The picture above is not a cue for me to speak about basketball.  Rather, it is being “posterized”.  This is when you completely dominate a game and dunk over someone so badly that you wind up on a poster.  It’s called “being posterized”.

What I’m going to write about below are a few futuristic concepts.  Some items I’ve told people about, only for them to ridicule me – and then when it happens, I feel like I am posterizing them.  The problem is, NO ONE on the planet wants to be posterized.  They don’t like someone saying “I told you so”.   What I have decided to do was to do kind of a brain dump on where I see some things going.  I’m going to save the posterizing for 10 years down the road when things get back to normal.  For now, there’s some concepts here that have been recurring over millennia with fiat currency systems, depressions, recessions, bubbles, etc.  Darwinism is not just survival of the fittest with respects to life – it is with companies as well.  Sometimes recessions are a good thing like pruning the tree in your back yard or doing a 3 day fast to attain some form of autophagy to cleanse the system.  In life, there’s expansion and contraction.

You hope with each expansion you foster innovation and competition, and with each contraction you champion efficiency and best practice.  

Unlike my call with the oil industry which was play by play how it turned out, these are more long term concepts.  Many of these are NOT my ideas, but some that I’ve seen and believe strongly in and champion – and would like to share those with you.

I like the idea of spirited debate in this sector.  My friends in high school were all like this.  We all challenged each other and had futuristic types of discussions.  I shared a close friend in high school with someone who invented YouTube, so our circle of people thinking big wasn’t limited to our basements.  Some actually did big things with their ideas.  A good number of people in my group got PhDs, one teaches at MIT.   Another works in a hedge fund and owns a ton of race horses and is a well known horse racing owner (I know nothing about the industry!).  I am the black sheep with two master’s degrees writing an unpaid blog because it soothes my soul.  It’s the idealism and conjecture that gets me going.  New ideas.  Understanding someone’s position.  I do NOT have to agree with you, nor do I have to vote the same way you do – but I appreciate the differences in each of us, and understanding where people come from helps color their life experiences into where they are today.

That being said, I’ve dipped some of my powers of prediction into the stock market and maybe in a few years I’ll have enough to buy a new keyboard because I beat the ever-living hell out of this one.

One of my inspirations over the years has been futurist Michio Kaku.  I’d watch him a lot on TV and felt he might be one of the coolest guys on the planet to get drunk or high with.  My dad was also someone who was my inspiration in this realm, and often he was high talking about black hole shit with me.

I digress – let’s discuss some things moving forward.

Telework.  Telework has increased over the years.  A few years ago, I worked at a job where we teleworked 3-4 days a week.  Many jobs you need to be there to touch and move things – like retail where you need to stock shelves.  Other jobs like being a software engineer, might be more liberal.  I watched Mad Money the other night and Cramer said that during this recent crisis, Goldman Sachs was 98% virtual.

If you are a large company and pay millions in rent – and we are facing a new financial crisis, it’s going to start dawning on you that “hey, I could save millions from my bottom line by teleworking”.  Too many of the “old guard” are still running things, and over the next few years, I feel like this was a huge test case for many companies to start making positions more telework-based.

When financial crises like these happen, companies may go through mergers and acquisitions and layoffs.  They get stronger in a Darwin-like sense.  Those who are too weak, will fold.  I see many companies cutting:

  1. work space.  Whether it’s 90% telework or 50%, it’s quite possible that many companies start to decrease their footprint of desks.  Maybe they have kiosks where you bring your laptop in and plug into an open pod.
  2. Travel.  I feel travel has been cut a lot over the years, but I think it’s going to drop off of a cliff with COVID, social distancing, and cost cutting measures.
  3. Urban budgets.  So you have a high priced position you have to source in NYC paying $200,000 per year.  If you are going mostly telework, maybe you can now start to hire people across the United States and send them a laptop.  Maybe they travel to the office once a quarter or year.  This $200,000 employee might cost you $120,000 to source from Reading, PA.  This person used to commute an hour to Delaware and now can work from home making the same money.  This is sort what happened with my mother the last few years she was working.  However, I see this on a much grander scale now.  My mother would travel to NYC by car or train 2.5 hours away a few times a year.

