Capitalism as we are taught is dead. The American ideals we live our life by is deteriorating by the day as we experience increased civil unrest, destruction of property and small business, and unemployment at record breaking numbers.
We're in the midst of a cyber-psychological war of nation-states and political operatives producing media and content in every ideological direction to exploit your belief and biases. I won't dig deep into this, but we're all skeptical on what information and media outlets we can trust.
The beliefs on how society operates is now in paradox, but we'll hone in strategic economic issues. Mounting government, consumer, auto, mortgage, and corporate debt paired with decreasing revenues sets the stage for an insolvency event. But what exactly will trigger this?
In 2008 it was sub-prime mortgages, whats going on today is collateralized loan obligations (CLOs) in the corporate debt market. Ironically, a big portion of these are covenant-lite which is a new fancy way of saying sub-prime.
Old data, I know - whats certain this has increased since this was released. This issue isn't localized to the US, its a global issue. With massive exposure to the Central Banks of Japan and Europe. Keep in mind in those markets, the banks are on the verge of being nationalized with even greater economic issues.
Just as 2008, there will be a time that comes when these loan's credit ratings will be downgraded and balance sheets of our largest institutions will expose their complicit actions - this is a big bubble.
How is government mitigating these risk?
We know the Federal Reserve is buying corporate debt, mortgage securities, and other financial products to keep the financial system afloat. The US Treasury has issued more bonds to raise cash then they can spend, we currently have ~$1 trillion+ on hand that will help mitigate risks for the federal government. The environment is currently deflationary but its speculated that inflation is on the horizon. G-20 countries have some work to do.
In fact, certain data points are already showing inflation increasing in consumer prices.
But how do us average Americans prepare and protect our capital and resources?
My answer to that is cryptocurrencies. They are a far more efficient and faster means of exchange, store of value, and unit of account. I'm under the impression that the concept of inflation is required for economic growth is a flat out lie. I may very well be wrong, but given as things are its hard to be optimistic with current financial and economic mechanics.
To be competitive in the work force, us average American need to add technologist skills to our repertoire, in addition to our formal trade/craft that provides our means of living. Reason being, we need to create efficiencies and optimize our productivity for the long-road. That is the essence of free-markets and capitalism we must restore.
I'm a firm believer that fundamentals and first principles are the key to rationalizing and speculating probabilities of events. Nobody knows what will happen, but something will happen and as the cliche quote goes:
"Failing to prepare is preparing to fail."
We need our leaders to restore these ideals of prosperity so we can create greener pastures for all. Be the leader. We all have to do our part to build our future together. Now is not the time to be a passive citizen.