Executive Summary

• We are fighting (i.e. losing against) exponential functions on multiple fronts
• Social unrest (e.g. Yellow Vests) is a spreading symptom that collapse is accelerating
• Which path will collapse take?
• Preparing for the future of “Less”

If you have not yet read Part 1: Collapse Is Already Here, available free to all readers, please click here to read it first.

The reason I write and speak and sometimes travel to talk about The Three E’s – the Economy, energy and Environment – is because I hope to reach those who are ready to listen…and to then act.

Typically, I find that I am reaching people with a certain level of economic and professional success in their lives (many doctors, engineers, architects and lawyers in my audience) and who have the entirely-too-rare ability to face difficult information square on.

One of the more important principles concerns exponential growth, which has a nasty habit of speeding up towards the end.  Those numerate among us grasp the serious implications of exponential growth quickly and easily. The rest of us have to work a lot harder to understand, which is why most of the masses never do.

In the world of finance, exponential (or parabolic) growth always ends badly for the last investors in. Just ask those who bought into dot-Com stocks or Bitcoin near the highs.

However, where any of today's inflated prices go from here is not subject to traditional analysis.  Everything depends on the actions that the central banks will take from here.  Will they print more?  Undoubtedly. 

How much more suppression of the price of gold will the authorities demand?  As much as necessary to keep unwanted attention off of their policy errors.

Looks, what I’ve learned from investing is(…)

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In a prior piece this year, I proclaimed Japan to be my favored candidate to be the black swan of 2012. By this I mean that a financial accident in Japan that would create massive havoc in the world markets seems even more likely to me than something originating in Europe.

The reason is precisely because all eyes (and efforts) are focused on Europe, leaving Japan out of focus and unattended, so to speak. This is practically a requirement for a crisis spot; crises never seem to arise in the place everybody is already watching. Japan is nicely out of focus and therefore a good place for us to keep our eyes trained upon.

In the most recent podcast with Mish, we discussed the fact that Japan had recently posted its largest first half trade deficit in history. Then Mish asked if Japan's current account had slipped into negative territory yet, as that event will accelerate the pace at which Japan's looming structural insolvency will arrive.

While discussing the current account, a normally obscure economic term, seems a bit wonkish, it is really quite important. So let's start there, with a definition as a refresher for myself and perhaps an introduction for others.

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