Disorder Will Come – As Confucius Warned

No, it is the total mismanagement of the economy and the consequent debasement of the currency that creates hyperinflation.

Just look at the table below. All the major currencies have lost 80-86% in real purchasing power (gold) since 2000 and 96-99% since 1971 when Nixon closed the gold window.
And if we look at a hyperinflationary economy like Argentina, the Argentinian Pesos has lost 99.99% since 2000.

FEW ARE PREPARED FOR DISORDER, RUIN, OR HYPERINFLATION

Whether it is ordinary people or the so-called experts, everybody believes ruin won’t happen to them. Therefore they are not in a Confucius state of preparedness for the coming economic and currency collapse.

Let me describe a very recent anecdote about hyperinflation in Europe. Last year, in a small town in Ticino, (Italian part of Switzerland) I dined with my wife and friends in a small restaurant. The owner came up to me and said he knew me. It appeared that he followed my articles and interviews. He told us he fled from Yugoslavia in the 1990s. He and his family had lost an important part of their money during the 1992-94 hyperinflation.

The annual level of inflation in Yugoslavia in January 1994 reached 116 billion percent!

Below is a 500 billion Yugoslav Dinar note.

Fortunately, the restaurant owner had some savings in gold and this allowed him to start afresh in Switzerland. He told our friends never to keep any money in the bank but to only hold physical gold.

So this former Yugoslav man was prepared for the “possibility of ruin”, as Confucius warned, and told us that he would never trust the banking system again.

EPIC OVERVALUATION OF STOCKS

My friends who were at the restaurant still don’t hold any gold. They like 99.5% of investors believe that trees grow to heaven together with stocks and property.

Based on the stock market in the last 40 years, most investors could of course not avoid making money. Therefore very few are in a Confucius state of preparedness and will be totally taken by surprise when the next major crash starts.

Initially, they will expect central banks to save them again. But when the V recovery doesn’t happen and the market just continues down, most investors will ride the market all the way to the bottom.

I would be surprised if markets in the next few years fall by less than 90% like in 1929-32.

The Buffett indicator of market cap to GDP is now giving us a major warning. As the graph below shows stocks are now at an all time high valuation in relation to GDP.

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