On the Brink of 2024: After 2023, Can We Handle Any More?

As we approach the close of the year, CNN calls 2023 “the year of the brink” but anticipates 2024 could be worse. If we are now “on the brink,” it would seem 2024 will be worse as that is what “on the brink” implies. Economist Harry Dent (always a bear, but not always this much of a bear) claims that 2024 will bring “the biggest crash of our lifetime,” one that is “off the charts.” And John Rubino asks if we’re just plain “too dumb to survive!” One thing is certain, says JPMorgan, 99% of American’s will be financially worse off in 2024 than they were pre-pandemic. How comforting to know that, at least, something is certain.

In light of such dour thinking, Bill Bonner questions the “pivot ferver” that pushed the S&P up higher on Friday for the longest winning streak since 2017. He seems to think it was maniacal.

CNN sees the past year as one that could have been notably worse yet one that remained just on the brink of notably worse, ready to fall into the abyss at any time, but just not quite doing it. The post-Covid world, they say, is “exhausted, cash-strapped and more fraught with troubles” than it has been for decades. From the sound of things, that squares with JPMorgan’s assessment of where we are now.

That is how we enter 2024 with the US as a “flagging hyperpower” that is more divided to where it is“tearing itself apart in voting disputes and political extremism.”

The internal traumas of the US magnify every global risk. Authoritarian regimes in other nations at odds with the US may be more emboldened to take risky actions in 2024 while the US is caught up in its own internal battles that have been making decisions in the Capitol almost impossible. We seem to be seeing that in the attacks around the US military ships surrounding Saudi Arabia.

“2024,” CNN says, “could make 2023 seem rational and sober.”

I agree. That’s why I’ve predicted 2024 will be “The Year of Chaos.” I’ll be laying out my views on that and other things for the future in my upcoming “Deeper Dives.”

The Ukraine drain

The Russia-Ukraine war appears likely to carry on through all of 2024. Putin has gained no ground in over a year and was being pushed back for awhile. More recently he has been doing all he can to hold ground and succeeding at that. Putin has suffered multiple attempts on his life (as has Zelensky), but Putin’s attempts appear to have mostly come from the inside, while Z’s attempts appear to have come from Putin. Putin’s toughest warlord turned on his lord in an attempted coup that lasted all of two days earlier this year then mysteriously turned tail and ran, only to wind up blown up in his plane.

Zelensky is conscripting another half a million Ukrainian soldiers, and Putin is drugging his up and sending them back to fight again. Don’t expect any quick resolution in this match.

China, in my opinion, is most likely to be caught up its own internal problems in 2024 as the destruction Xi singlehandedly brought to his own national economy though his”zero-Covid”policies continues to oppress the people of China, whose numbers have always been a dangerous threat to the leaders of China if the peasants get too angry to hold back. This, in my view, is why we now see Xi returning to America, in spite of all the muddy Yangtze water that has passed under the bridge, to promote more positive relationships with the US, which has severed many easier relationships with China in recent years, particularly around trade, which China needs.

Harry Dent says the bubble that is exploding will be so ferocious we’ll never see another bubble in our lifetimes. It will be the bubble explosion to end all bubbles — not one that is capable of being reinflated.

“Things are not going to come back to normal in a few years. We may never see these levels again. And this crash is not going to be a correction,” he said. “It’s going to be more in the ’29 to ’32 level. And anybody who sat through that would have shot their stockbroker…. If I’m right, it is going to be the biggest crash of our lifetime, most of it happening in 2024. You’re going to see it start and be more obvious by May.”

Could well be. I’m still shaping up my own predictions, but they don't run too far from that so far.

Hussman Investment Trust says they expect a 10-12 year swoon of poor stock returns.

Bill Bonner notes that Argentina has come to the end of its monetary rope with an unpayable $400-billion debt. The US now holds an unpayable $34-trillion debt, so it’s at the end of a much longer rope. Argentina has finally voted for a tough guy to kill the nonsense. The US has no tough guy to vote for who will do that. It has Biden, who is doing his best to pile up greater debts with more demand for free Fed funds. Trump followed the same policy under Make America Great Again, especially in his big debt balloon year of 2020.

And, so, John Rubino asks if we’re just plain too stupid to deserve to survive. As his evidence that we may, indeed, be too dumb to survive, he points to the majority of people in the US who believe the government should solve inflation with price controls. These people are historically illiterate, or they would know the government can and has set limits on prices but it cannot stop producers from closing shop because they don’t see any benefit in producing at those prices. So, huge shortages result from price controls.

That is why you have to whip people to produce in communist countries because the suppressed prices don’t entice anyone to work; so, those nations typically wind up with severe shortages. China tried government funding to get things built and wound up with lots of vacant condominiums no on wanted to buy. Markets do best when they sort themselves out, but a full 56% or Republicans no longer believe that, 62% of independents, and 80% of Democrats.

Alas, it is a lesson humanity never learns:

The idea that an enlightened “Philosopher King” can successfully control wages and prices dates from at least the Roman Empire and has been tried multiple times in the subsequent 2+ millennia.

It usually begins with a government overspending, overborrowing, and then debasing the currency to hide its own mismanagement. Prices begin to rise as a tsunami of ever-cheaper cash chases a finite number of real things. The public demands that the government “do something” and desperate leaders respond by identifying “correct” prices and forbidding sellers from charging more….

Hospitals respond to a fixed price in an inflationary environment by choosing cheaper options for each part of the procedure, making it less pleasant and more dangerous for all concerned. In other words, the bill remains the same but the product degrades, sometimes catastrophically.

Now spread this kind of degradation across an entire society — food, air travel, local government services, etc — and you end up with most things not working as well, taking much longer, or being simply unavailable.

Like communist China at many points and certainly the communist Soviet Union. Now we have a majority of Americans who want to try it, even though it has failed wherever tried. Since we apparently never learn from history, maybe we are too dumb to survive.

Ah well …

It won’t be long and 2024 will reveal for itself what it holds — maybe even before the year begins at the rate things are unfolding!