The Unique Property
The Financial End-Game
There comes a point when the questions concerning investment
turn into something else. The world's stock markets are going to
crash. That's not at issue. Obviously the question is when? But
there is far more to this situation than the timing of a
I am always saying that I know no more than the next person. I
don't have a crystal ball. But I look at what is going on, then
I look back at history, and I make what I consider to be an
informed assumption as to how things are likely to develop.
Maybe we have another year to go before everything implodes. At
the moment I think it is a matter of hanging on in there if you
dare, but be ready to exit with some speed. And that's as far as
I am prepared to go. On the other hand if you are not invested
in the stock-market at the moment, maybe now is not the time to
What form will the crash take? I mean, is this just going to be
a stock market crash? Answer, highly unlikely. There will be a
whole series of problems that will be propelled into the
limelight as a result of any crash. Let's list some of the
things that can (and almost certainly will) go wrong.
1 Inflation is heading rapidly in our direction, and we
are not prepared, and nobody is going to take it seriously until
things have gone beyond controllability. I have already in a
previous blog listed the rate of inflation in a whole slew of
commodities. Those figures are frighteningly large. Even if
those figures have not yet filtered through to the consumer
market, they will. It may take three to six months for their
effect to become obvious, but before this year is out the levels
of consumer inflation will likely either be rapidly heading for
double figures or already be there.
Conclusion: we will all be feeling poorer. That effect will
impact on our standard of living and our ability to take on
further debt, and will certainly impact adversely on house
2 Political idiocy is rampant. Couple that with the
obvious fact that so many decisions are not taken on their
merits but on political preconceptions. This will lead to
financial and logistical misallocation of resources which will
exacerbate the coming chaos, and hinder solutions. We are
witnessing one such political mess right now; the way the corona
vaccination programs are being carried out across the EU.
The second political mess that is being pursued is the blatant
idiocy of the Biden administration in the US. Unrestrained money
printing; the build-up of huge debts which can never be repaid;
the fighting of historical bogeymen; the attempted destruction
of the capitalist way of life which has benefitted the US so
well in the past, and the embracing of an aggressive version of
socialism, is all going to lead to the downgrading of the US way
of life, and the eventual collapse of the country both
politically and socially. I challenge anyone to show me a single
socialist governmental system which has been a success. From
Zimbabwe to Venezuela, to the USSR, all have failed, and had to
be rescued by capitalism. As Mrs Thatcher so famously said:
"Socialism is fine until you run out of other people's money".
The bottom line here is that you need entrepreneurs to create
wealth so that it can be distributed. Maybe the distribution
mechanisms could be improved, but that wealth must first be
created. None of the countries listed above are currently
achieving that first requirement.
I have left out China from that list because it is hardly a
socialist country, but could be more adequately described as a
far right fascist state. What so many people forget is that far
right politics are synonymous with far left politics. Both
systems destroy people and stymie motivation, which is essential
for survival. You also need intelligent people at the top
instead of power hungry control freaks.
Conclusion: The EU is in total disarray and headed for collapse
due to bankruptcy, political chaos, and social unrest. The USA
is in partial disarray, and looks to be headed for high
inflation and a trashed currency, together with increased social
unrest. China looks to be headed for high inflation, a banking
crisis, a serious slow-down in its international trade, and more
and more opprobrium concerning its human rights record, which
will ultimately lead to more problems with the trade balance.
There is also considerable social unrest in the country.
3 Then there is the problem with money. So many countries
are teetering on the edge of bankruptcy. Clearly the current
financial system is irretrievably broken. What comes next? A
return to gold? Somehow I doubt it. Maybe in another era that
will happen, but it won't be the way out of this one unless
things change drastically from where we now are. I dont think
the world could cope with a reset to sound money. Gold would
have to be revalued at somewhere approaching $50,000.
That would bring international trade to its knees. It would
cause serious problems for the UK and China. Both are dependent
upon international trade, and a return to a gold standard would
do incredible damage to world trade. Who would be able to import
commodities from Australia? Who would be able to afford to buy
half the stuff the world currently buys from China? Food
exporting nations would do very well. Everywhere else there
would be a massive contraction.
When looking at the balance of power from this particular
stand-point it is clear that the USA has the advantage in that
it is reasonably resource rich whereas China is dependent upon
many raw materials, especially food, as the current climate
crises have shown. A country that has to import large quantities
of the staple food (rice) is going to be seriously at risk in
4 What all the above usually engenders is the ultimate
end-game of any major reset -- a war.
We already have the makings of a phoney war in the South China
Sea. At the moment you could call it a Cold War. But this has
all the trappings of a situation that could boil over to a Hot
War at a moment's notice. I would hate to speculate on how such
a situation could develop, but the situation does not look good.
A feasible way out of the mess on the USA home front would be
involvement in a war with China. A similar situation exists in
China. Whether the matter can be contained as a Cold War is
another matter. However, I think if things did escalate the
outcome could be appalling for the whole world, and I'm reminded
of the Tom Lehrer song about the third world war. If I remember
the words, he assumed it would probably be over in an hour and a
So, there you have it. Which comes first, the stockmarket crash,
a currency reset, social chaos, or a war?
Charming scenario, isn't it?
And how does one cope with any of those scenarios? Or the worse
case situation, how does one cope with all of them?
I think the first suggestion is: don't enter into anything new
at the moment unless you fancy buying gold. Buying anything else
at the moment is asking for trouble, and that includes buying
real estate. The only thing I am buying at the moment is crypto
tokens, and you need help with that subject.
Let me end by reiterating my standard position on buying real
estate. You buy when interest rates are high but falling. You do
not under any circumstances buy when rates are low and could be
about to rise. That means you should not be buying now.
As interest rates rise, loans become more expensive and so
prices fall, and buyers disappear. We are heading that way. It
may take anything from three months to a year for the rising
tide of inflation to become apparent, but it is baked into the
The time to buy real estate is therefore not as a hedge against
inflation, but to buy as inflation starts its downward trend.
That's when no-one else will want to buy, and prices will be on
the floor. It's happened before, it'll happen again.