Deflation in housing.  If you are living in NYC and bought a $1 million tiny apartment, you need a high paying job.  I can see a lot of these high paying jobs moving out of the areas like Seattle, San Francisco, NYC.  This will shrink the high paying jobs in the city areas and disburse them in the region or nationally.   There will be a glut of these $1 million apartments hitting the market with no one able to afford them.  This will have a deflationary effect of reducing these apartments by maybe 50% or more.  Likewise, the property value of the rest of the country may make some gains as urban dwellers start to move to suburbs and rural areas.  If you can move to the middle of Jersey and buy a 3,000 sq ft house for $350,000 as opposed to a tiny apartment for $1 million, you will, and you will go into the NYC or Philly office once every now and then.  Those leaving the urban areas will compete for homes 1-2 hours away from the urban centers – and maybe even 3 hours away.   While this will have a terrifying effect on big cities, this will have a strengthening effect on suburbs.  Over 5-10 years, there will be massive migrations from big cities.  Taxes will crumble.

Deflation in retail.   I think you are about to see a massive, massive shift in retail operations.  I think the Amazon’s of the world get much, much stronger.  I am concerned for most retail operations.  One of the places I like to shop, Kohl’s, was a darling for stocks with the resurgence lately.  I recently dissolved my position as I just feel 2nd qtr profits will force a lot of retail operations to file for bankruptcy and either restructure, merge, or close – in any sense, I don’t want to be a shareholder in any of those situations.  This also goes for commercial real estate.  You spend millions on a building and want to rent out to corporations that can pay their bills.  There’s about to be a lot of vacancy, and these property owners may be highly in debt to build these things.  I see a complete freeze in new retail building for a decade as their will be a glut of vacancies – this will have a net effect of driving down rents and it’s possible with lower rents, you may have a resurgence of mom and pop stores with newer types of products.   That being said – there are clothing companies out there that have you take pictures of yourself and send it in, and they can send you clothing that fit you.  What about universal sizing?  The numbers they use now are mostly subjective to the brand/style.  This forces you to try on tons of clothing – NOT COOL in a post-COVID world.  This could force companies like Kohl’s to be bought by Amazon.  I don’t need two Kohl’s in York, PA.  Maybe I use an app for clothing size measurements (maybe also bought by Amazon) and I buy from them.  It ships from my York store that day – or I can go there for different sizing and order custom that could take a few days to get to my house later.  Retail will be there, but in different forms and stronger than before.

Flattening of energy usage.  While I called what happened with the Saudi/Russian oil war almost exactly as it happened weeks before it did, I was not fully aware of energy usage.  It turns out, there’s about 100 million barrels of oil used per day, and with the COVID, the demand dropped off of a cliff perhaps 20-30 million barrels per day.  While recent cuts may level that off to a net zero – if you read above, I feel there will be less driving to work and less flying for work.  I also see where people just had the shit scared out of them and will not be going out as much.  These types of things also get the prepper in all of us activated and will lead to more solar panel roofs.  I’m not a “green” guy, but I see a significant increase in solar panels for homes and businesses in the next decade.  This also will lead to….

Increase in electric cars.  I plan on writing a full post on Tesla and Musk.  He might be this generation’s Nicola Tesla, Henry Ford, and Cornelius Vanderbilt rolled into one.  Another post.  I want a Tesla.  What has stopped me is that I have a 90 minute commute and the in-laws live 4.5 hours away.  I have extreme distrust in the batteries that have 200 or so mile range.  I have nowhere to charge at work.  I don’t want to sit on the turnpike at a gas station for an hour charging.  The solid state battery that is coming reduces the issues with the lithion-ion battery and crystalizing – while boasting a 500-600 mile range, lower cost, and 2 million mile battery life.  I read how there are 3 million total electric cars on the road today and there will be 125-150 million by 2030.  If you average that out, it’s 12-15 million per year for the next 10 years.  However, this is not going to happen at an average, it will be skewed much higher 5-10 years out and less the next 1-5 years.  I feel if Tesla can do their own financing for like 7-8 years for a car, they can charge whatever they want with low interest rates to boost sales.

Isolationism and nationalism.  I don’t want to mention any politician by name here for risk of offending anyone, heaven forbid anyone is offended today – but with this COVID we saw a complete breakdown of modern manufacturing supply chains.  Sourcing is going to be a BIG deal.  Each country in this mess is going to lose a LOT of jobs.  And – guess what?  I believe every company in the entire world is re-thinking their Chinese manufacturing and supply chains at this very moment.  This will lead to many companies further diversifying their supply chains to national borders.  In this country, I felt for many years that lots of manufacturing jobs are coming back in the form of automation.  Maybe you had a plant of 15,000 auto workers that left for Mexico.  They built a $1 billion plant and hired 15,000 people at a third of the cost.  Guess what?  Those companies will now get tax incentives to come back here and build a $1 billion plant here and hire 3,000 highly skilled workers.

hyundai-plant-2

While leads to…

Less travel for vacations.  With this crisis, most people finally realized they don’t have enough in the bank to sustain a single lost paycheck, let alone 6 months.  I feel that many people may draw back some of their extravagant expenditures and this includes fancy travel.  This is going to crush international hotel chains.  Absolutely baptize them.  Thin might also hurt the concept of the Air BNB.  I never liked the concept of this, but it may get even more sketch now.  Less travel for vacations also means..less airlines and fuel used.  I do see cruises not going anywhere.  Generally speaking, they are extremely affordable for what you get, and those that do cruises are hooked for life.  With this crisis, they have been offered packages to keep them as customers.  That being said – it’s completely unclear how port cities will be handled.  Will random small towns in the middle of nowhere like 5,000 people coming into their cities?  Do they have a choice and are currently built only for tourism?

