Executive Summary

• What to expect now that the decade-old credit cycle has entered a downturn
• How bad will things get economically?
• Why today's lower oil prices will make things even worse
• Our key 7 crash-watch/recession-watch indicators to track closely

If you have not yet read Part 1: In Gratitude – Peak Prosperity 2018, available free to all readers, please click here to read it first.

The bursting of the third, the largest, and the most ill-considered and ill-advised credit cycle is going to exceed the pain of the prior two by a considerable amount.

2000 was bad, 2008 was worse and 20XX (19? 20?) is going to be the worst of all.

The model for all this is based in understanding the difference between a business cycle and a credit cycle.  We used to have business cycles, and they had their almost metronomic regularity.   Expand, peak, contract.  Expand, peak, contract.

Under Greenspan the US Federal Reserve decided to do away all that pesky contraction part so they grabbed onto this crazy idea that they could control everything through something called a credit cycle.

Where the Fed couldn’t really influence all the myriad businesses out there to make all their specific decisions, they could influence the quantity and the price of money and therefore the amount of credit circulating in the system.

A credit cycle is a lot more fun for an activist organization like the Fed whose prime mandate is to assure that banks are healthy and skimming tons of profits from society.

On the way up everybody is cheering your brilliance at engineering such amazing times as the “roaring 20’s” and more recently the “twinkling teens.”  And on the way down?  Well, that’s when you put on your frowny face and make ‘tut-tut’ noises about the unforeseeable pain the working class now seems to be in and you plot out the next round of funny money to be printed and thrown in the general direction of your main customers, the big banks.

We’ve just begun the downturn phase and it will not be reversed until and unless the central banks reverse their current publicly stated policy course and return to QE.