Today, I’m making a special post to this regular column, outlining my economic predictions for 2019:
JWR’s Economic Predictions for 2019
As we all know, a new Democrat Party-dominated congress will be seated on Thursday January 3, 2019. The actions of the 116th Congress are bound to have a profound effect on the U.S. economy. Given the history of profligate spending and public debt accumulation by both major parties, we can expect more of the same. And, in the event of a credit, bank, or stock market crisis, we can expect a Democrat dominated congress to spend even more.
An Economy in Recession
Here is my economic prediction for 2019 in just one word: Recession. To elaborate: The currently flattened yield curve will very likely soon invert–most likely in January of 2019. In recent decades, yield curve inversion has almost always been the sign of imminent recession. Remember: The “recovery” following the 2007-2008 global credit crisis was not a genuine market cycle recovery. Instead, it was a false recovery that was fueled by central banks setting artificially low interest rates. Therefore, I expect the nascent reversion recession to be deep and long. Plan accordingly.
The Fed: Higher interest rates, Then Lower
Regardless of the spending habits of congress, it is clear that higher interest rates are ahead. Unless there is a severe crisis, there will probably be three more rate increases in 2019.
The Federal Reserve private banking cartel has held carte blanche since 1913. They have manufactured inflation through a debt-based monetary system, in collusion with the U.S. Treasury. (The Treasury also benefits, since inflation is a a hidden form of taxation.) Since 1913, the purchasing power of the U.S. Dollar has declined 97%.
The Fed is presently unwinding their Quantitative Easing (QE) holdings. They’ve been inching interest rates upwards. They will continue to do so, until the Wall Street crowd screams. At some point, higher rates will push the American economy into recession. If the credit market and economy shut down, then the Fed will probably resort again to a Zero Interest Rate Policy (ZIRP). But I suspect that this will be the last time that this ploy will succeed. The Fed will have run out of arrows in their quiver.
Two More Fed Predictions
Despite President Trump’s proclamations, it is still the big banking interests that really control America. So unless there is a mega crash that triggers a currency reset and abandonment of the Federal Reserve central bank system, I can make two more predictions:
1.) There will be no audit of the Federal Reserve in 2019.
2.) There will be no federalization of the Federal Reserve in 2019. It will remain a largely independent private banking cartel. (“It isn’t Federal, and it has no Reserves.” It is no more Federal than Federal Express. In fact their numbers follow each other in most phone books. Neither are up front in the “Government” listings.)
Legislation and congressional hearings
As the 116th Congress gets underway on Thursday, we can expect to hear a lot of noise from the Democrats, namely:
- A raft of new legislation pushing the socialist, statist agenda.
- Calls for Presidential impeachment, even before any committee hearings.
- Numerous and lengthy hearings in various committees, with a parade of histrionic witnesses.
- Stalled budget appropriations, threats of government shut-downs and actual shut-downs.
- Changes to House rules.
- Multiple impeachment votes.
- Another rise in the Federal Debt Ceiling. (Question: Why do they keep calling it a “ceiling”?)
- A wide variety of civilian disarmament legislation.
- Calls for “compromise”, “bipartisanship”, and “common sense legislation.”
- Legislation bundling, to sneak through Democrat agenda items.
- Legislative gridlock, punctuated by terrifying bouts of “compromise.”
- Continuing over-spending (annual budget deficits) and National Debt accumulation.
- A continuation of the debt-based money status quo.
- Further accumulation of power at the Federal level.
- Restrictions on cryptocurrency trading. Federal legislators will only be content once they issue their own (closely tracked) blockchain currency. Meanwhile, all private cryptos will continue to be marginalized, taxed, and regulated out of existence–or at least pushed offshore or underground.
President Trump may have to regularly rely on shutting down the government, to have any hope of furthering his policy goals.
A Continuing, But Targeted trade war
The current trade war is likely to continue. But instead of the outright battle axe strokes that were first seen, it will transition to a death of a thousand cuts. Very precise tariff adjustments will be made by both the U.S. and China. These adjustments will often benefit–or harm–particular companies. I predict that these laws and executive orders will cross the threshold of Bills of Attainder. Without actually naming particular companies, these trade laws will be be so precisely worded that they will in effect signal the health or death of individual mining, manufacturing, import/export, and retail companies. And I wouldn’t be surprised to see Tesla Motors (TSLA) be granted some trade pact or regulatory miracle that saves them from the brink of extinction. They know just how the game is played, in the 21st Century global economy.
