Navigating the Global Downturn

Dollar-denominated debt, hyperinflation, inverse yield curves and other oddities will keep economic conditions strange for quite a while. But keep in mind that it all represents the end of an old system, and a transition to something else - eventually something far better.

Well, we're definitely in it. We're experiencing it. Economic calamities of epic proportions.

So let's look at the optics of this global economy, briefly, and then frame an approach to survive this downturn - to even thrive within it.

To caveat, I firmly believe that economic conditions are not only the result of blatant market rigging, but that the latest set of policies across governments are completely intentional - starting with C-19, onto a parallel effort with a globalist view of climate change, and onto various proxy wars, the current one being in the Ukraine.

That is to say: Precise outcomes cannot be predetermined, but they are no less put into play by a small handful of the same power players hell bent on shaping a new world economic order.

This is an old story, with predictable chess moves for those noticing, and cyclical repeats of history.

As such, I would not despair over this; rather, understand what is really happening, prepare accordingly, and seize upon exciting new opportunities.

To be clear, I'm not talking about The Great Reset. I'm talking about a real reset.

                                                                          [You can read the full assessment here.]

What happens during a real reset? We break down false narratives and look at the actual mechanics driving the global economy.

First, claims that there is rampant de-dollarization are not quite accurate. The idea here is that the USD, as a petrodollar, is collapsing. It hasn't collapsed just yet... But it will. Saudia Arabia's consideration to bundle its oil reserves with the eventual gold-backed Yuan is the first real strike against the U.S. petrodollar.

                                                                                        [full article is here]

If that happens (and it likely will), then China, Russia, India, Iran and other formerly BRICS-aligned countries will have their own trade alliance, in their own denominated currencies.

Current reality is that the dollar has risen over 10% in less than a year. Ironically, The Federal Reserve (the bane of everyone's existence) will raise rates which should further strengthen the dollar. This actually helps US inflation in servicing the debt, but it makes dollar-denominated debt troublesome in other countries, especially emerging market economies.

Meanwhile, as the Fed puts the FIAT petrodollar on life support, we are transitioning to a Treasury-backed digital note or stablecoin (a USDD). Although there are plenty of risks with a stablecoin, this is not to be confused for a CBDC (central bank digital currency).

The ringer here in the dollar game is still China, which warhawks believe is the next great threat to U.S. hegemony.

We already know China is defaulting on its massive debt (Evergrande is this front market signal), much of which was acquired in Western debt, namely U.S. debt. In a funny game of the mouse jumping back into its own trap, China's dependencies on the USD remain intact - mainly because the Yuan cannot yet be legitimized as a global reserve currency, let alone an international trading currency. Which means that China won't be able to produce as it once did, and so manufacturing will move back to the U.S. despite major supply chain challenges.

Remember, petrodollars or not, productivity must outpace the dollars put into circulation for any nation's economy to have leverage in trade.

The second reality is even more interesting. Historically, a surge in energy prices means that we are entering yet another recessionary cycle.

This is a more obvious signal. Less obvious is the fact that North America has over 250 years of crude oil reserves, despite our OPEC affiliation and our insistence on investments in offshore production, primarily in South America. So, as the push for renewables continues without a viable infrastructure to support it, and foreign sanctions on energy persist, we will naturally seek energy independence stateside to "balance out the storm".

Despite the lunacy of WEF globalists enacting energy policies to the contrary, which in turn affect food production, which in turn exacerbate the decoupling of supply chains, no economy can stabilize itself in this way. Put another way, assets owned by the "elite" (the Davos crowd) can't even sustain their value.

The third reality involves natural resource commodities. Notice the role in commodity exports that both Russia and the Ukraine play. Even more curious, and perhaps not coincidental, is the current conflict between them.

Now notice the dependencies these exports play in North Africa and parts of the Middle East. Also notice their concentration geographically.

We might notice something bigger here: Energy and food supply manipulations are an attempt to test controls over emerging markets, namely sectors of the economy that provide alternatives to commercial energy production and food production, which of course go hand-in-hand.

Here's the good news - not only is there real capability for mixed energy independence, but there are many more regenerative organic food producers proliferating around the globe, especially in the U.S., Canada and Western Europe.

                                                                      [source: Regenerative International]

Okay, so now that we've established fundamental realities for economic activity which cover the current mechanics behind money, energy and food production, let's look at a framework for hedging against flationary risk over a period of the next ten years. (*To emphasize, this is a framework NOT actual investment advice.*)

The thesis is that, by default, resource-producing populations can and will move faster than rising inflation (as well as asset deflation).

The macro rationale supporting this is that investors will, by default, need to reinvest in assets that do this very thing, which is to provide a flationary hedge.

+ Starting with (digital) cash, there is a "slow risk, short hedge" in which cash moving out of equities also outperforms those equities.

+ Precious metals will push out of metals squeezes and manipulation through paper contracts, as the petrodollar fades in a "slow risk, long hedge" scenario.

+ Asset-backed cryptocurrencies - that is, instruments that are backed by a private, fungible treasury, or assets that have real world functions (like food or energy) - will emerge as sound currency. These include things like NFTs, despite their myths and misrepresentations. These amount to a "lower risk, fast & long hedge" scenario.

+ Networked-backed cryptocurrencies like Ethereum are leading a Web3 infrastructure that is already decentralizing finance functions, and now will help provide more autonomy and self-sovereignty - meaning the freedom to transact meaningfully without middlemen in a "high risk, short hedge" scenario due to their volatility.

+ Real estate, specifically rural land developments, will also do well as properties that can regenerate resources and can fractionate their offerings, sustainably over time. This amounts to a "medium risk, long hedge" scenario which changes the local economic landscape for developers in that they are now not just investing in static assets, but those that actually create jobs and tax revenue.

Sounds pretty opportunistic, doesn't it?

Well, it is.

Unfortunately, there are, and will be, lots of pains in this transition process to something else - there's no denying it any longer.

And yet, there are so many good developments happening and good movements towards something better than what we've experienced before in our relatively short history on this planet, that we can not only be hopeful, but optimistic about taking matters into our own hands.

With a vision for a new system that bases itself on sound mechanics, anything is possible.

I hope this brief economic overview and financial framework have been helpful to you.

Blessings to you all.