Next Recession May Be A Complete Reset of All Asset Valuations
World public and private plus unfunded pensions will surpass $300 trillion this year, and that doesn’t count the $100 trillion in US government unfunded liabilities. These obligations cannot be paid; the time is coming when the market and voters will realize this, and that means market turmoil.
We are coming to the ‘Great Reset.’ As it hits, we will have to deal with the largest twin bubbles—global debt and government promises—in the history of the world.
History shows it is more than likely that the US will have a recession in the next few years. When it comes, it will likely blow the US government deficit up to $2 trillion a year.
The Great Reset will also bring an increase in volatility, and the correlation among asset classes will once again approach 1.0, as it did during 2008–2009.
The recovery from the next recession could be even slower than the last recovery has been, but politicians and central banks will not allow that. They will print and try to hold on as long as possible, thwarting any normal recovery, until markets force their hands.
But then, there are at least three or four ways that politicians and central bankers could react during the Great Reset. Each one will bring a different type of volatility and effect on valuations.
Flexibility will be critical to successful investing in the future. The answer lies in diversifying among noncorrelated trading strategies that can invest in any asset class.