A Weaker Dollar
Ironically, Dollar weakness will not come as a wish granted to Trump, but rather from a cold, hard realization by our trading partners that America’s ever-expanding debt (now roughly 31% of global debt) is not sustainable. With the U.S. National Debt now accumulating at just over $1 trillion USD per year, this game cannot go on much longer. Servicing this debt is presently just barely manageable. Just paying the interest on the debt is close to the cost of National Defense. But what will happen when interest rates restore to their historic norm? I see absolute doom ahead, for the U.S. Dollar Perhaps it won’t come in 2019, but it is almost bound to happen sometime in the decade of the 2020s. This will give new meaning to the phrase 20/20 hindsight.”
Real Estate, Stocks, and Auto Makers
With a recession now looming and interest rates climbing, I expect the real estate market to drop at least 15% in most markets. The steepest house price declines will be in resort areas, where folks will be dumping their vacation homes. In Idaho, for instance, the overall market may drop 10%, but Sun Valley, Sandpoint, McCall, and Ketchum may see a 20% or more decline.
I expect the recent decline in the stock market to continue. Be forewarned that this may not be an “orderly decline”. Very few companies will prove themselves to be recession-proof. In the short term, expect to see some quiet Plunge Protection stock buys from the banksters and some much-heralded corporate stock buy-backs. If there are stock market rallies, they will most likely be Suckers’ Rallies. The smart money quietly exited months ago.
Meanwhile, stairstepping interest rates will really hurt sales of new cars. By the time the Fed reverses course and lowers rates, it will probably be too late for Detroit auto makers to pull out of their dive. This may be the last nail in the coffin of Tesla Motors (TSLA). However, given their amazing political connections, don’t be surprised in they end up with more U.S. taxpayer Dollars, this time in the form of a bailout.
Layoffs Ahead
Recession of course means corporate belt-tightening. Look for layoffs to begin early in 2019, staring with investment banks, mortgage lenders, and car manufacturers. By the way: The risk of a layoff is just one more reason to have a at least one year of storage food for your family! Nobody wants to have to choose between heating and eating.
Forex and Cryptocurrencies
I won’t venture many guesses on the Forex market. In a genuine global crisis, the U.S. Dollar may gain, but more out of familiarity than cold, hard mathematics. The sad truth is that more than 33% of global debt is held by the United States (public and private), and it is nigh-on mathematically impossible for that to be re-paid without a hefty cut in the value of the Dollar.
I expect the private crypto market to continue to be very volatile, and generally trend down The Bear Path in 2019–although punctuated by some dramatic rallies. The world’s governments and bankers hate private cryptos. In fact they hate all opaque markets that they cannot effectively tax. They will only be happy when they create their own “approved” transparent cryptos that they can track 100 percent and tax what ever percent they think that they can get way with.
Stronger Precious Metals
Precious metals have long been considered a safe haven. But a run-up in metals prices will have to wait for a genuine crisis. Just consider the current low prices of silver, gold, and platinum good buying opportunities. When the U.S. Dollar’s ongoing winning streak on the Forex ends, watch for silver and gold to jump in price. Silver, in particular has the best prospect of gaining versus the Dollar. Remember: You aren’t buying precious metals as an investment. Rather, you are buying them as insurance. They are fire insurance on the U.S. Dollar.
Other Tangibles
I will close my economic predictions for 2019 with this suggestion: If you haven’t already hedged your investment portfolio into tangibles, then you will probably get steamrollered, in the next few years. You need to limit your exposure to all Dollar-denominated investments. When a currency unit itself is at risk, then all investments denominated in that currency is at risk.
It will be things like silver, productive farm land, guns, and full capacity magazines that will shelter your nestegg, in the next decade. As always: buy low, and sell high. Today is the low, folks. But beware of what currency you accept, when you do eventually cash out. Perhaps it is best if you only take other tangibles in trade.
Mark my words: The day may soon come when trading a $1,000 face value bag of pre-1965 quarters and a couple of AR-15s will buy you a very nice suburban home or a rural farm.
I’m praying that you will all be safe, prosperous, and well in 2019. May God bless you! – JWR
I agree with your predictions for 2019. I have been aware of the current economic and political game since the mid 70’s when I began reading about the Federal Reserve and other faux paradigms that had become generally accepted. We are definite getting closer to the “end game”. I think we are edging towards a depression that will surpass the “Great Depression”. If you compare economic parameters to those of the 1930’s and combine that with the shift in cultural values, the plotted outcome is depressingly obvious.
