Global Crises Warnings Everywhere: Has the Canary Died?
It’s time we talked about the inverted yield curve.
Oh no! Please don't click away from this column!
For indulging in this line of approach, if you will, helps to explain why components of the U.S. economy are important indicators of its health, or lack thereof.
The U.S. Treasury Bond yield curves are your "Canary in the Coal Mine."
A quick primer into understanding this economic indicator is essential in the days and months ahead.
Investopedia.com defines an inverted yield curve as:
- An inverted yield curve occurs when short-term debt instruments (U.S. Treasuries) have higher yields than long term instruments of the same credit risk profile
- An inverted yield curve is unusual; it reflects bond investors’ expectations for a decline in longer-term interest rates, typically associated with recessions
Macro economist and renowned investor, George Gammon, does a masterful job simplifying the concepts around this rare phenomenon and why it is an, ominous yet, almost perfect predictor of severe financial crisis.
In a recent interview with Kitco News, George outlines a very plausible explanation as to why the yield curve is so telling.
Gammon says it’s the "smart money" or the "uber wealthy insiders" causing this circuit breaker to pop (or otherwise outright lastingly fail!).
In other words, the absolute wealthiest elites making up trillions in collective holdings, come to understand events well in advance of We the People and move to protect their money by moving massive amounts of capital into the longer-term treasuries, which in turn drops the yield below that of the shorter-term instruments.
So what?! You may ask.
As Gammon says, there are "No certainties, only probabilities."
However, historically, as the inversion corrects itself, a significant financial crisis typically follows, like we saw in 2008.
The smart money has voted its wallet that the "Black Swan" or an "an unpredictable or unforeseen event, typically one with extreme consequences," is arriving and they can see it.
Since We the People do not breathe the rarified air and take our dessert and brandy on the veranda, is there any way we can know what the Black Swan is?
No, not enough zeros in our accounts unfortunately.
However, we can narrow it down to a few suspects which make the elite’s freakout understandable. We see these things every day and feel them in our community.
A few suspect Black Swans for your radar screen:
- Unsustainable debt and middle class destroying inflation
- Extreme risk levels that world war could break out – pick your hot spot
- Democracy crushing climate autocrats locking down economies, stripping liberty here and abroad
- China going full-on Mao Zedong, burning banks and businesses globally as the Iron Curtain pulls closed and their economy sends billions back to poverty
- A new pandemic under sketchy pretenses and the resultant lockdowns that conveniently make election integrity and civil rights disappear — only this time we turn over power to the WHO
- Impeachments and indictments of political rivals tears the thin camouflage off the hidden Cold Civil War in our country with foreign and transnational attackers ready to capitalize
- Insert your own idea of what the Swan is here
The point is the elites know and are tipping us off with their capital moves.
George Gammon warns us to make preparations now, highlighting Michael Burry’s troublesome bets last week as a clear signal.
Burry is the famous hedge fund investment manager.
He called the housing crisis in 2008 and made billions. Last week, the great Burry shorted the markets to the tune of $1.6 billion in options.
That's a lot of money to wager on options which could expire worthless if he is not right.
It sounds like he has conviction. Translation? Time for caution.
If you used to make fun of "preppers," it might be a good idea to eat a little crow and emulate a few sensible steps.
Taking stock of your financial situation, upcoming big-ticket purchases, and cash on hand are prudent anytime.
For the type of storms that we could experience from the candidate Black Swans above, it would be smart to make sure you have looked at your food, water and energy access and think about how sustainable those things are in different scenarios.
Most importantly, the best thing to do before a crisis is to assess your community and what your role is in that group.
This is the number one factor in gaining the resilience and sustainability to face the unknown. If you don’t know your neighbors, now is a great time to start.
If anything, we should return to that time when we did know our neighbors.
We the People are beyond durable.
Our history is overflowing with examples of how we pulled together when the chips were down. Although the last three years have claimed many lives, ruined businesses and decremented our freedoms. It may have been a precursor to something much larger.
The richest of the rich are showing us that they believe this to be the case and that the real storm is lapping on our shores.
Are we ready? Do we have the will to be?
Brig. Gen. Blaine Holt (retired) is a co-founder of Restore Liberty, a former deputy representative to NATO, a lifetime member on the Council on Foreign Relations, and a Newsmax contributor. The views presented are those of the author and do not represent the views of the U.S. government, U.S.Department of Defense, or its components. Read Gen. Holt's reports — More Here.
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