- What can we expect next, and how will we recognize it?
- A series of sharp, interrupted shocks is more likely than a major sudden collapse.
- Five game-changing events, what I call The Five Horsemen, will indicate that the rules have changed and a new reality is about to take over:
- The First Horseman: New credit growth falls below interest payments
- The Second Horseman: The Fed monetizes debt
- The Third Horseman: Government spending exceeds 10% of GDP
- The Fourth Horseman: The dollar goes down, while interest rates go up
- The Fifth (and final) Horseman: US debt becomes denominated in foreign currencies
Severe structural damage has already been inflicted on our economy. As I wrote two weeks ago in It Has Hit the Fan:
If you have been waiting for further confirmation about the direction of the economy, or waiting for a sign that it's now time to get serious about preparing for a future filled with less, this report is written for you.
You are living in the midst of the collapse of western economies, which are moving from a more complicated state to a less complicated one. This is it. Keep a journal, because it's happening right now.
After the Great Depression, many people remarked that it was only obvious in retrospect. While it was unfolding, things steadily eroded. But 75% of the workforce remained employed, while hopeful signs of progress were constantly trotted out by various politicians, private economists, and official-sounding government agencies. It is often quite difficult to appreciate the true magnitude of sweeping change while it is occurring.
The most pressing question now is this: What can we expect next, and when?
In this report, I will give you the precise combination of macro-events that will cause me to issue an alert and kick my thinking and actions into new orbits.