There Is a 100% Chance of Recession Next Year
Today, we’re taking on a big economic mystery…
Doesn’t sound exciting, does it? Well, what you’re going to learn below will be responsible for earning some investors trillions in profit over the next five years.
Investors who don’t understand these concepts are going to get wiped out. What’s the concept? It’s the answer to the following questions…
Given a more than 100% increase in federal debt and federal debt securities over the past few years, why haven’t bond prices fallen and why haven’t interest rates risen? Where is all of the inflation that should have occurred?
As you know, bond prices not only didn’t fall (causing interest rates to rise), they continued to hit new all-time highs (sending rates to new all-time lows). In many places (covering around 25% of global GDP), bond prices rose so much that interest rates went negative, something most people thought was simply impossible.
Of course, federal debt levels aren’t the only thing that has exploded…
Student debt, auto lending, U.S. corporations, and, perhaps the biggest debt bubble of all, foreign corporations.
In the U.S., corporate obligations are at all-time highs, relative to GDP (a little more than 45%). But in China, they’re even crazier: Corporate obligations have soared in the past eight years from virtually nothing to more than 120% of GDP. The corporate debt and real estate bubble in China is probably the largest the world has even seen. (Imagine working out that problem in a nation without the rule of law or a tradition of recognizing property rights.)
In total, the International Monetary Fund says that global debt is now equal to 225% of global GDP, up from about 200% just a decade ago.
Just about every economist in the world would have told you that massive increases to credit and money supply and the resulting huge expansion of consumption would have set off massive inflation, or, at the very least, much, much higher interest rates.