The Next Big Economic Crisis…and How to Prepare for It

The Importance of Owning Non-Dollar Assets

“We figure there’s going to be at least two crises in every decade, and we’d better be ready for them. My slogan has always been, ‘We manage in good times so that we’ll do well in bad times.’”

That was Herb Kelleher, the founder of Southwest Airlines, talking at a Stanford Business School lecture series back in 2006.

I bring you this bit of history because it speaks to where we’re headed: Another crisis this decade.

We’ve already suffered the slings of the first—the global pandemic and all the destruction it wrought in terms of life and wealth.

We’ve largely moved past that now, save for China and its unnecessary lockdowns.

Next up: Likely a monetary/debt crisis later this decade, centered on the U.S. dollar.

Our poor dollar. Those dullards in Washington have turned it into one of the most mismanaged currencies in the world. It’s only saving grace is that back in 1944, the Roosevelt administration successfully angled for the greenback to become the global reserve currency.

Of course, it’s not like it had any competition at that point. Europe was a smoldering warzone, and the only viable currency on the continent—the Swiss franc—was much too small to manage global trading.

Now, nearly 80 years on, the dollar that saved the world is the dollar that will likely undermine much of the global economy.

I’ve rehashed the numbers over and over ad infinitum it seems like, so I won’t go into all the bloody gore again right now. I’ll only say that Uncle Sam’s cumulative debts now approach $30.5 trillion, a massive 130% of GDP. Unfunded liabilities are nearing $170 trillion, 7.2x GDP.

I cannot stress this enough: There is no way the U.S. government can manage those debts and keep the status quo.

Something must change.

Either inflation is allowed to soar so that it radically reduces the price of America’s debt (high inflation allows Uncle Sam to pay back today’s debt using tomorrow’s less valuable dollars)…

Or the government begins to print hyper amounts of dollars to repay the debt…

Or Congress votes to default on certain debts and simply write them off the books as though they never existed…

Or, politicians do nothing—which is highly likely and would probably lead to some hybrid version of all three previous possibilities.

Whatever happens, the result is bad news for our pocketbooks. And for the world.

The dollar—whether it collapses or simply becomes buried under impossibly large sums of debt—will lose global reserve currency status.

When that happens, the American lifestyle becomes unbearably expensive.

Right now, the dollar’s special status means there’s a constant global demand for our home currency. That keeps the greenback’s price unnaturally high…which lowers Americans costs for everything from oil to mortgages to all the clothes and electronics and whatnot that we buy at Walmart and Costco and Target.

But if the dollar collapses because of a fiscal crisis in Washington…well, that’s the gateway to a Great Depression greater than the 1930s.

Almost every commodity in the world is priced in dollars. Lots of foreign savings accounts are denominated in dollars. Lots of central banks around the world hold beaucoup dollars in their national reserves.

The dollar collapses and boom goes the dynamite.

Which is why I always say: Own gold. Own silver. Own bitcoin. Own Swiss francs.

All should be part of a permanent portfolio. Don’t even pay attention to the price. What each trades at today is a fraction of their worth in a currency crisis centered on the dollar.

The goal of diversification is reducing your exposure to any one asset. The dollar is an asset. Your income, your pension, your Social Security, any house or rental property you own, any annuity or whole-life insurance you own, your brokerage account, your bank account…all of it (or the vast bulk of it) is priced in dollars.

If a dollar crisis materializes, every asset in your life is slammed.

Better to own at least a few assets that are not tied to the dollar in anyway and which are likely to rise sharply if the dollar shrivels.

And that’s not just a bag of Southwest peanuts…