making predictions, can a Great Depression happen again? Yes.
I am sorry to be the purveyor of bad tidings, but that is indeed my super long-term expectation in the 2030s. I know it doesn’t make sense to some people. We live in a crazy world. The entire financial system that doesn’t work for everyone has been “abused” for too long. We need to hit the real bottom and clean up the mess before we can make a genuine recovery. I could give you some examples but I will not. Maybe some other time.
The younger generations like those who are in debt, living with their parents and working at jobs they don’t like will be the ones who will get the biggest impact from the next economic or financial depression. Mercifully, there is still a “gap” between the “party” that we are living today and the next Great Depression.
We should very slowly prepare for what is coming in the very long term. It is not the end of the world for any investors or traders. There is no need to panic because the funny thing is you don’t actually need depression or recession to lose money.
Looking at the bright side, those who know how to navigate the market cycles will make a lot of money and yes, there are things that will do well in any extreme economic and market conditions. I’m not exaggerating for comedic effect.