In a recent interview with Stansberry Research, Macro Investor Bert Dohmen issued a dire warning about the future of the US and global economy. According to Dohmen, anyone who believes the banking crisis is over is engaging in wishful thinking. He believes that the three biggest banking failures in US history within six days are just the tip of the iceberg and that the majority of the iceberg is below water and will sink everyone else.
Furthermore, Dohmen believes that decades of systemic risk have built up in the derivatives market, which is headed for a seismic crash. There is about $1.6 quadrillion of derivatives outstanding internationally, and this amount is unregulated. The CFTC tried to regulate derivatives in 1999 but was fought by the biggest names in the investment field. Dohmen predicts that when derivatives start falling apart, it will be like dominoes falling, and it will be an international crisis.
Dohmen predicts that the Fed will print trillions upon trillions of dollars to try to stabilize markets. He says that he withdrew money from banks well in advance of the current crisis, and if US lawmakers don’t reverse course, he forecasts an economic collapse as bad or worse than the Great Depression.
Dohmen believes that the 1930s will repeat itself, and this decade will be like the 1930s. He thinks that it will be a ten-year depression, but it could be worse than the Great Depression. Dohmen believes that the government and the Federal Reserve are doing the same things they did in the 1930s, where it was a ten-year depression. He thinks that spending is up the wazoo, and tax increases are like you cannot believe. President Biden wants to double the capital gains rate tax from 20% to about 40%, which Dohmen thinks is a killer for the economy.
Dohmen is not a believer in Bitcoin and crypto, and he thinks that gold will be a safe haven, but only after a coming crash. The first phase of gold is on the way to a top, an important top, and then a very strong correction in gold. Dohmen cautions that people shouldn’t be trapped when they read headlines that gold made a new record high. That would be a sell signal. Eventually, people could have a great buying opportunity when the central banks step on the accelerator and create trillions and trillions of dollars of artificial money.
Dohmen’s outlook is certainly pessimistic, but it’s not without merit. There are many factors that contribute to the health of the global economy, and many of those factors are not in good shape. One of the biggest problems is the amount of debt that countries and individuals are carrying. Debt levels are at record highs, and interest rates are at record lows. If interest rates were to rise, many countries and individuals would be unable to service their debt, which would lead to defaults and bankruptcies.
Another issue is the level of inequality in society. The rich are getting richer, and the poor are getting poorer. This leads to a lack of demand for goods and services, which can slow down economic growth. Furthermore, there is a lack of investment in infrastructure, education, and healthcare, which can hurt economic growth in the long run.
Dohmen’s prediction of a coming crash is not without precedent. There have been many crashes in the past, including the Great Depression, the dot-com bubble, and the 2008 financial crisis. However, it’s important to remember that crashes are not the end of the world. They can be painful, but they can also be opportunities for growth and change. After the Great Depression, for example, the US government instituted policies that helped to create the middle class and led to decades of prosperity.