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November
09
2023

What to do? What to do?
David Haggith

How do you prepare for the crash of the Everything Bubble when nothing is safe?

Many have asked me over the years what we jump to for safety if stocks are crashing, bonds are crashing, and housing is set to crash some more while inflation is still rising so the purchasing power of the dollar is crashing. When all the bubbles (hot-air balloons in size) are falling, where do you go? 

I’ve always felt like I should try to offer something, but I don’t have any answers better than anyone else’s. Still, having heard the request over the years, I feel like I should make some attempt for everyone, and this is that attempt.

Simply put, when everything crashes, there are no safe bets, so the goal of my own writing has never been to lay out the best prepping plans, as that is not my expertise, but to provide the very best road map I can as to what is going to happen and how and when it will play out because a dependable map is a vital tool. 

Some have told me you cannot predict this. I fully disagree, and I hope my track record here at The Daily Doom proves you can. So many of the government’s plans and trends are clear as well as the Fed’s, and the breaking points (flaws) in those plans are apparent enough to me, that I believe I can generally see where they will fail, why they will fail, and to good extent when they will fail based on stated schedules for enactment, cause and effect, and known lag times.

For the past five years, I think the events and timing I’ve laid out have been spot on. Let me provide a list of examples so you have some sense of the reliability of the map provided via The Daily Doom:

1. The crash of the stock market due to the Fed’s QT and rate hikes in 2018 (predicted in 2017, including exactly what parts of the year the three main declines would hit and why).
   
   
2. The need for the Fed to stop QT much more quickly than it said it would and stop interest hikes when the stock market crashed (which the Fed did in a major face-plant that even it said caused it some trust issues with the public).
   
   
3. A repo crisis in 2019 due to the QT by the Fed that ran from the end of 2017 through 2019. The repo crisis, I said in January, 2019, would hit later in the year due to the over tightening and the effect that would have on bank reserves. (It hit in September.)
   
   
4. The rise of scorching hot inflation that I predicted, having never predicted high inflation, unlike many, in all the past years of Fed money printing, but having said, “I’ll let you know before we get there if it is coming.” I started letting people know it was coming in the late summer of 2020 before any inflation in CPI was showing itself. I tracked the progress of its development among resources and producers, and, when inflation finally did start showing up in CPI but the Fed started claiming it was purely “transitory” and all financial media and government were going along with the Fed, I held my ground. (I had Harvard graduates in economics writing that I was an idiot for predicting the opposite of the Fed, but here we are.)
   
   
5. The fact that the Fed’s blindness would cause it to tighten late, requiring it, therefore, to tighten faster than it ever had in the past once it got started.
   
   
6. The crash of the bond market beginning when the Fed’s QT began.
   
   
7. The crash of the stock market beginning when interest hits and QT began.
   
   
8. The crash of the housing market and especially commercial real estate to come after the fall of bonds and stocks was well underway.
   
   
9. The technical recession that hit in the first half of 2022.
   
   
10. The return of inflation this year. (Started back up this summer.)
    
    
11. The failure of the Fed to understand the labor market and therefore to keep tightening us into a second dip of deeper recession after recession already began. (Still to be proven.)

That is just to say, it can be done with enough accuracy to have a good map through rough terrain ahead, and that is its own kind of help. So, that is what The Daily Doom is all about — seeing clearly what is coming — giving you tomorrow’s news today so you are not blindsided. I may not have a clear plan for how to deal with it, other than the basic advice below, but just knowing and understanding what is coming in advance will help you keep oriented in that world as it dawns and may help you think much quicker on the fly as you do decide for yourself what you need to do in your own particular circumstances as troubles emerge. And, of course, as good ideas for protection do become clear with me, my paid subscribers will be the first to know, and the rest will be informed (I hope) in time to help themselves.

I’m going to start by sharing another section of last weekend’s “Deeper Dive.”

Quoted section from my last “Deeper Dive”

The only material answer I’ve been able to come up with (since it is way too late to buy some land you can farm [advice I gave years ago] at these prices and interest levels) is something from the news I usually haven’t gone to:

Where do we hide?

Where can we put our money if the S&P 500 enters a protracted downtrend?

We're keeping an eye on Gold…. While stocks have been drifting toward their lows, gold has been drifting towards its highs.