Resurgence in gardening and canning.  I think the big winner in this might be home depot and Lowes.  Both sets of my grandparents grew up in the Great Depression and as such, both had very sizable gardens and canned/froze a lot of their veggies.  Both sets had connections to meats with farmers where they wouldn’t be buying retail at a grocery store.  I still remember every Saturday where my grandfather would “go to the farmers” to get scrapple, eggs, lard, and other things like that.  That same grandfather used to walk around picking dandelions and make salads from it.  He lived to 86 years old.  My other grandfather lived to 90.  I still have a grandmother left who is almost 93, and I remember a lot of times growing up where she was pressure cooking vegetables my grandfather made in the garden to can them.

Today, a can of mixed veggies is $.59 at giant.  You can get veggies pretty cheap.  That being said, what happens in a real crisis like this when you can’t get to the store….or to go in to the store is a 2 hour wait….or what if the supply chain is completely down and there are no veggies….OR the cash system in this country goes belly up and a bunch of bananas now cost $76 rather than $3.  All of these items have happened in other countries when their currency system collapses.  And – we are on the verge of it.  The entire world right now is on the verge of a currency collapse.  So – I think many people are starting to garden and less will eat out.

Restaurants will have to simplify and adapt.  Less people will be eating out.  “Fusion” retaurants are going ass up.  There has been wayyyyyy too many restaurant openings near me with food that doesn’t really match the consumers in the region.  I see lots of restaurants that rely on densely packed people eating food that is way over priced going ass over tea kettle in the rust belt.  There’s a restaurant near me that I like, but is one of those that is a tad over priced.  Nice, but not too “foo foo”.  They could have simplified their menu during this time and taken some of the wait staff and used them for delivery.  Instead, this restaurant may have older owners who just get out of the business.  With more and more telework, those lunch options where people go might have a significant decrease in sales.  More people may bring lunch to cut costs.  I don’t think small cities like mine will have 15 chain steak house restaurants anymore – or the delivery companies may start to make bank from them.  It might make sense for them to convert some of their wait staff to delivery drivers.

Refinancing boom begins.  There’s no way this country can pay back our debt.  Kind of.  With the fiat currency system we are on, the only way this moves is inflationary.  For whatever reason, the CPI index that measures inflation changed in the mid 1980s to remove things like energy costs and medical costs.  While your health insurance has gone up like 8% every year for 15 years, the CPI is cooked at 2% yearly.  This is to make you feel better that inflation is in check.

Well, shit’s about to get real.

Here’s how this works.  We ow $24 trillion and are taking out something like $6 trillion this year to help with COVID.  Interest rates are about 0.  How do you get out of this?  Inflation.

You own a home with 5% interest?  Let’s refinance you through Freddie Mac at 2% and give you back $800 per month that you’d be paying in your mortgage.  You owe 100k in student loans at 8% interest?  OK – let’s refinance you to 0%.  Corporate debt high?  “Ohhhh they are too big to fail, let’s refinance that debt to 0%”.  See a pattern here?

The result of this is now freeing up a lot of capital to spend.  Spend spend spend.  This is called the “velocity of currency” in the Keynsian model of economics.  If this velocity stops, like during a zombie apocalypse, the economy crashes.

This will free up a lot of capital.  Hyperinflation now begins.

Hyperinflation.  You can buy a $100 trillion dollar Zimbabwe bill on eBay for about $3.  This is what happens during hyper inflation.  Everyone now has cash, and guess what – everyone wants things that are tangible assets.  Real estate, stocks, gold, silver.  The rush for these items will send the markets crazy upward.  Maybe the stock market goes now from here directly to 40,000 in 2 years.  Why??  The government is creating trillions of dollars out of thin air, but this money is only going to a select few.

