Could This Unleash the Biggest Credit Bubble in History?
Sometimes to know what’s going on, you’ve got to ditch the papers and talk to the people in the industry.
Back in the first week of April — a time that feels like another decade ago — I reckon I spent about 40 hours on the phone talking to people in the gold mining sector.
The geos that know where to find it, the folks who dig it up, the people who refine it, and the analysts and stockbrokers who are telling you to invest in it.
Given gold and gold stocks are kind of my jam, I needed insider knowledge and to find out what was happening before it hit headlines.
Fresh from that the following week, I started hunting around the construction sector.
Putting a call out for anyone in a trade across commercial, residential, or industrial trade to get in touch.
What I learned from these hours I logged was fascinating. And the majority of what I learned never appeared in the papers.
So why I am digging around in these sectors? Why all that effort talking on the phone when I could just read some charts and data?
Well, part of the problem with sticking to charts and data, is that you miss the smaller parts of the story. Hear some tales enough and they begin to build a bigger picture.
More to the point, there’s a reason I follow construction and mining so closely.
Want to know how the exports sector is holding up? Talk to miners. Want to get an idea of employment and consumption? Talk to people in construction.
You need to talk to people in property
However, there is a third sector all Aussies should pay attention to. And that’s because it’s where most of us keep our wealth.
If you want to know the financial health of Aussies, you need to talk to people in property.
Which is why you’ve been hearing from my digital desk buddy Callum Newman, editor of Profit Watch, for the past couple of days.
As you’ve probably noticed, he isn’t just regurgitating a couple of headlines from the papers. He doesn’t see doom and gloom, rather he keeps talking about the opportunities. ‘Cheapest you’ll see it in your lifetime’, he told me recently about Aussie house prices.
For most of the week, Callum and his co-editor Catherine Cashmore have been writing to you about the ‘housing-finance’ complex.
That is, how access to credit and house price growth has consistently left wage growth in the dust…
…and how what’s happening to properties and stocks today isn’t an anomaly, rather it’s part of a cycle that’s been running for hundreds of years.
So how is it all going to play out?
According to Callum and Catherine, their cycle pinpoints the year things will get really bad (hint, it’s not for a few more years yet).
However, before the cycle comes to an end and we get a proper property bust, there’s one crucial component that will take us there: credit.
Which just so happens to be what Jim talks about today. Credit, money printing, and ensuring that cheap money flows through the financial system.
As Jim points out below, there is a dangerous economic theory gaining traction…and if more economists start backing it, it will unleash the biggest credit bubble in history.
Read on for more.
Until next time,
PS: Market expert Shae Russell predicts five knock-on effects of the recent market crash that could be even bigger threats to the average investor’s wealth than the crash itself. Click here to learn more.