Monday, January 9, 2017

Early 2017 Q&A on Status of Monetary Change

With the world clearly heading in a new direction as the Trump Administration takes office in 2017, I thought this might be a good time to do a brief Q&A style update for readers as to where things seem to stand. Reader questions, input, and article links are always welcome.


Q: Does Trump taking office change the picture in a significant way?

A: In some ways yes and in other ways no. It does not change what this blog follows in any way. Here we simply are watching for any indication that significant monetary system changes are in progress that would truly impact our lives in a meaningful way. We will continue to watch for that no matter how the political environment might change. Of course Trump will likely make different policy decisions and take some different paths than Hillary Clinton would have. However, it is hard to say whether those differences would have that much impact long term on what we follow here. The conditions that might lead to significant monetary system change (systemic risks, etc) have been building up for many years during both Republican and Democratic periods of political control (and also during gridlock which has been in play quite a bit of the time as well). They are not likely to be solved very quickly by anyone. All we can do here is wait and watch.

Q: Have the big issues for this blog changed in any way?

A: No. The two big issues here remain:

1- Will we get another major financial crisis much bigger than any we have seen before as predicted by Jim Rickards and many other analysts? (note: we feature Jim here quite a bit because he is well known, widely respected, does many free media interviews, and has a clear prediction of a major crisis we can follow over time)

2- If we get the big crisis, what solution will be put forward to try and fix the problem?

We can probably add this sub question (2a if you wll): Would Trump deal with such a crisis much differently than anyone else would? 

We don't know the answers to #1 and #2 yet. And now we can add #2a. It is very possible that this kind of crisis/situation would be dealt with the same way no matter who was President of the US. Time will tell.

What we do know is that such a crisis is possible and therefore we must continue to monitor events as we really have no other choice. Sticking a head in the sand is not a wise option.

Q: What are your best information sources saying now?

A: First, let me say that I have been very fortunate to get direct input from some incredibly well informed and high credibility sources. I try not to bother them much unless something important is happening. but they all have been extremely kind and generous to provide me direct honest answers to questions when I do have them. This has allowed me to present better information to readers than I can just reading and searching news articles on my own.

Interestingly, all of my best sources are pretty similar in their view as best I can tell. They don't know the answers to the above questions either and are watching and waiting just like we are to see what actually happens. Trump is somewhat of a puzzle for everyone. He is not a hard core idealogue on many issues. He has issued many what seem to be contradictory statements over the years. He seems to seek input from a broad variety of people across the spectrum including some viewed as "establishment elites" and some viewed as challengers of the establishment. He is a deal maker at heart and seems to value what he thinks are results above all else on many issues. 

All of my sources including those like Jim Rickards are not really sure what Trump will actually do if he is presented with the major crisis we watch for here during his term. Some of my sources have concerns with various aspects of Trump's public policy views, but still really don't know for sure what he will actually do. All of them hope whatever he does is successful, but view him as somewhat of a wild card with no way to accurately predict his actions. They hope he does not create an atmosphere that inhibits free trade with the current system as fragile as it is right now, but they understand that trade needs to be both free and fair so we have to just see what Trump means when he talks about this.

Q: What do you think Trump will do if presented with The Big Crisis during his term?

A: All I can do is guess of course. My sources would be far more likely to know that I would and they really don't know as I mentioned above. My best guess is that if a major crisis as bad as Jim Rickards is predicting were to actually arise during his term, Trump would eventually agree to whatever the experts he trusts most advise him to do. I don't think Trump has envisioned something like this as happening so he would likely be caught somewhat off guard. He might literally have no other choice than to accept the IMF as global lender of last resort that Jim Rickards forecasts. The alternative might be a complete meltdown of the system (we might go back to the Stone Age as one of my sources said to me in an email). If that were the case, I would expect him to turn into a salesman for this proposed solution despite his attacks on globalism as a candidate. Of course, that does not mean that solution would actually work either. It's all just a giant unknown. 

He might surprise everyone and simply go directly to the public and level with them as to what caused the situation and what the realistic options are to deal with it. I don't know and hope we don't have to find out. The atmosphere would probably be filled with political poison and mass confusion could easily result as various special interests tried to take advantage of the situation/crisis. All this is why we have no choice but to stay alert and informed ourselves and keep some kind of backup plan in mind that we hope is never used.

Q: What if nothing major happens during the next four years?

A: That's possible too. If I had time I could list hundreds of failed systemic crisis forecasts I have read over the past 10 years doing research for this blog. While there is always a nagging feeling in the air that at some point the system will go over the edge, it has not happened yet. I don't know of anyone on earth who could possibly know for sure of the timing of an event like that. I plan to continue to monitor events here until at least early to mid 2018. If there is still no indication of a major crisis like we are talking about here, I will likely discontinue regular blog articles. If I do that, I will leave all existing content and articles here and would add new articles if a major event ever unfolded. But I have published most of the most important information I can find here already in the list of systemic risks and the articles on the potential for the SDR to eventually replace the US dollar as global reserve currency. The input from people like Jim Rickards, Dr. Warren Coats, Claudio Borio, William White and Robert Pringle in those articles is as good as you will find on this topic in my view and won't really change much over time. If events unfold such that this information is needed, it will be here for anyone who can use it. If they don't, it will still be here for anyone just interested in learning more about it.

Q: What can the average person do in an environment like this?

A: Every situation is unique of course and people are in different situations. I have always felt that just simple common sense provides a few simple things most everyone can do:

1- try to stay alert and informed and watch for signs of systemic instability

2- try to reduce debt as much as possible

3- try to build up an emergency fund (include a precious metals component if possible)

4- keep some emergency supplies on hand as best you can (some extra food, water, etc)

5- develop a network of trusted friends, relatives, etc to deal with stressful circumstances

None of the above are overly difficult to do and can be done by most people. They are really just common sense and should be done whether we ever get a huge financial crisis or not. Number 1 seems obvious, but I find that most people I know do not make much effort to do it despite how obvious it seems. Perhaps they have a hard time finding good information with all the various misinformation and disinformation that is out there. This blog attempts to help with that as best we can. 

Q: What should I expect on the blog in the short term?

A: Not much change. Probably just  a few articles here and there unless something major happens any time soon. Right now I have no indication that I should expect that, so I will try to just put out an article every now and then, but with no regular schedule. Just based on what news I see out there. The whole world is kind of just waiting to see what Trump is going to do.

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