America will suffer, but the rest of the world will do worse

America will suffer, but the rest of the world will do worse:

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America will suffer, but the rest of the world will do worse.

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Their king dollar is wreaking havoc on the world.

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Countries are going bankrupt.

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Sri Lanka is already there.

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Many more will follow.

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Currencies will hyperinflate.

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People will lose everything.

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Slowly we’ll start to see more countries turn like Venezuela.

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That’s a scary world.

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Debt levels are too high everywhere.

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Everyone printed money after COVID.

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The Americans just raised rates more quickly.

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Europe’s interest rate is still at less than one percent.

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They can’t go any higher or literally bankrupt the Eurozone.

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The Euro is at par with the dollar meaning the dollar went up and Euro went down.

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Their energy crisis is not going away.

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We’ve been lucky so far with a warm winter, but it will get worse.

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Japan is running into currency problems.

They can’t maintain yield curve control.

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Soon they’re going to have to start buying their currency to defend it.

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Who has one of the largest US treasury holdings in the world?

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The Japanese.

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What happens when they buy their currency?

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They sell treasury assets to buy Japanese Yen thereby spiking bond prices.

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Disastrous for American and global bond markets.

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Also means the price is more attractive and money flows out of the stock market.

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There’s lots of pain to come.

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Nicolas Nassim Taleb talked about it in a panel interview with Bloomberg.

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Listen to him.

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He’s been around the block.

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He knows how these things work.

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How we’ve been in La La Land because of money printing for 15 years.

Zero rates.

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Continuous QE.

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The money printer always running.

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It made rich people wildly richer.

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On paper.

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And further distorted the difference between the haves and have-nots.

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That’s an unproductive world.

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That’s a world on a powder keg waiting to explode.

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This has happened in history before.

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Taleb’s partner at Universa, Mark Spitznagel, wrote an essay to his investors saying how this time was similar to the 1920s with likely similar consequences to come.

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Quick aside - his book, Safe Haven - Investing for Financial Storms - is a fantastic read (notes here).

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It basically walks through his epic strategy to bleed a little every day but win every time there’s a massive tail event. He outperforms every other fund using math and probability and walks through that in his book.

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If I was a money manager right now, I’d be loading up on volatility and these tail risk-type funds. 

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I’ve been writing this for years.

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We have a huge debt problem that we can’t deal with.

When inflation was ravaging through the world with rates at 0% and the US treasury was buying $120 billion dollars worth of bonds, I knew we had a problem.

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Getting out of this problem will be bad for so many people.

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Currency crises. Revolutions. Protectionism. De-globalization. War. 

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This is what’s to come for the world.

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America will suffer, but the rest of the world will do worse.

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