Folks, we are heading very rapidly towards widespread failure of the financial system and economic implosion. A major and accomplished Economist known as Dr Doom has just come out and made some pretty dire predictions. This gentleman that we're going to be discussing has actually been right quite a lot in the past and was one of the most specific when it came to predicting the 2008 Financial crisis. And this time around, he is saying loudly and clearly that reaching a two percent inflation rate without a hard Landing is going to be quote Mission Impossible and Mission Impossible without Tom Cruise Can you imagine Jerome Powell starring as Tom Cruise and Mission Impossible that would be a mess.

He expects a long and ugly recession as a result, with stocks sinking as much as 40 percent. I'm gonna go through step-by-step Dr Doom's predictions and his advice on what you should do with your money. Hopefully this can give you a new perspective and save you some time on your own research as we go through this very precedented collapse of this economy and overall Financial system. If you appreciate deep Dives like this, make sure to hit that subscribe button to keep up to date with us and this video is brought to you by MooMoo and they're up to 15 free stocks that they are offering you if you sign up and deposit with our link down below.

Australian Viewers can get up to 50 Australian cash back when they do the same thing. Okay, the financial Express reports quote Rubini AKA Dr Doom expects the U.S and Global recession to last all of 2023, depending on how severe the supply shocks and financial distress will be. This time around, he said corporations and Shadow Banks such as hedge funds, private equity and credit funds are going to implode. Implode.

This is a far-reaching prediction. He's saying Global Recession to last through 2023 Corporations Shadow Banks Hedge funds, private equity and credit funds imploding. Imploding. That's a complete collapse.

This is in addition to his prediction that we are heading for a hard Landing In that soft Landing is quote Mission Impossible This is an addition as well to his prediction that stocks are going to go down about 40 percent. So here's his basis for the prediction: Dr Doom Said that those expecting a shallow U.S recession should be looking at the large debt ratios of Corporations and governments as rates rise and debt servicing costs increase. Many zombie institutions, zombie households, corporations Banks Shadow Banks and zombie countries are going to die. He said so in: Hollywood When you have an apocalypse, guess what? zombies come to life.

But in the economy when you have an apocalypse, zombies Die The problem is that during good Economic Times The zombies. they live amongst us. They could be our neighbors. They could be companies that we do business with.

They could be entire countries and you don't really know which ones are zombies until all of a sudden rates start. Rising When he says zombie though, what is he referring to here, folks, he's referring to entities that exist not based on their own productivity, not based based on their own systems, or based on the amount of money they can bring in organically through their business and value providing, but exist purely on the amount of debt they can borrow and the rates they can borrow at. They are fed not by earnings and not by real effective systems, but rather by debt. If you are a household, a company, or an entire country that exists, not based on the amount of value you provide and the amount of value you produce, but instead the amount of value that you can borrow.

Well, all of a sudden, when rates start rising and credit starts getting Tighter and Tighter, Well, you get pushed off a cliff. This is the amount of non-financial corporate business debt since 1980. it's gone up substantially and consistently. at the same time that interest rates have gone down substantially and consistently.

Meanwhile, you look at the historic calculations of total debt, public debt, household debt, and again, non-financial corporate debt. It's the same thing. On a global level, Total debt has gone from just over 100 percent of GDP in 1970 to 256 percent of of global GDP by 2020.. Can you imagine how many households, companies, and entire countries were zombies during this period of time, but were allowed to subsist amongst the living specifically because they could be financed by Cheap debt? Can you imagine decade after decade building atop these flimsy zombie surfaces and all of a sudden, when rates start going up, the services start collapsing.

These zombie entities were created by easy money. What happens when the easy money is taken away? Well, they collapse. What about companies that may not exactly be zombie companies, but they were poorly run to the extent that they had to borrow more than they took in. And all of a sudden, they too are at risk of collapsing, even though they're such an integral part of our society.

The point that Rabini is making here is that hey, when rates go up and they're going up fast, all of these zombie institutions, they're gonna die And they're gonna die painfully. and that's going to bring down the entire economy. Rubini said that achieving a two percent inflation rate without a hard Landing is going to be mission impossible for the Federal Reserve. However, persistent inflation has, especially in wages and the sort of sector will mean the FED will have probably no choice but to hike more.

He said with funds rates going toward five percent, five percent. And when he said this particular prediction just before the FED meeting last week, people said, oh, five percent, you're fear-mongering you little fear-monger But if you actually look at what the FED Dot Plot on what participants projected at the meeting that came after his prediction, Well, they are projecting now the target rate in a range of 4.5 to 5 percent and that's the base case. That's the base case scenario for year end 2023, and that's based on a Fed that thinks inflation will calm down into 2023. So this is what they're thinking.

If inflation comes down, if it doesn't, we're going to go higher than that target range. So I mean the idea that Rubin is five percent prediction is crazy and extreme and overly bearish is just not based in reality. The FED themselves are saying hey, we're at least gonna have to go that high, at least in that range And you go back to the statement: persistent inflation, especially in wage and the service sector will mean the FED will probably have no choice but to hike more. So there's this idea that the Fed by raising the federal funds rate can cause wages to reverse back down and lower inflation that way.

But that is just an inaccurate idea and history backs that up. The FED does not actually have the power to lower wages. They have the power to cause people to lose their jobs, but not lower wages when the FED raises rates and it hurts the economy, Employers don't go to their employees and say oh, the FED raised right? So we're gonna have to cut your salary. No, they just simply go and lay them off and give more work to their top performers.

In fact, wage increases are so sticky that even during a massive recession, they don't go down. People just lose their jobs. Which is why when you're in a situation where wages are spiraling to the upside, Well, all of a sudden that is a Telltale sign that inflation is not. It's not done going up either.

