January 1, 2022

Back in 2011 I made some rash predictions about what would happen in the next ten years compared to 2009. The results are a shocking indictment of the bureaucrats, politicians, and puppet masters running the world.

Prediction #1: The world will successfully add another $100 trillion debt by the end of 2021

Prediction #2: Gold prices will double in real terms

Prediction #3: Silver prices will do better

Prediction #4: Oil prices will do even better

Prediction #5: Government deficits to rise seven-fold

Prediction #6: Two more wars

Prediction #7: A recession and low interest rates

Prediction #8: More bubbles

Prediction #9: A Great Financial Crisis

Prediction #10: Change we can believe in

Prediction #1: the world will successfully add another $100 trillion debt by the end of 2021

(or “needed credit” according to the World Economic Forum).

Result: Smashed it! 

Starting at around $180 trillion in 2011, global debt smashed through the $300 trillion mark at the end of last year. It was a slow start and I was worried the world would fall about $20 trillion short. I should have had faith in our leaders. The global response to the “pandemic” added around $40 trillion, taking us safely into the red.

Source: Reuters

Prediction #2: Gold prices will double in real terms

Result: total miss 

Source: goldprice.org

When I made this prediction gold was trading at $1,400. It’s now at $1,816. That’s a 29.7% increase in nominal terms, or 2.6% per year. That’s approximately reported inflation.

The grossly manipulated BLS inflation calculator indicates that with reported inflation gold should have been $1,767 in November. It was. However, based on the calculations at Shadow Stats, the real gold price should be $3,470 (2.5x) to keep up with inflation.

Clearly the money that would have been piling into gold has been chasing Bitcoin and Ether.

Another way to think about what the gold price should be is the increase in US government debt. Back in 2011 it was $14.3 trillion. It hit $28.5 trillion last year — approximately doubling.

Source: US Federal Reserve

In fact, the increase of $14.3 billion is 45% higher than in the previous ten year period when there actually was a crisis. Governments are getting even better at what they do best.

Given the preference for bitcoin and other blockchain options, most of the world has fallen out of love with gold.

Prediction #3: Silver prices will do better than gold

Result: Total miss 

Source: Silverprice.org

Silver prices have actually decreased by 20% since my prediction. Fortunately, my email subscribers (and me) made a bunch of money on the way up to $45.

Commercial uses for silver are still increasing, however it’s less attractive than gold as a storage of value. While many pundits are forecasting a rapid increase in demand due to electric cars and solar panels, the reduction in production will be more interesting.

Prediction #4: Oil prices will more than double

Result: Total miss 

Source: US Federal Reserve

Over the past ten years, companies have found new sources of oil in the US and developed lower cost of extraction. Oil prices have fallen by more than half in real terms. Once supply chains sort themselves out and countries come out of lockdown, oil prices should go well over $100 a barrel. We’ll be watching this one.

Prediction #5: Government deficits to rise seven-fold

Result: Sort of 

Missed with the 2011 base, although to be fair to myself, deficits did blow out 7-fold from 2008 levels and 15-fold from 2007.

US budget deficit blow out 7-fold compared to 2008. Srouce:DataLab

The US disappointed here. The deficit actually fell by a quarter from $1.30 in 2011 to 0.98 trillion in 2019. An annual loss of $1 trillion is still a lot — it’s the entire annual GDP of Mexico. And yet, when asked about going another trillion dollars into debt each year, Americans respond the same was as if they’d been told Mexico had suddenly disappeared: a disinterested shrug.

Fortunately, Mexico didn’t disappear and politicians quickly fought off Covid with an extra $3.6 trillion. American tax payers were happy to be saddled with an extra $25,000 each to postpone a cold for two years.

At the end of the day, deficits only climbed by 113%. This is still a wildly insane amount, but compared to the current insanity prevailing in Washington, it seems fairly mild.

Australia did better though.

Source: Reserve Bank of Australia

Compared to 2008.. well Australia used to have a surplus. Now the deficit is running at around A$161 billion (US$117 billion) which is 8.8% of GDP. That’s a good effort by our heroes in Canberra, but still well behind Washington’s 13.6%.

Prediction #6: Two more wars

Result: Heck yeah! 

Easy. But sticking strictly to the wars the US was involved in, we get to five:

1. Libya x 2 (The 2011 overthrow of Gaddafi with US help, and the 2014-2019 air strike season)
2. Uganda (The 2011 overthrow of Ongwen with US help and subsequent civil war)
3. Iraq (Third Iraq war 2013-2017)
4. Syria (US air dropped a mass of weapons and ammo on insurgents fighting the al-Assad government and ISIS/ISIL and each other, and the subsequent shit show was a good reason for the US to go in a build some bases)

I know I’m sort of stretching here — the only significant wars were Iraq (pretty big) and Syria (much smaller, but will last ten years). The trouble was that Donald Trump was elected president. What a disgrace that man is. In four years he didn’t start a single war, and actually ended two. No other US president has had such a shameful record of not spreading carrier-launched democracy to the world.

Aside from the wars the US was directly involved in, there were a few more that the US only supported covertly through the CIA: South Sudan, Mali (US had troops on the ground there), Congo, Central African Republic, Crimea, Myanmar, Azerbaijan, Ethiopia, etc.

Prediction #7: A recession and low interest rates

Result: You bet! 

Source: US Federal Reserve

The Fed raised interest rates to a whopping 2.4% in 2019, but slammed them to the floor as Covid spread through the world. Rates were 0.05% in April 2020. The Fed’s funds rate is still 0.08% and it seems more likely that the Fed will raise its inflation target than raise interest rates.

Meanwhile, reported GDP remained strong at 3-4% annually before going into recession in 2020. Actual GDP growth may have been a lot lower, according to Shadow Stats, who suggest that the US economy never really recovered from the 2008 recession.

Source: ShadowStats

Interestingly, Australia never went into recession until 2020. This was the first recession since 1991

Australia GDP growth. Source: World Bank

Prediction #8: More bubbles

Result: Yup, a whole bath 

I could go through dozens, but let’s stick to just four:

• Housing
• Stock Market
• Carbon trading
• …

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