How To Survive The Coming Stock Market Crash

Here are my takeaways from a great 2021 book about the global economic system, "Gold Matters" by Egon von Greyerz and Matthew Piepenburg.

The stock market will crash soon and inevitably. No one knows for sure exactly when so the specific question is, “Are you prepared?”

Here are some of the specific reasons why we are about to enter a severe world recession: 

Basic Principles 

1. People prefer to feel good rather than think critically.
2. Greed and envy trump common sense, logic and prudent planning. That is, immediate gratification is sexier than delayed gratification
3. The real economy is based upon the production and trade of goods and services (not the liquidity-supported stock market).
4. Wealth disparity results in rising populism and extreme left and right tensions.
5. Governments prefer to lie, cheat and steal to get re-elected so all thinking is short-term. Policymakers resort to disinformation to keep their currency-debasing schemes of a rapidly-rising money supply off the radar of public knowledge. Ditto for the CPI which is quoted to be 8% but is actually in the 15%-20% range. (Check the cost of gasoline and groceries, not what the government tells you.)
6. The real measure of inflation is the rising money supply (which is why the U.S. government no longer publishes the weekly M1, M2 and M3 figures).
7. Actual yields and inflation rates are less important than the inflation rate being higher than the prevailing interest rate.

Monetary

1.  Governments print money out of thin air rather than have a gold-backed currency and be accountable for their decisions.
2. Policymakers pretend that the resulting massive debt problem can be solved with even more debt.
3. Increases in the broad money supply is the best definition of inflation and this directly causes currency debasement.
4. In 2021, total combined corporate, public and household U.S. debt hit $84T, a sum that can never be repaid nor its interest expense serviced (without deception and market manipulation by the U.S. and all other governments).
5. Every single event of hyperinflation in history and civilization breakdown is the result of currency collapse.
6. All the major currencies have lost 80%-86% in real purchasing power since 2000 and 96%-99% since 1971 when Nixon closed the gold window (including the USD, the world’s reserve currency, at 98%).
7. As a result of this tsunami of fake money, U.S. and global stocks are massively overvalued.
8. The secular bull market of the last 40 years was fueled not by productivity but by profligate money printing and credit (i.e., debt) expansion by central and commercial banks.
9. The U.S. government is bankrupt (It has produced and borrowed trillions of dollars of fiat currency at zero cost).

Psychological

1.  No one wants to believe that they cannot trust their governments, banks and international financial regulators.
2. Or more to the point, the usual denial is that whatever happens in the world won’t affect me.
3. Based on the (artificially inflated) stock market of the last 40 years, this is an understandable delusion.
4. People always prefer the illusion of short-term gain to acknowledging the reality of the long-term pain it always creates.
5. The public has lost trust in the markets, central and commercial bankers, media, banks and politicians.
6. #1 and #4 can co-exist because emotional states don’t make sense which is why folks in denial can maintain 2 sets of opposing thoughts at the same time.
7. This brings up the reality of hypostatization or reification. Reification is a fallacy of ambiguity when an abstraction is treated as if it were a concrete real event or physical entity. In other words, it is the error of treating something that is not concrete, such as an idea, as a concrete thing. This is an important basis for deception and propaganda.
8. An excellent example is Modern Monetary Theory which is used to justify “quantitative easing”, more Orwellian double-speak to cover up and justify government-sanctioned theft of the working man’s wages. Governments refuse to control spending and be responsible so they print fake money which debases currency and creates runaway inflation.

Fiscal Indicators

1.  The Buffett Indicator of market cap to GDP shows stocks were at an all-time high valuation in relation to GDP (data to Q4/2021).
2. Traditional portfolio thinking (bonds are a safe haven for falling stocks in a recession) is outdated and dangerous.
3. Bond markets have been incredibly inflated and distorted by central banks pumping up prices so that by 2021, over $19T of global bonds were trading at negative-yielding levels for the first time in world history.
4. Because as bond prices skyrocketed, bond yields plummeted. By definition, a negative yielding bond is a defaulting bond. When adjusted for inflation, half of the world’s bonds are now yielding negative returns. Meaning you are guaranteed to lose money.
5. The key variable for gold valuation is negative real yields (i.e., the 10-Year Treasury yield minus the “official” CPI inflation rate). Therefore, the real yield is the real inflation-adjusted yield.
6. The Fed will  “solve” its unsustainable debt nightmare by devaluing the currency to partially inflate its way out of debt.

 What Does This All Mean For You?

1.  Noah built the ark before the Flood.
2. Every dollar you own is losing purchasing power by the year, month, day, and second.
3. Central banks and fiscal deficits are the big forces to watch, as are rising and falling bond yields and inflation rates (not the daily variation of your stock price which is like rearranging the deck chairs on the Titanic).
4. The U.S. and international stock markets will crash sooner rather than later, along with the real estate bubble, and the Chinese economy
5. THE TIME TO ACT IS NOW!

A Practical Solution

1.  Some prominent fund managers are getting out of their stock positions completely. Most are not.
2. The key to prudence is risk mitigation. If you do not want to liquidate your stock positions (because you believe in the government or the future of your company or are the CEO and don’t want to create a selling panic), you can hedge your international (non-U.S. or dual-listed) stock positions through a Stone Creek Global stock loan of $1M-$500M.
3. This risk diversification strategy allows you to transfer the risk of holding your stocks in these volatile times to SCG.  Invest your cash into gold, silver, real estate and other tangible, physical assets as well as crypto (if you believe it is a store of value).
4. If the stock crashes, it is SCG that has the problem.
5. An SCG stock loan allows you to enjoy: 

• actual liquidity which is difficult to find now through banks or other commercial lenders
• risk mitigation through diversification
• 40%-60% LTV
• the protection of all gains
• a non-recourse loan (if your stock  collapses, you walk away because you have not pledged your personal or corporate assets)
• the cheapest funding available
• simple interest
• interest-only, quarterly payments
• 3.99% interest
• a huge hedge against inflation

 The Take-Away

1.  be aware, the times are changing
2. get educated, do your own research (do other people do your pushups for you?)
3. don’t believe everything you see, hear or read, especially the government or news outlets
4. take action now to protect your family, your legacy, your company and your future

 Yours respectfully,

George Glumac

President

Secure Stock Loans