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In democratic countries, governments that cause recessions are not re-elected. I mean, Trump knows this well. He must support the stock market until the November elections . And he has to show that everything is fine with the economy . He can lie, but lying has its limits. The only thing they can't lie about—they can manipulate it a little, but not 100%—is long-term bonds and interest rates.
The long-term bond market is weak. In my opinion, this is affecting the housing market, as mortgage rates are approaching 7%. I'll tell you, if mortgage rates go above 7%, it will have a psychological effect. And home buying is now at an all-time low . Why? The economy is booming, but people aren't buying homes.
They ca n't afford it. It's a question of accessibility, you know? The Fed, with its " supreme wisdom," has driven itself into a position where the cost of living is rising so much that ordinary people can no longer afford it. They can't afford to buy things. The rich can, but they don't need to. They already have everything.
So, the economy is currently on a crooked path: the middle and lower classes are declining. We can measure this by the wage share as a percentage of the economy. This is the lowest level ever . And corporate profits are at an all-time high. We have a stratified economy where 0.1% of the population—the Bill Gates, Jeff Bezos, and Elon Musk— benefit, while ordinary people are left with nothing, to put it bluntly.
And the government is not helping. They only support these conditions. The only way to fix everything is to get rid of state interference . That's the problem. Once you remove government interference, especially from the ignorant...if you go to the hospital for surgery, there's a difference between a doctor who has knowledge and practice, and someone who came off the street, knows nothing about medicine, and only knows how to play golf.
Believe me, the worst thing for the economy and society is when the country is ruled by ignorant people. And this is happening everywhere in Western democracies now. I don't quite understand why, but I guess the rich like idiots in government because they can be bribed and manipulated more easily. This is the problem of public administration.
By 1910, the federal government's share of the economy was about 10%. Currently, in democratic Western countries, this figure is about 50%. Since the government controls 50% of the economy, it becomes a big buyer in many areas, such as defense, and can also manipulate people through social security payments and so on.
They have enormous purchasing power, receiving tax revenues that they can distribute among their friends or those who donate to them . So it's surprising, in my opinion, how left-wing rich people are. I don't know the social circles in every country, but I know wealthy people all over the world, and it's interesting that they lean towards left-wing views, not right-wing ones.
This amazes me, and I can say that these government interventions have only postponed a problem that existed 20-30 years ago, namely, excessive debt growth. But this debt growth is possible if there is a loyal central bank that finances the budget deficit. The government spends more than it receives and cannot raise taxes because it is unpopular.
And poor people simply don't have the money to pay taxes. We could tax the rich , but they don't want to pay. And the rich control the government. I'm not saying this because I feel deprived. I benefited from the asset market bubbles and everything else. I say this as an observer of society and an economist, not as a businessman.
For me, the more money they print, the more money I have. But I know that the system will collapse one day. And I keep asking myself: What is the best thing for me to do in a collapse scenario? And how much time do I have before this collapse begins? If it comes tomorrow, I won't have time to sell everything.
Even if I sell everything and put the money on deposit, what happens if the bank where I keep it goes bankrupt ? Or what if the Ministry of Finance says, “We are no longer paying interest on the national debt. We changed our decision ." This administration is a circus, a real clown show. Probably a smart decision, if possible, would be to keep your funds in gold, silver, and platinum.
Although there is a risk of expropriation, and Trump will not hesitate to carry it out. He was repeatedly found guilty of fraud and embezzlement. And he appropriated other people's reserves, as the US government has done for years. This is why no one trusts the US dollar anymore. The purchasing power of gold will be preserved.
I'm not saying it can't fall in price. Of course, it can fall in price during a liquidity crisis, but to a lesser extent than, say, Micron Technology, Tesla, or SpaceX. And if someone wants to hedge their portfolio, they should open short positions on any stocks related to the Trump family. It seems to me that the conflict in the Middle East cannot end quickly because no one really wants it to end.
The Iranians are at a disadvantage, but under Trump and neoconservative hardliners like Dick Cheney, Rumsfeld, and other such war criminals, the US has lost its prestige. When I was growing up in the 50s and 60s, people were fascinated by America. They believed that America was acting for the good of the world, and this led to a president like Kennedy who gave the world hope.
And today the United States has become unpopular almost everywhere. And no one wants the US to simply win the war in the Middle East, with Israel controlling the region. I assure you, after the events in the Gaza Strip, sympathy for Israel in the world has fallen sharply, and the US is perceived as a supporter of Israel and a warmonger.
And everyone sympathizes with Iran to some extent, because it is a small player fighting a large powerful power. And the Iranians are supported through indirect channels by powerful allies. The US has now apparently declared the Strait of Hormuz its territory, as if it has any hope of making this dream a reality.
Anyway, I want to say that this war will not end anytime soon, because the interests of Israel and the world do not coincide, so it could last a long time and even become quite shameful for the United States. Last year, I wrote repeatedly about the “failed country ”—Thailand. Although economists call it such a country, it functions quite well: economic growth is minimal , but people have something to eat, society is stable, and stocks were cheap last year .
They are now up more than 20% in less than a year, and I think they will continue to grow, but it is no longer the " deal of the century" . I think the Indonesian stock market has become very cheap, so I buy Indonesian stocks, and I also buy Vietnamese stocks at a reasonable price because the country is doing well economically .
And I also feel that there is a movement, a right turn, happening in Latin America that will be beneficial for business. So about 2 years ago I started buying Colombian stocks in Colombia because they are a big agricultural producer. Most exports then go to the USA. But the country is doing well, and the government has taken a right turn.
And I think it will be profitable. And there has been a recent sell-off in Brazil, and against this backdrop, I think investors could buy some Brazilian stocks. But during the crash that I predict, everything will go downhill. Don't think my stock will go up when everything is going down. They may fall less than others.
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