What if you had the power to predict the next economic crisis? What if you knew when the next Great Recession, Great Depression, or Black Swan event was going to happen? Would that change the way you protect your savings?
Many analysts study recurring patterns in the economy, society, and nature to foresee what soon could be coming.
Ominously, many of these theorists are giving a dire warning – that soon a convergence of negative patterns, and the low points of several cycles, will hit us all at once.
This is one of the worst convergences of negative forces in centuries! It could potentially batter the United States socially and economically. For the unprepared, it could be a disaster. For those who are prepared, it could be a huge opportunity.
Based originally on the cycle analysis of Austrian economist Joseph Schumpeter, the U.K Independent reported, a negative convergence of just three cycles, “came together in 2008, a rare occurrence leading to that disaster” that cost the average American 40 percent or his or her net worth.
The bad news now comes from a diversity of sources. Prof. William R. Thompson from Indiana University has studied 1,000 years of how one cyclic pattern affects society; he sees us moving from a “recession” to a “depression” in an “economic winter” that could last until approximately 2020. Scientists who study sunspots see a rare low-spot pattern that could bring problems with the world’s water, food, and energy supplies, and hence with the global economy.
President Donald Trump has his own analysts of such recurring patterns who see us at the riskiest low point in an 80-100 year cycle, the same point in the cycle that brought us the Revolutionary War of 1776, the Civil War of 1861, and World War II, which for America began at Pearl Harbor in 1941. We may not understand why such cycles happen - or why this long cycle has two rising and two declining 20-25 year cycles within it - but according to some analysts, we need to be militarily and economically prepared to face a major conflict or social breakdown.
The good news is that we can tip the odds more in our favor. Let’s turn our crystal ball into a magnifying glass and look closely at one repeating pattern, easily recognized when we focus on it. Over the past century, ever since the Federal Reserve was created in 1913, at least one major crisis has happened during each decade, a convergence of negative patterns and cycles. Here’s the crisis timeline:
Wall Street Crash of 1929
The Wall Street Crash of 1929, also known as Black Tuesday (October 29), the Great Crash, or the Stock Market Crash of 1929, began that year on October 24 ("Black Thursday"). It was the most devastating stock market crash in U.S. history. The crash, which followed the London Stock Exchange's crash of September, began the 12-year Great Depression that affected all Western industrialized countries. Between 1929 and 1935 gold prices rose 70% against the U.S. Dollar.
Recession of 1937–38
America’s Recession of 1937–1938 was an economic downturn that occurred during the Great Depression.
By the spring of 1937, production, profits, and wages had regained their 1929 levels. Unemployment remained high, but it was slightly lower than the 25% rate seen in 1933. The American economy took a sharp downturn in mid-1937 that lasted for 13 months, through most of 1938. Industrial production declined almost 30 percent, and production of durable goods collapsed.
Unemployment jumped from 14.3% in 1937 to 19.0% in 1938. Manufacturing output fell by 37% from the 1937 peak and returned to 1934 levels. Producers reduced expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. In most sectors, hourly earnings continued to rise throughout the recession, which partly compensated for the reduction in the number of hours worked. As unemployment rose, consumer expenditures declined, thereby leading to further cutbacks in production. Gold prices remained stable, but fluctuated wildly in foreign currencies.
1949 Berlin Blockade
The Berlin Blockade (June 1948-May 1949) was one of the first major international crises of the Cold War, a war symbolized by the “Iron Curtain” the Soviets used to divide the world between their Marxist empire and the West.
During the multinational occupation of post–World War II Germany, the Soviet Union blocked the Western Allies' railway, road, and canal access to the sectors of Berlin under Western control. The Soviets offered to drop the blockade if the Western Allies withdrew the newly introduced Deutsche Mark from West Berlin. This was another event in world history where currencies were used as a weapon.
In response, the Western Allies organized the Berlin Airlift (June 1948-September 1949) to carry supplies to the people of West Berlin, a difficult feat given the size of the city's population. Aircrews from the United States Air Force, the British Royal Air Force, the French Air Force, the Royal Canadian Air Force, the Royal Australian Air Force, the Royal New Zealand Air Force, and the South African Air Force flew over 200,000 flights in one year, providing up to 8,893 tons of necessities such as fuel and food to West Berliners. The Soviets did not disrupt the airlift for fear this might lead to open conflict.
