We believe, more than ever, in the inevitability of an economic collapse…sometime around October…as a number of black swans on the wing head our way. [Let me explain why that is likely the case.]
The above comments, and those below, have been edited by Lorimer Wilson, editor of munKNEE.com (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (see sample here – register here) for the sake of clarity ([ ]) and brevity (…) to provide a fast and easy read. The contents of this post have been excerpted from an article* by Jeff Thomas (internationalman.com) originally posted on SeekingAlpha.com under the title Preparing for a Potential Economic Collapse in October and which can be read in its unabridged format HERE. (This paragraph must be included in any article re-posting to avoid copyright infringement.)
When debt reaches the level that it cannot be repaid, a major re-set of some sort must take place and the major economies of the world have reached and exceeded that point. The debt problem is no mere anomaly that can be papered over. It is, instead, systemic. There must be a major forgiveness of debt, a default, or an economic collapse, or some combination of the three and so, those who recognise the inevitability of such an event have been storing their nuts away in preparation for an economic winter.
The greatest…[black swan on the horizon] is that, once every five years, the International Monetary Fund (IMF) renews its membership structure (SDR quota, governors, and voting power.) This is significantly in question this year, as China vies for a larger chair at the table. China surpassed the U.S. in 2014 as the world’s largest manufacturing economy but still has less than one-quarter of the voting power of the U.S. and even has less than France or Germany.
The IMF has been dragging its feet on a rebalancing of IMF member voting because doing so would diminishing the influence of the U.S. and increase China’s and has gone so far as to announce the consideration of a delay. In effect it has run the possible delay up the flagpole to see whether it will fly or be torn down.
Clearly the IMF feels it’s on shaky ground with its proposal – and it should be. In recent years, it has arrogantly pushed China away from the IMF table time after time, so the Chinese have taken matters into their own hands. They’ve created their own international development bank, their own worldwide cable communication system, and even their own SWIFT system.
Very soon China will have the ability to run their own worldwide economic system, independent of the U.S./EU/IMF system, and many of the world’s governments have recognised the future opportunities that this would bring to the world. First, Russia and the countries of Southeast Asia signed on, then South America, Africa, and, finally, some EU countries reached agreements with China.
The IMF is in a jam and no member country more so than the U.S.. If, in October, it allows China greater voting power, it will cast in stone China’s increased economic influence over the world. However, if the IMF chooses to put off China another year, China may move ahead with its own economic system…
What does this mean to the investor? It suggests that, once again in history, October promises to be a month when great economic change may well take place.
When dramatic change looms, it’s best to keep your powder dry, whilst keeping an eye open for opportunities as soon as events reveal the future. Until then, nut–gathering serves to provide an insurance policy against unpleasant economic surprises.
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