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What To Invest In When The Everything Bubble Bursts

Where will true value be found?
Saturday, October 28, 2017, 1:38 AM
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Executive Summary

  • Why conventional analysis may not be our best guide anymore
  • The critical importance of scarcity and value-production
  • Making the most of your time and capital
  • How to best prepare for the popping of the 'Everything' Bubble

If you have not yet read Part 1: What Could Pop the Everything Bubble? available free to all readers, please click here to read it first.

In Part 1, we surveyed the economic and socio-political dynamics that will pop the credit/asset bubbles that have created an illusion of normalcy, continuity and prosperity for the past eight years. So how do we non-elites prepare for the end of the everything bubble and the rise of economic, socio-political disorder?

The Conventional Approach

The conventional approach is to seek out assets that will survive either a deflationary implosion (i.e. an implosive collapse of collateral and debt) or high inflation fueled by massive helicopter money distributions to keep the “growth” machine chugging forward.

The Usual Suspects are real-world tangible assets such as precious metals, real estate, orchards, oil fields, solar panels, etc.  These are touted as survivable assets because their utility value remains intact regardless of whether their price in currencies drops or soars.

Another Usual Suspect is intrinsically scarce collectibles such as fine art, early 1960s-era Fender guitars, etc.

A newcomer is bitcoin and the other leading cryptocurrencies, which are seen by many as holding scarcity value due to their limited issuance.

This approach is commonsensical and sound, as far as it goes. But it is ultimately a financial approach, not much different than any other form of sell high, buy low, sell high advice of switching out of overvalued asset classes into undervalued asset classes, and then riding the uptrend in the undervalued asset until it too is overvalued.

This approach assumes the larger socio-political-economic system will sort itself out in due time, i.e. it assumes continuity based on self-correcting mechanisms built into the financial status quo.

I’m not so sure that the financial system has any self-correcting mechanisms left, or that they will function as expected in a phase shift or supernova implosion.

Put another way...

 

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