What I’m Doing as the Recession Gets Worse (To Avoid Going Broke)

A potential 2008-style bank collapse is in the making

Photo by Batuhan Doğan on Unsplash

A nuclear war isn’t how I thought I’d start fatherhood.

Only a few weeks until I become a dad. Yet the madman in charge of the largest country in the world could release his rockets, although I doubt it. Reagan found a way to get Gorbachev to take a chill pill.

Same with the Cuban missile crisis. Crisis averted. Nonetheless, this type of news doesn’t help the global economy.

We’ve been in a technical recession since the start of the year. High inflation has added another layer of pain, thanks to 40% of US dollars in history being created since March 2020.

Making interest rates higher to offset the inflation caused by all the money created out of thin air hasn’t helped either.

The hope was the recession would be over by now. It’s not.

Here’s what I’m doing. It’ll give you a few ideas.

Watch interest rates like a hawk

The world is in a huge amount of debt. More than ever before.

This means there’s a point where higher interest rates will break the market. Just like the banks overcorrected during March 2020 with free money and stimulus for everybody, the adjustment in the other direction is almost always wrong, too.

At some point higher interest rates will lead to the liquidation phase.

This is where people and businesses have to lower debt and sell assets to keep their banks off their backs.

We’re almost at that point.

When everybody starts selling assets at the same time prices go lower. This can sometimes lead to a panic, too, where everyone is selling at once and fear feeds on itself.

Once assets start to go on sale I’m buying real estate. I’ve been out of the market for too long. But I need diversification in my investment portfolio. Humans will always want land and it’s scarce.

As interest rates go higher real estate prices will go lower. As more people sell their real estate prices will fall.