The Five Biggest Bubbles In 2016

By: Curtis Wayne 0 Comments   2/3/2016

One of the best ways to survive a recession is to avoid making any purchases or investments in the bubbles that are created by all the money printed by the Fed.   

After several years of money printing, greater than any other time in recorded history, there are lots of bubbles.   

The more industries that form bubbles and the longer they last, the harder they are to avoid. 

This works in the favor of the Fed, because their goal is to get everyone involved in expanding credit by borrowing and spending.   

5 biggest bubbles in 2016 

  1. Auto loans/debts - $1 Trillion, chart. The biggest factor increasing this bubble is the longer term loans, from an average of 3-4 years to 6-8 years.  Also, much of the student loan debt and the stock market bubble which has created a wealth effect, have both contributed to the increase in auto sales.
  2. Student loans/debts – $1.3 Trillion, chart. The student loan bubble has been fueled by the ever expanding government loan programs, which have been effective at keeping many young people busy, happy and fed, rather than rioting in the streets because they are unemployed, cannot buy food or pay rent.   
  3. Farmland values/debts– $8 Trillion, Iowa farmland values have quadrupled in 10 years.  The primary reason farmland  has gone up for 10 years is because of low interest rates and the high price of crops.  That trend started to change last year with falling crop prices, but low interest rates are likely to keep farmland prices low for a few more years.
  4. US Stock market - $100 Trillion increase in the last 5-years, as US stocks have tripled.  This has created a wealth effect, because people spend more of their income when they see their investments increase.  
  5. Derivatives / Banks - $700 Trillion, 20% increase since 2008, top 25 banks in the United States now have a grand total of more than 236 trillion dollars of exposure to derivatives.  This is the big one to be worry about.  The banks are still insolvent as the market value of their assets still wouldn't cover their debts, and the derivative market is dependent on more and more credit.

It is easier said than done, but one of the best ways to survive this recession is to avoid buying a vehicle, going to college, owning farmland, investing in stocks or derivatives/banks.

After these bubbles burst, prices will fall below average and it will be a great opportunity in these industries.  

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