2017 Scenario #2: Global Musical Chairs

Musical Chairs

A commitment to human values, environmental stewardship, and market economics are constrained by a failure of national and global cooperation. This results in continued high levels of debt, military expenditures, and disaster capitalism.

Weighting = 40%

  • Multipolar World
  • Negative Return on Investment to Taxpayer

While the forces of centralization are not able to assert global control, the inability to maintain effective governance or markets in many areas results in intense and sometimes violent and destructive competition for natural resources.

Like the game of musical chairs, as chairs get pulled, some areas and countries suffer significant hardship and depopulation.

Donald Trump is a one-term President. The result of his administration is mixed. The record is defined by partisan gridlock and, because greed overcomes gridlock, by “piratizations.” The piratization falls short of duplicating the “Rape of Russia” but further corrodes trust in government and corporate leadership. There are similar tensions throughout many of the developed nations.

Per capita incomes in Asia converge with those in the G-7 nations as the developed world’s middle class diminishes in a long slow financial squeeze. Food shortages lead to depopulation and mass migration from Africa and the Middle East.

As a result of the forces of centralization breaking down, there are still far more pockets of productive human development and civilization than in a unipolar world. If your country or area “keeps a chair” and is able to build markets and trade with others that do as well, you are in a much finer world than either of the two unipolar scenarios.

Critical strategic assets include arable land and water. As a result of food-producing capacity, the Anglo-American alliance enjoys a significant strategic advantage – including US, Canada, Australia and New Zealand. Global tensions continue over GMO policies and the patenting of life.

The continued waste of resources on war, security, and covert competition, however, means that the human race struggles under high debt loads and under-investment in infrastructure, renewable energy, education and the arts. Investment in space remains somewhat protected. The advancement of civilization is much slower.

Global inequality persists.

Scenario #2 – Implications for 2017

Opportunities to create value:

  • Focus on your home, your business and your community: make sure you are adding value within a country or place which is likely to keep a chair. Geography matters.
  • Look for opportunities with new technologies to take advantage of decentralization and globalization.
  • Track changes in tax policies and their implications for you and your business.

Be prepared for significant volatility!

Prepare a defensive strategy:

  • Retire debt and maintain a low overhead.
  • Avoid dependency on government money.
  • Maintain a core position of precious metals.
  • Maintain resources in multiple jurisdictions, if possible.
  • Practice “prepping” – you want to be prepared if a natural disaster occurs where you are.
  • Maintain a cash reserve and liquidity.

Best long-term investment opportunity:

  • Your education, health, and career.
  • US and G-7 equities.

Best short-term investment opportunity:

  • No way to know – stick to disciplined allocations.