by Doug Casey, International Man:
I first began to predict a major economic collapse back in 1999. Although I understood that it was at least fifteen years off and possibly more, I believed that it would be wise to begin to prepare for it then, as the actual date of collapse could not be predicted. (Better to be a few years early than even one day too late.)
Not surprisingly, back then, this prediction appeared to most people to not only be unlikely, but laughable.
Today, we’re a good bit closer to the onset of an economic crisis and it now not only seems possible, but quite likely to an increasing number of those people who are paying attention.
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And not surprisingly, as so many people are now realising the inevitability of such a crisis, they’re also realising that they should have been preparing for it. Preparation for a major event such as this requires a fair bit of time and many people are belatedly coming to realise that they may be caught with their pants down when the initial crashes begin.
Whenever the inevitability of such a debacle is first recognized, the first reaction for most people is to dive into denial, saying, “It simply can’t happen. Nobody would let it happen, because nobody benefits.”
But that’s just it. Not only does someone benefit, they’ll benefit on a grand scale.
The controllers of an economy always benefit from a collapse
In 1814, Napoleon’s army went into battle at Waterloo, Belgium. The investment moguls at Capel Court in the City of London were biting their nails with worry, as the outcome of the battle would determine stock prices. If the French won, stock prices would drop dramatically. If Britain won, prices would rise dramatically.
In those days, communication was slow. it would take considerable time for the official envoy to travel from the battlefield in Belgium to London with the news of the outcome of the battle.
England’s foremost banker, Nathan Rothschild, had sent his own messenger to Waterloo with instructions to return by the fastest possible means with the news. Consequently, Mister Rothschild received the news many hours ahead of the return by official messenger.
He then was seen at the stock exchange selling as much as he could as quickly as he could. The word went out: “Rothschild knows.” This elicited a panic and others sold as quickly as they could.
Prices plummeted quickly; then, as the official envoy from Waterloo came up the Thames, Rothschild suddenly bought heavily at a rock-bottom price. Within the hour, the envoy provided the news that Britain had won the battle and prices shot through the roof, making enormous profits for Rothschild, all within one trading day.
He later called it, “The best business I ever did.”
The above tale is one that should be committed to memory, as it informs us that those who know of an economic event will most certainly capitalise on it.
Those who pull the strings make tremendous profits by manipulating an economy over the length of prosperous times, but they make just as much in crisis periods. They simply wait until an economic collapse has been completed and the dust has settled, then they buy up the remaining companies at rock-bottom prices at a time when the average investor has been wiped out. Then, when the economy begins its recovery, they ride the next wave of prosperity.
For this reason, anyone who’s in the economic driver’s seat understands that he’s best-served by creating false prosperity, then triggering its collapse, then cashing in on the collapse.
When this realisation occurs to the average investor, he more often than not declares, “Well, if that’s true, I’m toast either way.”
But this is only true if he takes a passive role in his economic future.
You can benefit from a collapse
The Mandarin word for “crisis” also means “opportunity.”
Those who are able to understand this Chinese concept have a tremendous opportunity in terms of investment. They can recognise that the coming crisis is also an opportunity.
Yes, there will be a collapse in the stock and bond markets. These will unquestionably be deflationary events, causing asset prices to crater.
But this need not spell disaster. The game is not over, but the crisis is unquestionably a game-changer.
It’s important to bear in mind that real wealth never disappears; it merely changes hands.
To prepare for the new game, the objective would be to liquidate all or most stocks, bonds and hard assets such as real estate, in advance of a crash.
Next you would wish to expatriate the proceeds to a jurisdiction that’s less likely to be a casualty of the crisis and, hopefully, would be a net-gainer at such a time.
Like those who actually pull the strings, you’d not only avoid becoming a casualty of the economic collapse, you’d stand to gain from it.
Editor’s Note: The economic trajectory is troubling. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion.