The
year 2025 marks a critical turning point, with a global economic crisis
on the horizon. Our models predict a major downturn, particularly in
Europe, and a prolonged US recession extending into 2028. This crisis
stems from long-term mismanagement by central banks, especially the
Federal Reserve, which kept interest rates too low for too long, forcing
banks to hold risky government debt. While analysts focus on short-term
rates, the Fed has little control over long-term rates, which continue
to rise despite rate cuts. Tensions in Europe, including the threat of
World War III, are exacerbating this issue and pushing rates even
higher.
» While financial elites are aware of the looming collapse, everyday people will feel its full force. «
The rise in long-term rates reflects a loss of confidence in government debt. For instance, corporate bonds in France are now offering better returns than government bonds, and even Greece's debt is becoming more attractive. This points to systemic weaknesses within European governments. Meanwhile, the US faces its own dilemma: raising rates to combat inflation only makes its national debt more expensive. As the world's largest borrower, higher rates simply add to the debt burden rather than reducing spending. This crisis underscores the failure of Keynesian economics, which Paul Volcker acknowledged in 1979. Today, the US government borrows far more than in the past, and raising interest rates does little to curb spending—it only adds to the debt.
The financial system is now in deep trouble, and the average person will bear the consequences. Europe is headed for a depression, and the US is facing a severe recession. Unemployment will rise, wages will shrink, and basic goods will become more expensive. The gap between the rich and poor will widen, and financial instability will increase. A sovereign debt default in Europe by 2025 is likely to trigger a broader collapse, with massive financial instability by 2026-2027. Many banks and pension funds are heavily invested in government debt, and a default could lead to the disintegration of European financial systems. Insiders are very much aware of the crisis and fear that public panic could worsen the situation, potentially triggering bank runs. While not all banks are equally at risk, poor management and political interference in banking have worsened the problem. The Federal Reserve, designed to act as a backstop for failing banks, may be overwhelmed by the scale of the crisis.
occurred during the downturn of sunspot cycles.
The
impact on ordinary Americans will be severe, with rising unemployment,
shrinking wages, and higher living costs. While financial elites are
aware of the looming collapse, everyday people will feel its full force.
The US government’s failure to roll over its debt could spark a chain
reaction, causing widespread bank failures. The interconnectedness of
the banking system means one collapse could trigger a broader financial
breakdown. Cash will become essential, as digital transactions and
credit systems may fail, as seen in previous disruptions like the
Canadian trucker protests.
I strongly recommend preparing for this crisis by having physical cash and at least two years' worth of food stored. The collapse of the financial system will lead to widespread losses in banks and pension funds, and the government and central banks will be unable to protect everyone. Those who are unprepared will suffer the most.
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As the debt crisis worsens, geopolitical instability will exacerbate inflation and push capital into the US as a safe haven. The dollar will strengthen, and sectors like gold, food, and bonds will see increased investment. However, emerging markets with high foreign-denominated debt, such as Brazil, will be particularly vulnerable to financial crises.
I also caution against the growing threat of Central Bank Digital Currencies (CBDCs), which would grant governments unprecedented control over personal finances. The rise of gold as a long-term safe haven, coupled with rising long-term interest rates, will create significant risks for those holding variable-rate debt. People should prepare by securing tangible assets like cash, food, and gold, and locking in fixed-rate debt where possible. The coming crisis is inevitable, and those who prepare will have the best chance of weathering the storm.
I strongly recommend preparing for this crisis by having physical cash and at least two years' worth of food stored. The collapse of the financial system will lead to widespread losses in banks and pension funds, and the government and central banks will be unable to protect everyone. Those who are unprepared will suffer the most.
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November 2024: A Norwegian task force has advised against the immediate adoption of a central
bank digital currency, while South Korea has launched a CBDC pilot with seven major banks.
As the debt crisis worsens, geopolitical instability will exacerbate inflation and push capital into the US as a safe haven. The dollar will strengthen, and sectors like gold, food, and bonds will see increased investment. However, emerging markets with high foreign-denominated debt, such as Brazil, will be particularly vulnerable to financial crises.
I also caution against the growing threat of Central Bank Digital Currencies (CBDCs), which would grant governments unprecedented control over personal finances. The rise of gold as a long-term safe haven, coupled with rising long-term interest rates, will create significant risks for those holding variable-rate debt. People should prepare by securing tangible assets like cash, food, and gold, and locking in fixed-rate debt where possible. The coming crisis is inevitable, and those who prepare will have the best chance of weathering the storm.
Reference:
Martin Armstrong (December 21, 2024) - Depression, Debt, Default & Destruction in 2025. (video)
Martin Armstrong (December 21, 2024) - Depression, Debt, Default & Destruction in 2025. (video)