If the Fed just stops tightening interest rates, and certainly when it also stops its bond rolloff, the dollar will start to decline in value on foreign exchanges, so an asset like gold, valued globally in dollars, should become worth more dollars, keeping up with the dollar’s continued decline in consumer purchasing power due to inflation perhaps. With no apparent reasons to collapse like everything else has, gold should rise.

However, as I noted in one podcast interview that I did on Saturday with Rethinking the Dollar, the US government has been known to step in and seize full control of gold within the US in times that declined as deeply as the Great Depression. So, consider nothing to be assuredly safe. Far from it. We're going into a collapse where anything can happen. Even cash is not entirely safe if banks go down, but it is most likely safe due to the FDIC if you keep it in an insured account … for now anyway.

[Let me interject an update in this quoted section from today’s news on gold and then go back to the material from this one section of the “Deeper Dive”:

Gold prices have collapsed in a two-day avalanche, tumbling as fears over market volatility ease — with the precious metal seemingly entering a correction phrase.

The safe haven asset has slipped from $1,993 per ounce at the start of the week to $1,957 per ounce in Tuesday afternoon trading on the spot market, a near two percent drop.

This is in sharp contrast with last month’s mega rally when prices broke the $2,000 per ounce barrier, powered by fears over economic instability as conflict escalated between Israel and Hamas….

Ole Hansen, head of commodity strategy at Saxo Bank, argued that Fed chief Jerome Powell’s response surprised market watchers, who had pinpointed gold as a key flight to safety asset.

“His comments helped wrongfoot traders who during the reporting week had been focusing on markets plagued by geopolitical concerns, sharply rising Treasury yields and a strong dollar driving the risk of economic weakness. Three weeks of near record gold accumulation has left the metal exposed to a correction or best a period of consolidation,” Hansen said.

This outlook was shared by Craig Erlam, senior market analyst at Oanda, who believed $2,000 per ounce represented a psychological barrier for investors, with the metal struggling to sustain itself at that milestone this year.

So, gold gets jogged around by what the Fed does or doesn’t do and what people THINK the Fed will or will not do. Still, what better bet is there for storing your money when even the banks are not stable? It’s that or cash and the FDIC. There is crypto, of course, but that has proven to be more unstable than stocks, bonds and certainly far less stable than the dollar. Now, getting back to that “Deeper Dive” section:]

You can turn to faith in God, in lieu of just faith in gold, of course. God doesn’t depend on any circumstances, and a community of faith can provide assurance and resilience in times of collapse because we’ll all need a team around us if times get as bad as they appear to be going.

Have some backup supplies, some cash built up if you can (realizing no method of cash storage is guaranteed secure), perhaps some precious metals, and mostly a community of friends you can help who may also help you if you need it, and the mental preparation and supply of faith to be able to accept hard times as times that can still be good because of the good you inject into them through your community, which gives purpose and friendships in tough times. I have known desert times in life that were rich in meaning and in natural experiences, such as walks along the ocean and good friends that made those times deep and moving if your faith helps you believe God will use such times to bring about good in your life — maybe just strengthening your sense of who you are and how you can survive.

OK, end of sermon. That’s all I’ll say on that today, but not mentioning it when it is clear there are few if any safe lily pads to jump to, would seem derelict to me, as there is not a lot else right now to recommend. The breaking of the Everything Bubble is the breaking of all assets, except MAYBE precious metals. [End of quoted portion of “The Deeper Dive.”]

What has my own family done to prepare?

In my personal life, my options are limited. We do not have large 401ks because my wife is on a government plan that gives an assured pension, and my work did not offer them for most of my life. So, while we have three 401Ks, they are fairly small. Their options are terribly limited in what you can do, and none of those options includes anything having anything to do with precious metals or with owning bonds outright. You can buy into bond funds, but those are a terrible risk because their existing bonds are downgrading in value as new issuances give better interest. So, they risk experiencing runs. Owning Treasury bonds directly and collecting interest is an entirely different matter.

