I would like to start by stating in plain English- The world economy is on the brink of a major recession.

Yes, 2019 will most likely be the year the world economy enters into a major recession. A recession we have long had coming and which could be worse than that of 2008/2009.

You need to understand why this major recession WILL hit hard. What created it and why it would present immense investment opportunities.

Market cycles

Markets moves in cycles. The world economy experiences a recession once in every 7 to 10 years. The last time we had a recession was in 2008/2009. We are therefore ripe for another recession.

The next recession might be very ugly……

You need to understand the state of the world economy as it stands today. Everything appears fine with the world economy, isn’t it? Sadly, the answer to that is an emphatic NO! The world economy as it stands today is a mirage…… follow me as I break it all down……

An unusual event occurred in 1971. President Richard Nixon of the united states took the US dollar off the gold standard. In the year 1944, the gold standard was reintroduced (after the world had seen the hyperinflation of the Weimar Republic in Germany in the 1920s). The US dollar became the reserve currency of the world and it was pegged to the value of gold. In fact, you could take your US dollar to any local bank and redeem it for its value in physical gold. The US dollar, the world’s foremost reserve currency was linked directly to gold, thus the whole world operated on sound money.

Then the US entered the Vietnam war, the war became prolonged and money was needed to finance the war (it was the cold war era, the United States wasn’t going to give in to the Soviet threat) so in order to be able to print fiat currency, President Nixon took the US dollar (and by default, the world) off the gold standard. That single step took the world’s economy off sound money and into an age of fiat currencies.

From 1971 forward, whenever any government needed extra money to fund irresponsible projects and war, all they had to do was turn on the printing press and print fiat currency into existence. Governments could now afford to be irresponsible but at what cost? Well, it’s at the cost of its citizens, at the cost of inflation and hyperinflation. The world has witnessed 3 cases of hyperinflation since going off the gold standard in 1971.

Former Yugoslavia 313,000,000 % between April 1992- January 1994

Zimbabwe 79,000,000,000 % between March 2007- November 2008

Most recently Venezuela

There have also been several cases of countries experiencing inflation in the thousands and tens of thousands of percentages over various time frames since 1971. These various inflation and hyperinflation scenarios were as a result of ditching sound money in favor of fiat currency. During this same period in time, gold (sound money) retained its value. Gold rose from $33/ounce in 1971 to hit $612.56/ ounce in 1980. An increase in value of almost 2000% percent over a nine-year period.

The coming major recession can’t be avoided

Not only was the world economy moved off sound money but the act empowered the world’s central bankers to manipulate the money supply like had not been seen in all of human history

By introduction of central banks (the United States Federal Reserve Bank in 1913). They introduced the fractional reserve banking. Fractional reserve banking is simply the ability of a local bank to borrow out up to 90% of a customer’s deposit while replacing the loaned out money with “BANK CREDITS”. They still go ahead and charge interest on the loaned out sum while automatically creating fresh currency out of thin air by replacing loaned out money with “BANK CREDITS” (it’s actually very ridiculous how this is done. Please refer to our previous article here to understand fractional reserve banking in details. ZIRP (Zero Interest Rate Policy) and in some cases NIRP (Negative Interest Rate Policy): with the world off the gold standard, central bankers could stimulate economies and disrupt the normal cycle of economic boom and recessions as they please. They introduced ZIRP to stimulate economies when there was supposed to be a recession. In some cases, it was NIRP ( as in the case with Switzerland). All these is to arbitrarily increase the money supply E (Quantitative Easing): this is probably the most economically devastating of all. It has resulted in the flooding of the world with trillions upon trillions of US dollars. It’s simply the process by which a central bank issues a debt instrument (treasury bonds, treasury bills and treasury notes) and the same central bank goes ahead and buys up all the debt it just issues. This act results in the instant availability of the amount of the debt bought as fiat currency in the circulation. Simply put this act results in the printing of currency out of thin air. Before 2008 , before the last financial crisis, the Federal Reserve Bank held about $800 billion dollars as debt on its balance sheets. Today, after Q.Es 1, 2 and 3 it holds about $4.2 trillion dollars. It printed about $3.4 trillion dollars out of thin air between 2009 and 2013 in order to artificially support the United States financial markets and economy. It printed an estimated $2 billion dollars a day during that period of time. The ECB (the European Central Bank) is presently in Q.E and has been printing an estimated 2.5 billion Euros a day since March 2015. The Bank of England and the Bank of Japan has had their own spree of money printing in the past.

All these actions as inflated an unsustainable bubble in the real estate and financial markets across the world. The bubble went burst in 2008/2009 but instead of allowing the ensuing recession to play fully out, the world financial elites decided to step in and reflate the bubble, in effect further complicating an already difficult problem. The United States alone has a national debt of $21 trillion. If you add unfunded liabilities and the debt of entitlement programs (Medicare and Medicaid), the debt approaches $100 trillion. World wide, debts of countries and corporation stands at around $210 trillion dollars( this is aside of individual debts. People in advanced economies live on debt- credit card debt, student loan debt etc)

Where this debt load will lead

This debt burden can only lead in one direction-A global financial crisis 2.0. and it is imminent (it can only be delayed again for a little while if all major central begin a fresh round of Q.E)

If you follow the world’s financial markets like I do. You will know that extreme volatility has been a feature of the major indices in the United States (the world’s biggest economy) for the past 2 months. As I write this, the S&P 500, the NASDAQ and the Dow Jones Industrial average are all in a bear market (they’ve lost 20% or more of their value this year). If you check the price chart of any of these indices, you will see that their value has been on a free fall since October and 2019 might just be the year these major indices goes into a free fall. Dragging down the world’s economy along.

Cryptocurrencies and precious metal (gold and silver) are your only edge…..

What happens when inflationary economic system operates alongside a deflationary one? Taking a cue from the example of gold we considered above. When the US dollar became an inflationary unit of account (i.e when it became a free floating currency detached from gold) and started loosing value, gold on the other hand appreciated in response.

Another great example is Bitcoin. When Bitcoin was created (it’s a deflationary economic system. Only 21 million will ever be created). As the US dollars was being devalued by Q.E, Bitcoin’s value increased in response. Appreciating a whopping 2,100,000% in 7 years (from 2010 to December 2017).

I think its clear by now that your only edge in this present economic system a washed with excess fiat currency is a decentralized deflationary economic system. And if you think Bitcoin and other cryptocurrencies has had their best days, think again. They haven’t even began exploding yet! The world is awash with too much cash (the derivative market alone is worth over $1200 trillion or $1.2 quadrillion!) this inflationary, debt based financial system can’t last for too long anymore. It will slowly be engulfed by the deflationary sound money system. A system based on the decentralized blockchain technology and the gold standard.

Early adopters of cryptocurrencies will become wealthy as this wealth transfer ramps up. The best time to get on board cryptocurrencies is now!

If you would like to know how to begin to get involved and invest in decentralized blockchain startups, bitcoin and other cryptocurrencies click here

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