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How Bad Will It Get?

user profile picture Chris Martenson Feb 18, 2017
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Executive Summary

  • How overvalued is the system?
  • The biggest errors that got us to this point
  • What to expect during the big reset
  • Taking necessary action

If you have not yet read Part 1: The Mother Of All Financial Bubbles, available free to all readers, please click here to read it first.

What will the coming reset look like when it finally arrives?

This is the operative question everybody should be asking themselves because, believe me, the bankers and politicians are already frantically at work on the only question they care about: Who, instead of us, is going to eat the losses?

Let me be clear. The coming reset is going to be very, very painful. Part of me just wants to rip the proverbial Band-Aid off and get on with it, yet part of me dreads what’s coming and is in no hurry to see it arrive. Talk about being ambivalent!

The big picture looks like this: Ray Dialo’s firm Bridgewater Associates, a mega-money management firm, put together the below chart of the IOUs of the US (most other countries look the same, so feel free to extrapolate for Japan, or most of the EU, or the UK).

There are, simply, too many promises that cannot be kept. At a recent ICV wealth conference (just this week) one of the speakers was a man named Bradley Belt, a current member of a money management firm and the former executive director of the Pension Benefit Guaranty Corporation (PBGC).

After talking about how the Trump rally might end, he stopped for questions and I could not resist. I asked the former director of the BPGC, who should know something about long term liabilities, if he was familiar with this chart and what sorts of possible solutions there were to resolving this chart and who was tending to such matters?

He answered that nobody is really tending to these matters, that he had seen the chart, and that the only possible solution was vigorous long-term growth. Fortunately I had given my talk just prior to his so a number of people immediately gave me that look which said “that isn’t going to happen, is it?”

In other words, without sustained, long-term growth, of the sort we’ve not seen in over a decade (and will never again with debt levels as they are and oil becoming harder and more expensive too find) somebody is going to have to eat the losses.

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Top Comment

Outstanding as always Chris!
One of my favorite quotes from Mahatma Ghandi is this;
“Your beliefs become your thoughts,
Your thoughts become your words,
Your words become your actions,
Your...
Anonymous Author by a23
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