Key asset markets in the United States have reached extremely overbought levels, including everything from stocks to real estate. And while most Americans are feeling positive about economic growth in the near-term, legendary global investor Paul Tudor Jones cautions that the long-term outlook for America is very bleak.
You look at prices of stocks, real estate, anything… We’re going to have to mean revert to a normal real rate of interest with a normal term premium that’s existed for 250 years. We’re going to have to get back to that. We’re going to have to get back to a sustainable fiscal policy and that probably means the price of assets goes down in the very long run.
The next recession is really frightening because we don’t have any stabilizers… We’ll have monetary policy, which will exhaust really quickly, but we don’t have any fiscal stabilizers.
If the next recession is anything like the last one, we can expect massive price destruction across the board, large-scale job losses, and millions of people seeking assistance to help with food, housing and medical expenses via emergency programs.
Moreover, as we’ve previously warned, the trigger for the next crisis could come in many forms, one of the most likely of which is a total loss of confidence in the U.S. dollar.
That being said, physical assets that actually have value rather than hype will be the order of the day.
We need only look to Venezuela to understand what that means in an economic collapse, where even the most basic of necessities like food, medical supplies and toiletries are in short supply.
When it happens it’ll come seemingly out of nowhere and at that point it will be too late to prepare for the worst case scenario because it will already be in progress.
We encourage readers to consider the physical assets of last resort that have been the class go-to for capital flows when bubbles burst, including gold and silver, secure farmland, and a healthy supply of basic emergency goods to dip into should the system around us completely tank.
Of course, many claim that this time is different and those worried about collapse and price destruction simply don’t understand the mechanics of centrally planned economies, a claim to which Jones bluntly responds:
The one thing I’ve learned over the past 40 years — these price patterns it’s the same old story so often just with different characters, different times, different plots