Our Immediate Future

Rip Van Winkle awakened from a multi-decade slumber to see a country he didn’t recognize. While the people he met upon awakening may have been a little scruffy, they had newfound freedom and the hope that the future would be better. Now the situation is reversed. We are putting an excessive burden of debt on our children and grandchildren. There are no jobs, and we are losing our civil liberties. This is not a great time for people who believe in things like civil liberty, freedom, and common sense.

I’m very concerned that troops are coming back from Iraq at the same time we are passing legislation that allows for indefinite detention of U.S. citizens without habeas corpus. The troops coming home right now are the most disconnected from society in our country’s history. There’s a reason for this: our country previously made sacrifices to fund wars; now we just turn on the money spigots. This not only creates debt problems down the road, but it creates the illusion that no war is going on. This isn’t a good thing. Massive civil unrest is coming, and I wouldn’t be surprised if you saw troops roaming the streets on U.S. soil.

There’s a reason why the government always goes after the educated and independent thinkers; they are the ones who can cut through all the crap and recognize what’s happening. People are way too caught up in useless things while our country is going down the drain. This is the kind of downward spiral I’ve read about in history books, and it’s playing out more or less exactly as it should. As things get worse economically, are we printing more money or less? Do we have more freedom or less? Are our leaders keeping their promises or breaking them? As King Solomon would say, there is nothing new under the sun.

Predicting this mess in America is not hard at all, but getting the timing right is. People who predicted the housing crash knew when it would arrive based on when interest rates on ARMs reset. We don’t know exactly when Treasuries will “reset” higher, but it will happen. That’s when the fundamentals take over. For housing, the fundamentals that “took over” once interest rates reset higher were things like median home prices being way out of line with median income. You can only mask a problem for so long before a catalyst or two exposes all your faults.

2012 is going to be a year of great volatility. Can gold correct to $1200? Sure. Can gold also rocket launch to $2500? Of course. It will not be easy to navigate through this mess, and I am quite sure a lot of investors will be wiped out. Bond collapses are always the worst, and Baby Boomers need to get the hell out of managed accounts and do their own investing. Think an MF Global fiasco can’t happen again? Think again. I expect bank runs as early as next year in America.

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  • Matt R.

    This is indeed a trying time. Thank you for all you do to educate readers with your insightful blog. 

    • http://www.expectedreturnsblog.com Moses

      Thanks Matt

  • lidya

    This is the first time you are mentioning about correction to 1200. What is your suggestion?  Keep gold or sell it now and but again around 1200.

    • http://www.expectedreturnsblog.com Moses

      I don’t necessarily think gold will hit $1200, but that’s a possibility. I don’t think gold is something you can really sell because a very small event can trigger a panic. 

  • http://www.learcapital.com/exactprice haljett

    I hadn’t considered the returning troops element. That’s interesting. And a bit disconcerting to think about. I’m hoping the worst case doesn’t come to that, but the disappearing civil liberties and disregard for the Constitution and the Rule of Law by our politicians and the uber wealthy is beginning to really worry me.

    • http://www.expectedreturnsblog.com Moses

      Yea the disappearance of our civil liberties is saddening, and our relative apathy to our loss of rights will come back to haunt us.

      • GordonD

        Yes, but where to go? That’s the rub. Most English-speaking nations are even less free than the U.S.A..  As one of your other readers mentioned, maybe Singapore. But the weather there is terribly hot and humid. Also, economic upheaval and war often go together and Singapore looks like a nice plum for the picking if hostilities do break out world-wide. Ireland, maybe.

        • http://www.learcapital.com/exactprice haljett

          That is the 64 dollar question, Gordon. I do think there are places to go. I was just discussing this issue with some family and I think the consensus was that one should just disappear into the wilderness, but the problem with that is that one needs to be self-sufficient, able to live off the land. Something the vast majority of people in the USA are clueless about.

          • Techperson

            Chile

        • http://www.expectedreturnsblog.com Moses

          Singapore stays out of everyone’s way and it will be one of the perceived safe havens for the big money. And as a safe haven of the big money, it will probably be left unscathed much in the way Switzerland was.

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  • lidya

    Gold price is going down, and heading about $1000, I think it is better to sell the gold now and buy it again at $1000.

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