History shows us that some kind of crash is coming.

And we may have just seen the first murmuring.

But how big and brutal could it be?

Today’s world is one of easy payments and easy money
There isn’t much of a need to think about what money is in today’s world. It’s plastic...a number on the screen...a tap and go.

In the last decade we have had a flood of easy money.

Back in 2008, major central banks got together and pumped a lot of cash into the system to ensure there was enough liquidity.  

They lowered interest rates and, as you can see below, added trillions of US dollars — yep with a ‘t’ to their balance sheets.

The Fed has been recently decreasing the size of their balance sheet as part of their quantitative tightening program to normalize the economy before the next crisis hits.

Or at least, that was the plan.

After markets saw a huge drop last December, the Fed was quick to do a 180 in their policy this year.

We’ve gone from quickly raising rates to now seeing rate cuts. Even though the stock market is still at record highs and unemployment is at record lows.

What will happen now?

Investors expect central banks to keep on pumping easy money into the system.

But how much money will the next crisis take? 20 trillion...50...100?

We don’t know.  

Can all this easy money help us get out of the next one?

Maybe...maybe not.

Truth is that we’ve had a decade of unconventional monetary experiments, and all this money hasn’t really brought us much growth. Risks are mounting with all this easy money.

Interest rates are already at record lows. In the next crisis, how much lower can they go?

Gold is gaining ground

Gold has no yield but yet it’s looking more appealing in a future with negative rates and low inflation.

If you have to pay to store your cash in the bank, why not store gold which maintains its purchasing power and does not cost you to  store?

Gold is appreciating on the prospect of negative interest rates, on fears that the trade war is escalating.

Central banks have gone on a gold bender to increase and diversify theirreserves. In fact they bought more gold in 2018 than in any year since 1971, and have continued their gold shopping spree into 2019.

According to Goldhub, central banks bought 374.1 tonnes in the first half of the year.