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
The information contained in this publication is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in this publication is that of the publisher and is subject to change without notice. The information in this publication may become outdated and there is no obligation to update any such information.