So, those 401Ks, in our case, are hardly worth the trouble of turning them into self-managed IRAs and converting the funds to gold. Within those limited constraints, I moved all the money in all of them out of stocks and out of bond funds just before the crash in both began (and warned my patrons to do the same). That leaves only some lousy REITs as options, but those are highly risky in my view because the real-estate market has a lot of crashing yet to do. So, I moved everything out of them, too. The only commodities you can own in those 401Ks are not even pure investments in resources and precious metals, but just BROAD investment in corporate stocks that produce commodities, which can ride the tide with the rest of stock market in general. So, that leaves what they call “cash,” which is CDs, money-market funds, and whole lot of things that aren’t very cashy, like insurance paper. That’s where our money is, and it has lost nothing throughout the last two years of the big stock bear market or through the bond bust. But I wouldn’t call it safe, especially now that the bust if spreading to banks, which I had said would be the last safe haven other than precious metals.

Outside of that, we have all our income tied up in our home because our one preparation was to sell our 40-acre farm and downscale to home in excellent condition on a normal size nice lot in a small farm town in order to reduce our mortgage as much as possible for future retirement. 

That might sound like we went against my advice to have farmable land; but another big thing we did was we sold our farm to people we’ve maintained a solid relationship with because relationships who know how to farm well and who are younger and more able than us. We set them up with the equipment they needed at a very good price and got a promise from them that we can grow there if we need to. More importantly, as I said above, the most important thing you have going is relationships/community, so we have built and maintained a good friendship with them, joining in their wedding and other life events. So, we can grow our own food if we need to there or buy organic food off them, as they are running an organic truck garden.

Here is something else people might still be able to do: We paid off all debts and got our mortgage as small as possible to improve our cash flow for the future (for as long as cash remains available and we don’t get locked out of the CBDC system, which I can’t do anything about, except rail against it), and the home we bought has a two-bedroom basement with ample living-room space, dining space and a bath and a small room with plumbing that we could easily convert to a kitchenette and its own separate entrance so we can, IF WE HAVE TO, rent it out as an apartment.

So, those were our practical measures along with laying in a some rotating food storage in a simple manner by purchasing double of everything we normally buy that has a long shelf life. We did that for about half a year, and are now rotating through it. That way we are never stuck with a lot of emergency food we don’t really favor eating if things don’t go that bad. It’s all just stuff we buy and use all the time — not enough to live on for a year, but enough to get us through times of intermittent shortages. So, we took a practical approach. Our rule is, if the store is out of something, we dip into the storage and replenish later when the store has it again, or we use it if it is nearing its shelf life and then replace it.

We’ve also stocked the freezer to the limit.

So, those are simple things that most of you have already done anyway; but I don’t see much more you can do. However, on that whole community, relationship thing, here is a “community” right here of people with a shared interest in the topic and space in the comment section where everyone can share what they’ve done. I’m not personally going full apocalyptic with bomb shelters and an armory, but I’ve done practical things to ease some of the tight spots. Feel free to share your bomb-shelter info, though, if that is your approach. My emphasis is on community, and we bought in a safe, conservative town with almost no crime and with good neighbors.

What should be reformed in the US to end these constant crises?

I’ve given what I think is sound advice as to what the US government and Fed should do to move forward and actually correct the economic flaws that keep us repeating these cycles in my little book, Downtime. These are major macro changes far beyond my doing in my life or yours; yet, they are common sense, even in reforming the Fed, versus replacing it, which is actually A WHOLE LOT easier than you might think. (Not politically easy, but easy to implement if one could ever get to making the political choice to do so.) That is where my own efforts at doing something about it politically have gone — reforming the big picture.

I don’t expect to be listened to, but there is no right complaining about it all if you don’t have a doable answer to it all. I kept the book small so people can mail it to their representatives very easily, as any reader here can do; and maybe it’s small enough to get read. It is, at least, something people can do to try to make a difference on the political level. I won’t say I give it much hope, but it is better than doing nothing.

Seeing the Great Recession Before it Hit

My path to writing this blog began as a personal journey. Prior to the start of this so-called “Great Recession,” my ex-wife had a family home that was an inheritance from her mother. I worked as a property manger at the time, and near the end of 2007, I could tell from rumblings in the industry that the U.S. housing market was on the verge of catastrophic collapse. I urged her to press her brothers to sell the family home before prices dropped. The house went on the market and sold right away — and just three months before Bear-Stearns and others crashed, taking the U.S. housing market down for the tumble. Her family sold at the peak of the market.

 

 

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