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.