By April 1949, the airlift was delivering more cargo than had previously been transported into the city by rail. On 12 May 1949, the USSR lifted the blockade of West Berlin. The Berlin Blockade served to highlight the competing ideological and economic visions for postwar Europe. During this period many unprepared people faced food shortages and were completely dependent upon outside sources for survival.
Recession of 1958
The Recession of 1958, also known as the Eisenhower Recession, was a sharp worldwide economic downturn. The effects of this recession spread beyond the United States to Europe and Canada, causing many businesses to shut down. It was the most significant recession during the post-World War II boom between 1945 and 1970 and had a sharp economic decline that only lasted eight months. By the time recovery began in May 1958, most lost ground had been regained. As 1958 ended, the economy was heading toward new high levels of employment and production. Overall, the recession was regarded as a moderate one, based on the duration and extent of declines in employment, production, and income.
Recession of 1969–70
The Recession of 1969–1970 was relatively mild in the United States. According to the National Bureau of Economic Research, it lasted for 11 months, beginning in December 1969 and ending in November 1970. But it followed an economic slump that ended the second longest economic expansion in U.S. history, which had begun in February 1961. Only the 1990s saw a longer period of growth.
At the end of the expansion, inflation was rising, possibly a result of increased deficit spending during a period of full employment. This relatively mild recession coincided with an attempt to begin closing the budget deficits of the Vietnam War by fiscal tightening, and a move by the Federal Reserve to raise interest rates, i.e., monetary tightening.
During this relatively mild recession, the Gross Domestic Product of the United States fell 0.6 percent. Though the recession ended in November 1970, the unemployment rate did not peak until the next month. In December 1970, the rate reached its height for the cycle of 6.1 percent.
1979 Energy crisis
The 1979 (or second) oil crisis or “Oil Shock” occurred in the United States due to decreased oil output in the wake of the Iranian Revolution. Despite the fact that global oil supply decreased by only about 4%, widespread panic resulted, driving the price far higher. The price of crude oil more than doubled to $39.50 per barrel over the next 12 months, and long lines once again appeared at gas stations, as they had in the 1973 oil crisis. During Iran’s Revolution, Americans were held hostage 444 days, and anti-American theocratic leaders replaced our longtime ally, the Shah of Iran.
In 1980, following the outbreak of the Iran–Iraq War, oil production in Iran nearly stopped, and Iraq's oil production was severely cut as well. Economic recessions hit the U.S. and other countries. Oil prices did not return to pre-crisis levels until the mid-1980s. Also during this time, Russia invaded Afghanistan, which created economic uncertainty that propelled gold prices to $850 an ounce, inflation to 16%, and interest rates to 22% – a condition known as the Carter Malaise.
After 1980, oil prices began a 20-year decline, eventually reaching a 60 percent fall-off during the 1990s. As with the 1973 crisis, global politics and power balance were impacted. Oil exporters such as Mexico, Nigeria, and Venezuela expanded production; the USSR became the top world producer; North Sea and Alaskan oil flooded the market; and OPEC lost influence.
1989 Savings & Loan Crisis
A Savings & Loan, or "thrift," was a financial institution that accepted savings deposits and made mortgage, car and other personal loans to individual members. In the late 1980s and early 1990s they virtually became as extinct as the dinosaurs.
The Savings & Loan crisis brought the failure of 1,043 out of the 3,234 savings and loan associations in the United States from 1986 to 1995. The Federal Savings and Loan Insurance Corporation (FSLIC) closed or otherwise resolved 296 institutions from 1986 to 1989.
By 1995, the RTC had closed 747 failed institutions nationwide, worth a total possible book value of between $402 and $407 billion. In 1996, the General Accounting Office estimated the total cost to be $160 billion, including $132.1 billion taken from taxpayers. The RTC was created to resolve the S&L crisis. These losses do not include billions in lost homeowner equity as the crisis caused a steep decline in home prices.
