Recently, the global stock markets have dropped somewhat, finally.  The stock market (US mostly, but can be applied to other countries) has enjoyed a nine-year-old bull ride, thanks to the ultra-low interest and QE policies by the Federal Reserve and central banks.   The result is massive debt incurred by sovereign nations, municipalities,  corporations and regular households:  the global debt is now at 247 trillion US dollars.

This is absolutely staggering and mind bogging.  Stock prices and real estates prices have been inflated to the moon, while “real” asset such as gold and silver have been artificially kept low.  Instead of investing in research and development or boosting business efficiency, corporations are using the “free” borrowed money to initial stock buyback (thereby inflating the stock prices) and pay their CEOs handsome bonuses.  Banks have been ignoring lending risks while approving loan applications.  A great read can be found here by Howard Marks

However, when interest rate rises, the asset price bubbles will burst with all parties unable to afford higher interest payments and be forced to default and even declare bankruptcy.  The emerging markets (e.g. African countries) will be hit hard first, with larger developed countries (e.g. Italy, Greece) following suit.  Finally, countries like China, Japan and US will be in trouble as well.

All of a sudden, the sentiment of Wall Street has shifted and has been sounding alarms all over.  Most notably, IMF is warning about the risk of approaching the Second Great Depression.   Another example, two-thirds of U.S. business economists see recession by end of 2020 .

The current trade war between US and China will greatly hamper global trade and could escalate into more serious conflict, i.e. a real war between NATO/US vs Russia/China.  So what can we expect?

Here is what I think:

1. Rising interest rates will definitely lead to a collapse of stock market and real estate markets.
2. Rising interest rates will definitely drag the economy into contraction -> demand drops -> companies layoff workers -> governments raise tax/increase spending hoping to boost economy -> more layoffs -> lesser demand -> recession
3. Possible rise of oil prices, especially with the conflict in Middle East.
4. Rise in precious metal such as gold and silver.  Wealth cannot be destroyed, they are simply transferred.
5. Riots and civil unrest everywhere.  Government will be forced to cut budget when recession hits.  Basic standard of living expected by normal Western citizens will be affected.
6. Conflict between Russia/China against US/NATO seems imminent, especially when all else fails, they (the elite) will take you to war.  In other words, when the economy fails, they need to turn the public’s focus and blame on someone else (China or Russia are the culprit)
7. ….and many more

This has been one of my themes on this blog:  be prepared!

1. If you are not a Christian, make sure you come to believe in Jesus Christ before doing anything else.  Get yourself and your household in order and know that when you are under the wings of the Almighty, no depression/recession/war would harm you.  You might die of hunger, disease, persecution and war.  However, you will be resurrected and living with God forever.  This is the most amazing thing in this world.
2. Get out of debt.  We cannot change what the governments and central banks have done, but we can repent of our reckless spending and start paying off our debts.
3. Make sure you have 3 months’ savings readily available when hard time comes.
4. Store up food, water and necessities for your family.
5. Learn survival skills, self-defense skills and grow your own food.
6. Connect with other like-minded families so that you will have a supporting communities when no body answers 911 anymore (I am serious, read history)
7. If you still have money leftover when you have done the above, but some gold and silver.  They cannot earn your interest, but they can preserve your wealth.