November 2018 - Summary -

The coming recession, or perhaps even depression, will “normalize” the exuberance that our generation has gotten so used to. The millennial generation have become “snowflakes” as it is so perfectly stated by the older generation. Millennials have had it too easy for too long, living off their parents` wealth, owning devices like smartphones that stops them from having real life confrontations and hardship, and instead turns them into keyboard warriors. They “ghost” boyfriends, girlfriends and even new employers, to avoid confrontation, and god forbid, to avoid having to actually fix something or do effort to create a meaningful relationship.

Millennials love to complain about the fact that they have sky high student debt, and even though this is a worrying development, I can`t help but think to myself: who forced you to do a bachelor`s or a master`s study? Who says that you need a degree to be able to have a job? Our entire generation seems to have a degree, and everyone seems to be working in the services industry, no wonder it`s difficult to find a job! Go look at manufacturing or agricultural jobs, they are begging for employees, and pay a handsome salary while they`re at it. But no, our generation doesn`t want to get their hands dirty, let alone leave their screens for longer than an hour!

The bubble that i`ve been talking about over the past 4 months is so much bigger than just a stock market bubble. It`s a political bubble and a cultural bubble. Basically every time you look at the news and think to yourself “this is absurd”, it has to do something with the bubble that we have created. Not just the bubble from the past 10 years, but all the way back to the gold standard in 1971.
We will go back to economic growth as it was meant to be: through productivity growth (technological improvements or better education) and population growth, not by just growing the monetary base into oblivion and continuously “borrowing from the future”.

Deleveraging is the keyword to fix all of this. Slowly deflate the balloon and reduce the “future borrowing” from let`s say 1 year, to 1 month, to today. This process will hurt, and there is not a single country, leader or central bank who would like to be the first to start this. That`s why i`m still assuming that instead of painful deleveraging and tightening the belt, governments around the world will just create an orchestrated hyperinflation scenario and therefore make it easier to pay back debts that were promised to be paid back in the future. The pain will be the same, but it will be faster, more effective, and with broad participation.

Currently we are at a stage where governments will try to tighten the belt. If the US markets will decline by more than 40%, I think they will give up tightening the belt and start lowering interest rates again and print more money in the form of quantitative easing, or programs that will most likely have a different name but the same effect. Stock markets will then rise, people will feel that things are fixed again, and that`s when the “boiling frog syndrome” will take place.

For now, let`s just hope that this will become a regular correction, because nobody will benefit from the above scenario, not even the ones who think they can prepare for it by buying precious metals.
Thank you for reading, and don`t forget to stay positive!

Robbert-John Sjollema

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