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the last time ray dalio was right millions of people lost their jobs and their savings in one of the world's most devastating crises ever known and it can happen all over again 5 trillion indiscriminate emissions on u.s dollars have brought us to a dangerous cliff and the entire economy could be wiped out overnight let's deep dive into what could be another billion dollar prediction yet first subscribe to market magnets and click the notification bell not to miss any of our following videos when ray dalio tells you the biggest market crash of our generation is coming you better know it's time to run the signs are all over the place energy bills in the uk could take an 18 hit the fed printed 5 trillion dollars and caused rampant inflation and everybody is in on the over 10 year old bull run of the u.s stock market ray dalio refers to that when he says markets and economic movements are driven by much simpler and more common sense linkages than most people articulate that paint a different picture yet the show is about to stop and many people will stay wandering in the dark any major crisis in history has its fair share of warning signs yet it doesn't matter how long you've been in the market a russia-ukraine war an unannounced high-skill conflict between china or taiwan or the next financial cataclysm happens too fast to react accordingly you can get ahead by reading the signs ray dalio has been pointing at them for months dalio always thinks outside the box and that box tells him that inflation is going to decrease in the short term we all remember the fed during the last health crisis printing at an annual rate of 1.5 trillion dollars yet right now is doing the exact opposite cutting the money supply at a yearly rate of 1.1 trillion so prices will decrease with less money in the streets and as the classic supply and demand the less money circulating the more it holds value a simple concept many corrupted countries with hyperinflation never quite understood after such a massive health crisis that redefine the supply chains and how we go by as humanity on a daily basis the economy has adapted immensely and we adapted to the changing environment businesses have embraced new technology becoming faster and more efficient cutting costs and the demand is currently booming many businesses are selling left and right we can see it in the number of container ships being ordered we are on the fifth largest year on record for container ship orders and there are still a couple of months left for christmas north american port congestion is historically high ships with tons of containers are in traffic jams at several ports and something is happening with the supply which is unsustainable so much supply yet the demand is not there consumers sentiment is around the same low as 1980 and 2008 then in both years a massive recession struck the world oversupply and low consumer demand are the perfect storms for a major recession ray dalio recently dumped his stock portfolio dalio believes the winter is coming and it may come as a supply shock the supply shock is an excess of supply in relation to demand where all fields of production are unsustainably high compared to the resources available to purchase them in short businesses have too much in stock and nobody buys so what happens then retail stores will start throwing massive price discounts desperate to get clients introducing mass sales if too many goods are on the shelves that nobody buys corporate profits will decrease leading to massive downsizing people will get laid off or have their salaries cut and once those stock quarters start coming in with massive losses it could be the end of our stock market as we know it with massive panic sell-offs running away from the stock market as it crumbles with bad financial reports a quarter is a three-month period in the company's financial calendar where businesses report their financial health and pay dividends if there is a market that hasn't stopped for over 10 years as the s p 500 and suddenly receives a massive downfall and losses on those reports it could trigger a severe recession things are not looking bright in the geopolitical scenario as ray dalio points out these three things that are now happening are the creation of enormous amounts of debt and the monetization of that which is having its effects inflation at all the second is the amounts of internal conflicts that are going on populism on the left and populism on the right due to the largest wealth gaps and values gaps that internal conflict is having a big effect and the third is a great power conflict the rising of a great power in the form of china and the relative decline of the united states and the conflict between different forces that we're also seeing reflected in the russia ukraine nato conflict as if these things weren't bad enough we can take a glimpse at another brilliant investor michael bury with the bull whip effect which looks like an economic cycle soon to be over the bullwhip effect is when there is so much demand that suppliers overstock and order way too much as a safety net so the shelves of stores are flooded with more than enough inventory piling up daily businesses work in an elaborate process as a chain if each stage orders just a little more the supply chain can snowball to immense quantities the supply chain mainly includes retailers wholesalers and manufacturers if each step over orders it leads to an overstocked business with a massive loss the stores end up full of goods that nobody wants to buy once the demand goes away and a lot of financial holes to recover in their profits imagine that if a store sells 20 eggs daily yet now a new tick tock challenge needs a lot of them so the egg sale increases exponentially in the short term instead of selling 20 they sell 60.
so they call the farm with 20 chickens and ask for 90 eggs to have a good safety net the farm seeing this increase will need way more chickens so if they order 40 more just in case of another significant spike in the future those are short-term solutions to cover demand but what happens when the tick-tock trend goes away then the farmer stays with the maintenance cost of over 40 more chickens and nobody asks for more eggs so he has to cut costs to survive the store also stays with an overstock of rotten eggs that nobody bought and if we take this example to every store in the country this results in massive losses and thousands of companies desperate to cut costs to sell those eggs quickly the store will offer massive discounts decelerating inflation and producing immense deflationary forces so the opposite of inflation happens the only difference is that if it happens at full force because of the bullwhip effect each cycle that repeats itself becomes stronger than before you see inflation and disinflation are nothing more than tools to balance out the country's overall economy yet too much inflation or disinflation can wipe out an entire currency when it sees an incoming disinflation the fed will start printing money again once the fed prints money more will be available and quantitative easing will boost consumer demands again causing another supply shortage and then the fed will start another round of quantitative tightening which means pulling money out of the system this cycle is dangerous because every time inflation or disinflation gets out of control it gets harder and harder to balance the economy so if the economy gets stuck in recurring bull whips we may face one of the worst crashes since 1929 the worst part is that the bullwhip effect is only human nature the more money you have in your pocket the easier it is to spend it raising the demand and the more a store sells the easier it is to overstock to have more gains and satisfied customers every decade the cycle gets stronger and stronger until one day it provokes a massive recession that changes the economic landscape forever as has happened repeatedly the key here is to read the signs beforehand and be prepared for what is coming and everybody should remember michael's words lost dollars are simply harder to replace than game dollars are to lose michael bury is serious about it he sold a massive quantity of stocks just days ago and for months he has warned that an unprecedented market crash will happen while ray dalio sees a darker world currently predicting an unprecedented change as he depicts in his book the changing world order why nations succeed and fail no system of government no economic system no currency and no empire lasts forever yet almost everyone is surprised and ruined when they fail is ray dalio right or is he missing another huge bull run
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