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Michael Murray's new predictions actually set off the alarms according to him the world's about to head back to the 1970s a Statewide jobless rate of 9.3 percent has jammed local unemployment offices the 1970s was a terrifying decade to live in the stock market was in complete turmoil it halved within a matter of 20 months unemployment was skyrocketing and while that was happening prices were rising at unprecedented rates but worst of all all of these issues remained for an entire decade that's a frightening reality to live in and bury thinks that we're taking a trip back to those times thank you everyone knows that history repeats itself because human behavior never changes having studied the 1970s extensively very confident that several critical patterns in the 70s will occur once again you see inflation has begun to decelerate to 6.5 percent year over year in the latest month and because of that everyone thinks that inflation will begin to fade away as we enter a recession behind the finance terminology Murray's thesis is actually quite simple think of the economy as a bathtub everyone wants to understand the level of economic activity how fast the economy is growing or shrinking and in the analogy of a bathtub the water level represents the current level of the economy if the water levels near the top of the tub that would be considered robust economic activity and if the water levels at the bottom of the tub that would be a recession or depression we ideally want to see the water between the mid middle to the top of the tub the pandemic caused the water level to enter the bottom territory of the tub the Federal Reserve pumped so much water into the tub that the water overflowed and spilled all over the restroom to compensate for This Disaster the FED is now sucking water out of the bathtub causing the water level to reach the bottom of the tub this makes perfect sense in theory but the FED forgot about the water that spilled all over the restroom all the water that's on the floor represents a hidden danger that nobody's thinking about money velocity if you were to put the water on the floor back into the bathtub then the bathtub will be full and spill once again Bernie explained how velocity is nominal GDP over money supply M2 here quantitative tightening plus higher rates starting to push M2 down yet we're seeing a take up in velocity emerging from narrative obscurity in 1978 to 79 Rising velocity trumped falling money supply to drive inflation higher and higher Redux would shock so let's think about this in terms of the bathtub analogy even though the FED is sucking water out of the tub the water on the floor is going to fill the tub up at a rate much faster than the FED is taking water out this will cause the tub to be filled up once again but what exactly is the velocity of money the velocity of money represents the rate at which each dollar is spent on goods and services everyone's sitting on their cash right now because people know we're in a recession if prices were to finally start dropping at rapid rates people will start buying products once again this would cause the velocity of money to go up because the dollars being transacted more often that's a terrifying dilemma occurring in that scenario if prices were were to drop and the velocity of money were to increase then prices would start accelerating again this would lead to a second wave of inflation caused by the velocity of money such An Occurrence happened in the 1970s even though the money supply was being shrunk by the fed the velocity of money was increasing so fast that inflation accelerated again to over 14 percent prices went up infamously during the Carter presidency inflation was increasing and unemployment was increasing at the same time another event that'll make Murray's thesis even more frightening is the idea that the FED will suddenly start printing money again bury believes that from June to December of 2023 inflation will likely start decelerating to levels that may even be negative this will be due to Rising interest rates from the Federal Reserve the issue is that the velocity of money likely won't start accelerating until 2024 so before the velocity of money picks up the fed and the fiscal government will start printing money again this will lead to the start of the next spike in inflation just like we experienced in the late 1970s Bree explained how inflation peaked but it's not the last peak of this cycle we're likely to see CPI lower possibly negative in 2H 2023 and the U.S in recession by any definition fed will cut and the government will stimulate and will have another inflation Spike it's not hard so not only do we have the mess that the overflowed bathtub created on the floor but we also have the FED pumping even more water into the tub both of these activities are only going to overflow the bathtub once again the bathtub might even be filled up to an even larger degree than last time such an event already happened in the 70s and 80s and will inevitably happen once again some investors might think that the FED isn't that dumb and has our best interest in mind but furry knows that's not true given their sketchy track record Michael Bree accused the FED of purposefully selling all of their stocks at the top of the bubble in the fall of 2021 while our current situation is similar to the 1970s there are also many parallels between now and the.com bubble the number of similarities between the.com bubble and right now are shocking in percentage terms it had less impact than the crash of 87.
the Pledge was sparked by a jumping U.S inflation the fear a bigger hike in interest rates the only remedy we also had bubble crypto coins that had no function other than making money which was just like the internet stocks with no fundamentals and lastly we had a high volume of fraudulent schemes that were just like Enron Worldcom and many others in the.com bubble now that the recession sunk in the fraudsters have been exposed and the bubble coins are now in the dumpster but the crash is far from over because some people still insist on buying the dip and bubble stocks and coins burrie explained how in early 2022 investors were asking me why I wasn't buying Worldcom feels like that right now Worldcom is one of the largest accounting frauds from the.com Bubble this Scandal came to light in the summer of 2002 many investors wanted to purchase the dip on Worldcom prior to the company being exposed you see businesses like Worldcom still exist today but they just haven't been exposed yet so with all that being said Murray doesn't think that the crash is over yet bury isn't shorting the market right now this is because inflation's already peaked in the short term and that's a bullish sign for the market right now bury tweeted I'm not short well I've been six feet for a while may get to 1.7 meters in time in other words he's more long positions than short positions so instead of shorting the market Murray's purchasing assets that would perform well in this environment we're currently dealing with economic contraction and an inflation simultaneously in times like this gold is a protective asset against currencies like the dollar many investors saw cryptocurrencies like Bitcoin as a store value and therefore a competitor for gold but now that crypto is doing extremely poorly Murray believes that gold will be a strong investment in the near future he explained how he long thought that the time for gold would be when crypto scandals merge into contagion another asset that tends to do well in the current environments is companies that generate high amounts of cash flow Burris found two sectors with these cash cow companies one of which is actually Hong Kong stocks many investors are scared of the Hong Kong market due to its ties to China but bury believes that behind the fog there's actually a huge opportunity there most Hong Kong citizens are skeptical of the stock market because they see the market as a risky investment so instead of investing in the Market Hong Kong citizens are more likely to invest in other assets like bonds and real estate this has caused the Hong Kong stock market to be extremely undervalued in comparison to the U.S market where investing in the market is encouraged the Hong Kong economies also under substantial pressure due to covert restrictions but times are changing now Hong Kong has been loosening its restrictions on Mainland China and other countries which has led many economists to become bullish on Hong Kong a survey by Bloomberg shows that economists now see Hong Kong's economy growing by 3.3 percent rather than the previous forecast of 2.7 percent this is happening while the Hong Kong stock market or the Hang Seng is down by a significant amount so instead of a 20 times price to earnings ratio in 1997 the Hang Seng is now trading at 7p to e ratio and instead of a 10 times Enterprise Value to sales ratio the Hang Seng is now at a one times EV to sales ratio and instead of a three times Price to Book ratio the Hang Seng is now at a one times Price to Book ratio the fact that the Hang seng's valuation ratios are trading at such low value suggest that the market is incredibly undervalued but many of you may be skeptical of the Hong Kong market which opens up the option of the U.S market foreign
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