1999 Dot-com Bubble
The Dot-com Bubble (also known as the dot-com boom, the tech bubble, the Internet bubble, the dot-com collapse, and the information technology bubble) was a historic economic bubble and a period of excessive speculation that occurred roughly from 1997 to 2001, a period of extreme growth in the usage and adaptation of the Internet by businesses and consumers. During this period, many Internet-based companies, commonly referred to as dot-coms, were founded, and many failed.
During 2000–2002, the bubble collapsed. Some companies, such as Pets.com and Webvan, failed completely and shut down. Others, such as Cisco, whose stock declined by 86%, and Qualcomm, lost a large portion of their market capitalization but survived. Some companies, such as eBay and Amazon.com, later recovered and surpassed their dot-com-bubble stock price peaks.
2009 Subprime Mortgage Crisis
The United States Subprime Mortgage Crisis was a nationwide banking emergency that happened between 2007-2010. The period from December 2007 to June 2009 saw the worst recession since the Great Depression. It was triggered by a large decline in home prices after the collapse of a housing bubble, leading to mortgage delinquencies and foreclosures and the devaluation of housing-related securities. Declines in residential investment preceded the recession and were followed by reductions in household spending and business investment. Spending reductions were more significant in areas with a combination of high household debt and steep declines in home prices.
The expansion of household debt was financed with mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs), which initially offered attractive rates of return due to the higher interest rates on the mortgages; however, the lower credit quality ultimately caused massive defaults. While elements of the crisis first became more visible during 2007, several major financial institutions collapsed in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession. We have yet to recover fully from this crisis.
The most notable of these failed institutions was Lehman Brothers, which as founded during the Civil War. Other famous financial giants such as Bear Stearns were taken over by JP Morgan, and Merrill Lynch was taken over by Bank of America, as major banks now also became major stock brokerage firms overnight.
These recurring patterns are not coincidences. They reveal something about people, both as a society and as individuals. Our fate is not in our stars, as Shakespeare said, but in ourselves, as the cycles turn and return. Those who do not see the patterns will be blindsided by change, but those who look carefully can turn trouble into opportunity by investing wisely in what lasts. What will happen next? Have you hedged against coming crises?
Conclusion By Craig R Smith
“Those who do not remember the past are condemned to repeat it,” famously said philosopher George Santayana, who understood our cyclic reality.
“Fanaticism consists of redoubling your effort when you have forgotten your aim,” he also said, describing perfectly our world controlled by central bankers whose failed economics of paper money and rigged interest rates have created boom and bust cycles over the last 100 years.
We have outlined here many world events which prove our system can and will survive the foolishness of the central bankers and big government control – BUT not without a cost.
Many were wiped out in the Great Depression. The recession of ‘37-’38 was only remedied when we entered the Second World War. A succession of recessions caused countless workers to lose their jobs and, in most cases, all their savings.
We’ve had crises - 1979, 1989, 1999 - and of course the memorable 2009 meltdown during which millions of homes were lost to banks while taxpayers footed the bill. In each event, many lost fortunes and most have struggled for years in an economy that should have been more prosperous for all.
A common thread connects all these events, past and future. Owners of gold, who had a portion of their money in hard currency and not paper promises, not only survived each of these periods but also benefited by maintaining purchasing power and liquidity during times of uncertainty.
Many 20th Century companies no longer exist. Savings & Loans have all but disappeared. Great companies like Lehman Brothers, founded during the Civil War, are gone. Many Dot-com start-ups evaporated in the ether of unbridled optimism. Average Americans again lost fortunes because they did not recognize the repeating pattern of approaching storms.
Through these crises, millions of people found that their diversification in the ultimate form of wealth and safety – gold - provided protection, safety, buying power and liquidity; no matter what world event transpired. As universal hard money for thousands of years, gold has held its value while economies based on politician and banker promises rose and fell.
We cannot predict the future but can assure you that the Central Bankers are fanatics bent on controlling the world economy. As such we can predict with certainty that another major event will occur in the near future. Many say we are but one headline away from another crisis. Will you be prepared to act decisively? Do you see the signs of the times?
Please take time to consider the crazy world in which we live, and then don't wait to buy gold. Just buy it. Take physical possession or place it in a qualified retirement plan. Then sit back and take the advice of Santayana again, “There is no cure for birth or death save to enjoy the interval.”