Well, if you want some proof of this, look at the last 15 years of monetary policy and the reaction on the average hourly earnings of all employees. In Green you have have those average hourly earnings and in Red you have the Federal Funds rate. You can see that as the FED cut rates into the Great Recession of 08. average hourly earnings of all employees continued going up through the recession and long after the recession.

which meant what? Well it meant, wages increased and stuck there. They were very, very sticky. And then as the FED raised rates again in 2017 through 2020, earnings per hour went up even more so again. The idea that the FED raises rates and that causes wages to go down is inaccurate.

What actually happens is people just lose their jobs and the employees that are left see the same level of wages that they have or maybe a slight increase. Even after the coveted lockdown and stimulus measures which were huge interventions into the market, you did see a faster jump ahead in earnings, but that became normalized a couple quarters later. So even in this case, where it did go down slightly for a couple months hey, look, it got normalized very, very quickly. So wages were very, very sticky.

So the point here is that the FED can only do so much to get prices down on because wages are already baked into a lot of goods and services. Going back to Mr Rubini: once the world is in a recession, Rubini doesn't expect fiscal stimulus remedies as governments with too much debt or quote running out of fiscal bullets High Inflation would also mean that if you do fiscal stimulus, you're overheating the aggregate demand. So here's the thing folks, as you know, over the last two and really 20 years, the economy has been propped up by Insane insane levels of fiscal from Congress and monetary from the FED stimulus. And we've gotten away with that because inflation has been relatively low, especially because we changed the way that we calculate inflation.

But now the reverse is true and inflation is out of control and we are entering into a new era of fiscal and monetary policy. And Rubini here is saying, hey, in order to bring down inflation, governments must dedicate themselves to refusing, refusing to do any more stimulus if we decide to do more stimulus. We were aggravating the problem, not helping it. so he's saying here.

Basically, Well, until we get out of this inflationary environment, which he thinks is going to stick around for a long time, then we don't have much in terms of fiscal bullets, and by assumption, not much in terms of monetary policy bullets either. And a good recent example of what's happening is over in the UK. The new Prime Minister over there is enacting tax cuts and other stimulatory measures to stimulate growth. But this is a period of time where the British Pound needs an economy that is contractionary.

It needs a contractionary economy where people are spending less, not more. and so all of a sudden. if you go and you try to stimulate, well, that's terrible. It's a terrible disaster for the currency.

This is just one example of what countries are going to experience if they do anything to try to stimulate right now, right? And the problem is that inflation is going to continue according to Rudini. Aside from the sticky wages, he identifies a ton of other threats that reduce potential growth and increase the cost of production: deglobalization, protectionism, relocating of manufacturing from cheap areas in China and Asia back to Europe and the US aging of populations, migration restrictions, decoupling between U.S and China and Global Climate problems and recurring pandemics. He says that all these things are going to cause inflation to be stubborn and growth to be poor for the foreseeable future now. I Want to move over for a moment to his predictions that are more closely aligned with the stock market.

Specifically, he said quote during the 2008 crisis, households and Banks took the hardest hits. This time around. He said corporations and Shadow Banks such as hedge funds, private equity, and credit funds are going to implode. Okay, so think for a moment about the statement when he is saying the epicenter of this crisis is going to be corporations.

and Shadow Banks Like hedge funds, private equity, and credit funds, What does that actually mean for the market? Well, it means that a ton of publicly traded companies are going to see a huge huge hit and perhaps even implode entirely. A ton of funds that invest in them are going to see huge hits and implode, and a ton of credit funds that lend to them are going to see huge hits and implode. which I don't know about you, but from the stock market perspective, if the corporations that the stock market follows are imploding, if the investor funds that invest in the stock market are imploding, and then the lending facilities are imploding, well, that's a pretty damn dire situation where the stock market's getting destroyed from all sides. And if you believe him and you think these predictions are in line with what's going to happen, or at least the level of what's going to happen, well, you can imagine that the stock market's going to go down a lot more.

Okay, so Doom and Gloom aside, what does Mr Rubini suggest investors should do? He says quote: you have to be light on equities and have more cash Though cash is eroded by inflation, its nominal value stays at zero while equities and other assets can fall by 10 20 30 percent in fixed income. He recommends staying away from long duration bonds and adding inflation protection from short-term treasuries or inflation index bonds like tips. But I Think that what's freaky is that you look at this advice and then you look at what the market is doing and markets are agreeing with this. They agree with his advice, or at least they have the same sentiment pretty much all year.

people have been selling out of every asset class in hold leveling cash. This morning Wall Street's fear gauge hit its highest level since June and Bloomberg reported this morning. Quote Traders who just want to survive, sit on five trillion dollar cash pile. From stocks to bonds, credit to crypto money managers looking for somewhere to hide from the Federal Reserve's induced storm battering, virtually every asset class are finding solace in a long, reviled corner of the market.

Cash investors have 4.6 trillion dollars dashed in US money market mutual funds. while Ultra short bond funds currently have about 150 billion and the pile is growing. Cash saw inflows of 30 billion in the week through September 21st according to figures from EPF are Global So I mean hey, love or hate this guy's predictions. He's so far been pretty right and a lot of people in this broader Market The majority of people in this broader Market are agreeing with him and positioning accordingly.

and the more stubborn inflation actually ends up being, the more right he will be anyways. Let us know what you think about his predictions down below. Make sure sure to get your up to 15 free stocks with MooMoo down below as well if you want to build a firm foundation and step your trading game up to the next level. I'll put a link to Ziptrader You Down Below You will get lifetime access to our step-by-step lessons, private chat, daily morning briefings, and full price Target list and all other trading resources if you join us.

Coupon code flash 40 will get you 40 off before checkout. Have a good one folks and I will see you in the next video.