Stocking up on tangibles is what my grandparents did as a typical accepted generational practice in the 1920’s. Going to the store every evening on the way home from work to get dinner wasn’t done. Store all items that are needed for “living”, worse case scenario is you can use them whether times are bad or not. Don’t forget coffee!! Pray. Learn and educate. Enjoy life. Plant a garden.
Your predicdtions are sound. I hope you are wrong, but I doubt you are. What is not understood however, is how the REAL ESTATE market is going to crash as well. Real Estate prices, homes, etc. have reached the end of the bubble and it’s going to burst! So, many who have turned-up their noses at Precious Metals in favor of Real Estate will lose bigly.
I agree that stacking silver and gold is NOT an investment, as much as it is an insurance policy. I tend to agree with you that gold is a great deal of wealth crammed into a small piece of metal. Silver is much more practical from the Survival side of the coin.
Debt, imposed on us by the Central Bank system poses the greatest threat to our Republic. Until the Federal Government regains control of the currency and the issue of currency either in coinage or the printing of bank notes, we will remain at odds with the Rothschilds and others who really control things in Washington.
You predict the Central Bank AKA Federal Reserve will not be audited in 2019. I don’t know. But, once the People realize what the privately-owned Federal Reserve has done, We the People may well DEMAND an audit.
We are on the verge of a Fincancial Reset, much as the resets of the past, 1913, 1933, 1945 and 1971. The Petro-Dollar system is dying rapidly. GOLD will kill the Federal Reserve. I’m convinced of that and Trump knows where the GOLD is. It’s my hope that Trump can end the tyranny of the Federal Reserve and Rothschild control. Be he successful in this effort will make him one of our greatest president, regardless of his other achievements.
God, guns, gold, gardening and guitars. Faith in the Lord brings me peace, especially with my efforts and purpose of working on growing my family’s preparedness. Guns and everything that goes with it gives me a chance to feel safe while always keeping aware of my surroundings. Gold and 90% silver gives us an insurance plan. Gardening provides us some self sufficiency along with our current long term food storage. Guitars is a term I use to enjoy life…music, walking with my family on a nice day, ect…whatever your “guitar” is, go out and do it ! Enjoy life and have faith.
Thank you JWR, for years you brought me peace and an open mind to learn, grow, prepare and believe in myself and purpose. I look forward to the new year and continuing my growth.
My Grandmother told me stories of how her family survived the Great Depression. The way life was before and during the collapse and how they thought they might starve to death even if you had money without ration stamps you couldn’t buy essentials. She was raised on a farm and had life skills previous to the Great Depression that helped her family survive. Growing up I remember her cellar be stocked with home grown canned foods and her reminding me to always be prepared physically and spiritually. A family of four could have easily survived a year. Now days when I tell those stories and remind people they should be prepared at the very least for a few months because of the just in time system at chain stores or disaster, I hear you worry to much or your a doomsdayer. I enjoy farm life , I enjoy canning my own food or milling my own lumber but most of all I enjoy my relationship with Christ! Really, being prepared is not about being worried but not having to. Thanks Mr. Rawles for such a fine site!
I want to wish the best for 2019 for everyone who makes this site possible. You’ll never know how much harm and suffering you have prevented and how many lives you have enriched. They will be significant in numbers.
Power to the people… only works when the people want the power and will not shirk the responsibility that comes with it. The American people have been tricked into believing that they no longer have the power, do not want it and should not seek it. Do not buy into this and do not believe it. The power still rests where it should and where it always has, with the people. The problem is that the people are failing to pick up the mantle and carry it forward. I do indeed hope that someday the citizens of this nation will wake up and realize what they have lost and what it will take to get it back and then do so. Until then, stay awake and stay prepared and teach others to do the same.
I also see this coming. My husband is currently loosing his job. And this area is very economically depressed. Has been for years. I am picking up every odd job I can find. I think it may take a while before he realizes that this is the case. I have tried talking him into putting in a wood stove. We have a wood stove, but he is resisting putting it in attached to the house. He really doesn’t believe that the economy is this bad. I do not want him going 2 states away to find work, but that is the only job he seems to be able to find, outside of working at Dollar General.