Meaning, an ounce of silver is now $15.  Give or take.  During these times of hyper inflation, I would expect to see this go wayyyy north.  Maybe $100 per ounce.  Those who could afford to buy it early on are in good shape.  But that $100 per ounce is now met with $7 gasoline, $12 per pound for apples, $25 value meal at McDonald’s.  Those who got involved with owning things early on have preserved their wealth.  They bought silver at $15, so when a $12 pound of apples happens, they have the means of buying those apples.  That being said, if you were making 50k before, maybe you are making 55k now.  Hyper inflation may happen with all of this in the next 5 years.

How this also works is – say you have a $300,000 mortgage in the suburbs.  That buys you a 3000 sq ft home in many places.  With hyper inflation, that same house may cost $2 million next year.  Or $4 million.  You refinance your $300,000 and you made an ass ton on stocks and metals, so you have means and pay off your house.

The same is done with the national debt, in a sense.  You lend someone $10,000.  At that time, $10,000 gets you a REALLY good used car that’s 3 years old.  You expect interest on that over 3 years.  But, the person who borrows that money from you now changes the game of monopoly money and that $10,000 spending power now gets you the worst used car on the planet at wholesale prices.  You see – the government will hyperinflate their way out of debt.

Currently, the world uses the dollar as its base currency.

The end of the dollar.  Anyone who has seen Mike Maloney’s “Hidden Secrets of Money” part 7 knows where this is going.  All fiat currencies end.  They re-brand them or dissolve them and create a new one.  At issue is during this COVID crisis, we have issues, our government just gets out the keyboard and hits some buttons to create trillions out of thin air.  100 other countries cannot do this and are pleading with the IMF for help.  Between those 100 countries, the IMF is looking to create a $1 trillion fund.  We printed up $6 trillion in an afternoon just for us.  Other countries have been wary of our dollar system for the longest time, such as: Iran, China, Russia, North Korea, Cuba, Venezuela – you name it, they all hate that the US dollar is reserve currency.  Most other countries have increased their gold footprint over the years.

Issues with the COMEX and spot prices.  After years of manipulation by the likes of JP Morgan, the COMEX and spot prices for commodities are about to explode.  These have been “digitally” suppressed by a practice called spoofing.  With inflation coming like a tidal wave, you see spot silver at $15 per ounce but you cannot buy it anywhere for less than $25 per ounce.  That dissonance is also seen in gold.  As upward pressure of acquiring assets increases, more and more will want to take shipment of orders and will force sharp upward spot prices, and quickly.  “Paper” prices got swatted down, and now physical prices will push prices up hard over the next 3-6 months.

Back to a metal standard.  China is messing with a gold crypto currency.  The US just talked about the “digital dollar” and adding it to your “digital wallet” which apparently just recently passed in the spending bill.  Of issue with all of this is – the government will then have control of your assets.  They don’t want you to travel past 100 miles?  Your crypto may not be good at gas stations outside of 100 miles.  Accused of a crime?  They can freeze your crypto.  Taxes?  Simple – they just take from your wallet.  Bills?  Simple – companies just take from your wallet and the government allows it.  They problem with this is that our country doesn’t work like this, and this is essentially another fiat system.  I believe there will be another standard in the next 5-10 years that backs our currency to metals and the re-birth of the American dollar will peg it to metals.  This is the only way to over prevent a Zimbabwe or Venezuela.  Those holding metals at that time will either be handsomely rewarded, OR, be directed by the government to hand in their metals.  This happened in 1932 under FDR with gold.  They paid $20 per ounce of gold, and when they had enough, turned around and made it $35 per ounce arbitrarily.

debt

Today, there’s $19,000 US dollars in existence for each ounce of gold, and $2,300 in existence for each ounce of silver.  It is entirely realistic with inflation that gold prices can see $4,000-$7,000 inside 2 years and silver prices see upwards of $100-$200 prices if not more now that it seems no one can really short silver with the spoofing investigations ongoing.  Anyone holding these metals or mining stocks will see their wealth being preserved where a lot of people who can’t get involved with this will see $2 per pound of apples go to $12 per pound.

 

Hope.  I strongly feel that in 10 years, there will be an equillibrium again.  There will be a severe recession, but I think there will be a lot of Darwinism from this.  Resilience.  Lessons learned from grandparents about thrift spending, self reliance, and hardening the fuck up may strengthen us as a nation.  Stronger borders.  Stronger supply chains domestically.  Less debt.  I feel there is a big change about to happen with how we go about life.  Less blatant consumerism may come from this.  We need clothing, but do we need a $400 pair of jeans?  The flamboyant items of recent past may be limited to the truly wealthy individuals – but they may also shun this in order to strengthen their savings.  In the short term, we will be moving from a 1990s way of doing business to the 21st century way of doing business.  More lean.  More efficient.  More flexible.  Less travel.  More innovation.  More factory jobs here.