In August of last year I read an interesting book called The Great Depression Ahead by Harry Dent and posted the following blog. Dent’s book summarized that demographic changes and technology cycles predict business and economic trends and that between now and 2014 the stock market will correct to around 3,500 (the market today is trading at around 12,900).
A patron told me about another book called Aftershock, written by three economists, David Wiedemer, Robert Wiedemer and Cindy Spitzer who had correctly predicted much of what happened during the financial downturn of 2008 in their first book, America’s Bubble Economy – Profit When it Pops.
In Aftershock, these economists estimate that the United States governments credit limit is between $15 to $20 trillion (currently we owe $15 trillion) and that once the we reach our credit limit foreign investors will stop or dramatically begin to reduce their lending to us causing failed treasury auctions.
The authors seem to think that this may happen sometime around 2013 or 2014 which tracks closely to what Mr. Dent is predicting. When this happens they expect a “triple double digit economy” with double digit unemployment (they mention it could be as high as 40%), double digit inflation and double digit interest rates. Gas prices will soar, government services will need to be cut, real estate will go much lower and the stock market will tank.
Is it just a coincidence that the Federal Reserve has announced that they will be keeping interest rates at almost zero until the end of 2014 ? I recall Ron Paul saying in one of the Republican debates that “the Federal Reserve must really be worried about something to be keeping rates this low for this long”.
The authors suggest that there is very little that can be done to avoid what’s about to happen because political leaders don’t have the willpower to do something until it is too late. They recommend lightening up significantly on stocks, buying gold and keeping a lot of cash on hand.
Of course no one can predict the future and hopefully what’s mentioned above doesn’t occur, but it might be worth taking some precautions just in case.