The 4 Looming Crises That Could Reshape Our World

With today’s dispatch, I am looking to the skies above… 

I’m peering up, over our heads, at a flock of “gray swans.” That’s the term economic and political analysts use to describe big events that are foreseeable and which would impose significant impacts on our world, though they’re not necessarily highly likely. 

But “not necessarily highly likely” is no reason to disregard them and go about our lives as though these swans aren’t flapping and squawking up there. That’s what too many people did in 2007, when the gray swan of a housing collapse was clearly visible, yet even the Federal Reserve chair at the time, Ben Bernanke, was downplaying the risk. 

Gonna call that an “L” for the Fed. 

I’m looking up at these swans today and taking inventory because, while I am an optimist in life, I’m also a realist who believes in preparation.  

I’d much rather be prepared and be wrong, then assume the best and be wildly disappointed—and far poorer—when gray swans start dropping out of the storm clouds. 

To that end, let me share four swans I see, and which prompt me to prepare what I call my “Financial Go-Bag,” a metaphorical backpack stuffed with the assets I want to own in the event a real crisis unfolds. 

To be clear, I am not saying these events will happen. I’m saying they are predictably possible, even if improbable. But if just one of these swans lands, it will change the world and impact our social and financial lives in dramatic ways.  

So, what are my four worrisome swans? 

• A Dollar Crisis 

Uncle Sam’s money is unusually strong today, at levels not seen in a generation. But it’s all smoke and mirrors—entirely the function of an investment phenomenon known as the “carry trade.”  

This occurs when investors pile into a currency with higher interest rates by abandoning currencies with lower rates.  

Because the Federal Reserve has jacked up interest rates so fast this year, the dollar now sports an interest rate of 4%. Outside of Canada (a tiny currency, relatively speaking), the U.S. tops all other major economies including the eurozone, Switzerland, Australia, Japan, and the U.K. 

But this is a sugar high, at best, and it is guaranteed to change. 

When it does, talk of a “strong dollar” will die away, and a focus will return on America’s deplorable financial condition—$31 trillion in debt and constantly growing.  

The gray swan risk here is that the global bond market at some point rebels against so much debt. If that happens, the dollar will tumble, forcing the Fed and Congress into emergency action that risks creating a spiraling financial crisis. 

• A Political Crisis 

This has been an ongoing theme in my dispatches for many months: political and social divisiveness that now defines daily American life. 

I am not going to dive into this. You see it just as much as I do. Hatred is endemic. Talk of secession and civil war is damn-near as common as talk of football. The First Amendment is under assault. Common truths are now debatable “alternative facts.” And political violence is accepted. 

A political crisis is brewing. It could very well lead to several outcomes, including the U.S. dollar losing global reserve currency status (which would be devastating to America’s economy and her citizens’ wealth), or even…  

• The Dissolution of the United States 

As I’ve noted in previous columns, a recent survey shows that 47% of West Coast Democrats (California, Oregon, Washington, Alaska, Hawaii) support the idea of breaking away from America. Southern Republicans have them beat: 66% of the folks from Texas to Florida want their own nation. 

So, too, do 43% of Independents in the Midwest, 39% of the Democrats in the Northeast, and 43% of Republicans in the Rocky Mountain states. 

I was chatting with attendees at the recent International Living conference in Atlanta about this and I noted that when I was a kid in the South in the ’70s and ’80s, such an idea would have never crossed any American’s mind. 

When I first wrote in 2011-ish that a “big rip” was soon to cleave red and blue states apart, everyone—and I mean everyone—laughed at such stupidity. 

And here we are with those kinds of statistics. 

Maybe they’re a fluke. Maybe they’re simply a knee-jerk response to the anger that colors the country these days, like a 5-year-old throwing a temper tantrum because he knows no other way to express his frustrations and anger. 

Or, maybe it’s a beacon telling us that a gray swan is preparing to land. 

If it is…bad, bad times lie ahead. 

• A War Between America and China 

If you are unfamiliar with the Thucydides Trap, I encourage you to consult Uncle Google and have a read. It’s the thesis that countries tend toward war when a rising power threatens to overthrow an existing power. 

Historically, 16 such instances exist have occurred…and 12 have led to war. 

Today’s potential Thucydides Trap has China looking to replace the U.S. dollar’s global hegemony. I wrote about this as well, way back in 2013 or so. I noted then my conversations with a former Soviet politburo member and architect of the Estonian currency who spoke almost monthly to the Russian central bank officials who were purportedly working on building a hard currency with China based on the vast natural resources both countries own. 

Again…people reacted to that with laughter and head-shaking. 

And yet just this summer, Russia and China announced plans to launch a hard currency based on their vast natural resources. Their stated goal is to unseat the dollar as global reserve currency, which gives America tremendous financial and economic benefits. 

The U.S. would certainly not politely stand down and let this happen. 

Loss of reserve-currency status, as I noted above, would be catastrophic for the U.S. economy. But neither would Russia and China back down, because unseating the dollar would be so beneficial to their economic agendas. 

That’s a conflict waiting to happen. 

Might the U.S. or China use Taiwan as kindling to provoke a war? 

Asinine as that would be, I cannot rule out that gray swan (in part because governments have always used war to bring society closer, and America certainly needs a cause to bring a divisive society closer). 

If that swan does, in fact, land, it will cause social and economic pain globally. 

In the End… 

I can’t tell you whether any of these will happen…or, if they do, when. 

I can only tell you that these are very real swans. They are not impossible events. They are very much possible. They’re foreseeable, even if their likelihood is low. 

But because their impacts would be so huge, I want to be prepared. 

For me, that means owning Swiss francs, physical gold, physical silver, and bitcoin. That’s my Financial Go-Bag—the assets I want in my possession if any of those swans swan-dive into our life.