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  • Gerard Kavanagh

Winter is coming! Recession is here


Central banks are woefully behind the curve. They have proven their fallibility and are reversing their easy money stance both late and aggressively; inflation is most certainly not temporary as their actions show. A succession of central banks from the RBI and RBA, to the Fed and now the BoE have all hiked rates aggressively (with more to come): https://www.reuters.com/business/bank-england-hikes-rates-clamour-contain-spiralling-inflation-2022-02-03/ The margin for policy error has increased dramatically as a consequence and with the world economy built on the shifting sand of debt (global debt to GDP is at all-time historic highs) the likelihood of a recession, a deep one, stemming from this combustible mixture is becoming ever greater. The likelihood of financial repression is growing larger, which in its simplest form is where governments channel funds from the private sector to pay off public debt. One way of achieving this is by keeping interest rates lower than inflation, so debt can gradually be inflated away. In addition to this problem, we have the other great macro risk playing out at the moment. Deglobalisation. The political divide rapidly developing in the world, that will change the rest of this century, is between China and the developed world. This divide between the developed world and China has been growing at least since former U.S. vice-president Mike Pence’s speech at The Hudson Institute in October 2018 when he drew the ideological battle lines between the U.S. and China. The Biden administration has not backed down from the confrontational relationship with China. The war in Europe has done something very important as it has brought the EU to realize that it has become too reliant upon Russia for energy and that it has become too reliant on China for almost everything else. German’s Lindner has made it clear that the developed world needs to reduce its reliance on China for trade. On March 17, French President Emmanuel Macron also outlined a new industrial policy for his country aimed at reducing its reliance on China. As Russell Napier wrote last month: "A greater order is being imposed upon the world and it is an order that cannot cope with the flexibility that the free movement of capital imposes upon it." Knowing this - we are moving to a command economy, that inflation is here to stay (to erode distended debt), that financial repression will worsen - you should be looking avidly for a non-correlating (highly portable) asset with which to hedge yourself. FIX00 is digitalising real-world rubies, proven stores of value for centuries, and offering them to the public via our utility token and importantly our forthcoming F-NFT platform which allows for the ownership and transfer of their value. These unique assets should be an important part of your defensive armour as volatility and downside risks increase. All aboard the Digital Ruby train ...... Whoo, Whoo ....... leaving platform one on May 6th ..... All aboard!


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