Three Major Market Events That WILL Happen

Thanksgiving is now out of the way. We can move on to Christmas. And New Year’s Eve. And then 2014. And 2015. And onward into the future!

But what’s in the future? If only we knew…

Making predictions is tough…especially when we have no idea what to expect. But wait…Some of the most important things we will see in the future have already happened many times.

Yes, dear reader…your editor is going way, way out on a very solid limb. He has identified three things that WILL happen. No doubt about it. He guarantees it.

I. Interest Rates Will Go Up

Interest rates are not fixed. And the Federal Reserve can’t suppress them forever. Nobody has repealed the interest rate cycle.

So, expect rates to go up.

When?

Hey, you want an awful lot from a free publication, don’t you? Isn’t it enough to give you a guaranteed future event?

We can also tell you that when it happens, there will be hell to pay. Here’s Michael Snyder at Global Research:

At this point, we have painted ourselves into a corner by accumulating so much debt. We simply cannot afford to have rates rise significantly.

For example, if the average rate of interest on US government debt rose to just 6% (and it has been much higher than that at various times in the past), we would be paying more than a trillion dollars a year just in interest on the national debt.

But it wouldn’t be just the federal government that would suffer. Just consider what higher rates would do to the real estate market.

About a year ago, the rate on 30-year mortgages was sitting at 3.31%. The monthly payment on a 30-year, $300,000 mortgage at that rate is $1,315.52.

If the 30-year rate rises to 8%, the monthly payment on a 30-year, $300,000 mortgage would be $2,201.29.

Does 8% sound crazy to you?

It shouldn’t. 8% was considered to be normal back in the year 2000.

II. Our Monetary System Will Collapse

No paper money standard has ever survived a complete credit cycle. Certainly not with a central bank on the job!

Higher interest rates, bitcoin, a credit crisis, a central bank miscalculation – something will bring it down. Something always does.

Bitcoin? Maybe. Bitcoin hit the $1,000-per-unit mark on Wednesday, the day before Thanksgiving. My sons followed it over the weekend.

Hey, I made $1,000 last night,‘ said one. ‘Bitcoin went up $100.

Yeah, and I’m thinking of cashing out and buying an old car,‘ said another.

Bitcoin hit $1,230 on Sunday. A bitcoin hedge fund is up 5,000% – which could be the best performance of any hedge fund in history.

Bitcoin will probably bite the dust sometime soon. That’s the trouble with new technology. There’s always newer technology – and maybe a better bitcoin.

Meanwhile, the dollar has been in a gentle decline since July. Someday, the decline won’t be so gentle. It will be brutal. Then investors will suffer huge losses as dollar-denominated assets sink.

Here’s more from Global Research:

The death of the dollar is coming, and it will probably be China that pulls the trigger. […]

As the global economy trembled before the prospect of a US default last month… China’s official Xinhua news agency called for a “de-Americanized” world.

It also urged the creation of a “new international reserve currency… to replace the dominant US dollar”.

So why should the rest of the planet listen to China?

Well, China now accounts for more global trade than anyone else does, including the US.

China is also now the number one importer of oil in the world.
At this point, China is even importing more oil from Saudi Arabia than the US is.

China now has an enormous amount of economic power globally, and the Chinese want the rest of the planet to start using less US dollars and to start using more of their own currency. The following is from a recent article in the Vancouver Sun:

Three years after China allowed the yuan to start trading in Hong Kong’s offshore market, banks and investors around the world are positioning themselves to get involved in what Nomura Holdings Inc. calls the biggest revolution in the $5.3 trillion currency market since the creation of the euro in 1999.

And over the past few years we have seen the global use of the yuan rise dramatically. […]

International use of the yuan is increasing as the world’s second-largest economy opens up its capital markets. In the first nine months of this year, about 17% of China’s global trade was settled in the currency, compared with less than one percent in 2009, according to Deutsche Bank AG.

III. US Empire Will Go the Way of All Empires
 

The US can still send its ships and bombers to stir up hornets’ nests wherever it pleases. But someday the hornets will develop a deadly sting.

Or maybe the empire will just go broke.

Who knows? Every empire has to find a way to exterminate itself. The US will be no exception.

This last event could be the most exciting. Falling interest rates and collapsing currencies can be fun to watch, provided you’re not standing directly beneath them. But a falling empire? The imperial warriors typically bring down a lot of innocent bystanders along with them.

But don’t worry. Be happy. Hold onto your gold.

Regards,

Bill Bonner
for Markets and Money

 

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Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.


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