I can relate to SR. I came back from Viet Nam in 1968. I didn’t really know much about the ‘real world’…I was still under the umbrella of the U.S. of the 40’s-50s. The thing that started me thinking was an incident when I was working retail in 69-70. I had been out of country for most of the years from 1965…the only coins I knew were of course silver. When I got a clad coin in change one day I was stunned that someone would consider counterfitting a half dollar!!! To my chagrin, I was informed that it was a genuine U.S. coin. I didn’t really understand what was going on, but I knew something was wrong. I started saving every silver coin I could find.
I know a gal that worked for a mortgage bank. After 17 years of good reviews she got laid off. She was on the team that decided that layoffs were necessary. She didn’t know that here head was on the block.
Jim, your prediction of bank layoffs is already starting.
One addition,be on the lookout for deals on tangibles during the retailpocolypse-store closures will accelerate and allow upto 90+% discounts. PM’s have bottomed and are up substantially but still relatively affordable,ar parts are close to bottom(retail is near production cost) buy now.
James you State we are all doomed and yet say have a prosperous New Year. A bit of odd logic, don’t you think?
Well I am the contrarian opinion that the collapse or change in global status will not be as you describe.
I see a constant decline in morals, value of your money supply moving towards a socialist governments in Europe where ones taxes are in the 20 to 40%.
This keeps the cash cow for the bankers and governments flowing plus they continue their control.
I cannot see how chaos you are referring to when millions are dead and the economy reduce to barter.
The FED has raised rates just exactly like Paul Volcker raised the FED rates when Reagan was president….and with much the same economy suffocating results. This time around it appears to be much worse (GM layoffs and plant closings….Ford to follow?).
Also took JWR’s advise and picked up more trinkets on sale at Palmetto State. Looking to pickup some more silver. Be well and remember Prov. 3:5,6.
Actually Ford announced their salaried layoffs quite sometime before GM did. Like GM they offered buyouts, relatively large amount of cash to quit. Those who refused to take the buyouts will get layed off anyway, without the cash. I expect to see hourly buyouts soon, first for those who are of an age where they could retire, then to those who have a long way to go before they can retire. If they don’t get enough people to leave voluntarily, the layoffs will happen.
Except for skilled trades, especially electricians and machine repair. There is always a shortage of skilled tradesmen, no matter what their craft may be.
Secrets of the Temple by Chernow was the documentation for the Paul Volcker FED rate hikes in the Reagan era. This choked the economy, put companies out of business, and stifled the “trickle-down” economics; essentially singlehandedly derailed a vibrant Reagonomics plan.
Thanks to Volker, inflation fell from 13% in 1980 to 3% in ‘83, and Reagan nominated him for a second term. Volker had balls.
With any luck a large number of major deep state players will end up before military tribunals, and then be sentenced to Guantanamo for an extended period.
I appreciate your knowledge, foresight and counsel JWR. May god bless and keep you and your family.
On the advice of Mr. Rawles I stacked nickels (as did Kyle Bass, so I don’t feel so bad). They were worth about $.07 apiece when I started. Now worth (in our declining dollar) about $.04 each. I started collecting junk silver when it was worth about 20x face value. Now it is at about 10x face. My gold has paid me zero interest, my real estate investments have quadrupled in value and pay me a monthly dividend (rent). Scared investors are foolish investors.
Keep in mind that those nickels cost you five cents apiece and you can spend them at five cents apiece. Both nickels and precious metals are a long term hedge on the Dollar and for wealth preservation, NOT an investment for gain, except in unusual times.
For Skip
I don’t think you understand JWR’s perspective. I was raised by parents and grandparents who grew up during the Great Depression. They were extremely poor and extremely happy. My dad was school age. He commented how he wanted a tuna fish sandwich so bad his mouth watered as he watched the kids from town eat that and an apple for lunch. He didn’t know that was all they had. He had a homemade biscuit that was 3″ in diameter and an 1-1/2″thick, a baked sweet potato, a large slice of smoked ham that he brought to school on a small bucket. They had grown the sweet potato, raised the pig and butchered and smoked it, raised the cane and crushed it and cooked the cane juice for the syrup, milked the cow and churned the milk to make the butter for the biscuit. Since I have retired, I’ve relearned to do the same things. When you eat a hamburger for fast food, think about where each item came from. How many people do you know who could make one from seed and a live cow to finished product??????