Republic: The Next Four Years

It's not that hard to see the future if you just follow the patterns and think for a whopping 14 seconds. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Republic: The Next Four Years]( It's not that hard to see the future if you just follow the patterns and think for a whopping 14 seconds. [Garrett {NAME}](floridarepublic) Jun 27 floridarepublic   [READ IN APP](   Dear Fellow Expat: Rule One of fatherhood is simple. When your six-year-old child is bored… she will tell you. So, imagine the horror when she audibly said so… in a quiet Teatro dell'Opera di Roma during a performance of Swan Lake. Her excitement was palpable when the performance started. But about 10 minutes before the First Act closed, the arms started wailing. The woman in the box next to us looked at us with the glare of a Salem Witch. When Prince Siegfried finished his final dance with the crossbow at the end of Act I, he was putting the late night with our daughter out of its misery. And with that, we returned to the hotel to put a cap on our final evening. Oh, England is a Mess, Huh? I watched a U.K. debate between Prime Minister Rishi Sunak and Labor Party leader Kier Stamer. I don’t know how England did it… but they somehow picked two less likable candidates who seem more robotic than either U.S. candidate. Stamer’s Labor Party effectively wants to eliminate all oil production in the North Sea (where Brent is priced). And Stamer couldn’t debate to save his life. If he were at a restaurant arguing (with video evidence) that he ordered a burger with fries, the waiter could convince him that he ordered a bag of moldy turnips. Stamer’s platform (though never clearly defined) is likely what you’d expect. Higher taxes, more immigration, and more transfer payments via welfare. Yet Sunak is still losing, which says more about him than Stamer. The Bank of England cracked the nation’s economy in half in 2022 thanks to rising interest rates, fueling a liquidity crisis and nearly the destruction of major pension systems (ones that are likely screwed anyway in the long run). This was the GILT Crisis, and it’s why Sunak took over in the first place. Ultimately, [a head of lettuce from a grocery store]( outlasted Liz Truss. Given his banking background, Sunak might have helped drive responsible fiscal and monetary policy, but he didn’t. The UK economy is weak, and the currency is weak. But it takes time to stabilize. More government spending is coming to the UK… and therefore, more inflation is likely coming, too. But this is all a system moving from crisis to crisis because no one knows how to stabilize an economy and wait. England engaged in a Soft Default, raising interest rates and continuing to expand Quantitative Easing. England wanted to engage in “Austerity,” but it turns out that a debt-based system needs perpetually more debt. Austerity didn’t work in Europe in the early 2010s, so their central bank started dramatically ramping QE in 2014. We Americans turned the taps back on massively in 2018 and 2020. And we haven’t gone backward or engaged in cuts or austerity… and likely never will. That’s what America's future looks like – with rampant debt monetization. Turns out… people didn’t like the results in England in the latest wave of this level of economic alchemy… and then they turned to “change.” Whatever comes next, it probably won’t be stable. I wouldn’t be shocked to hear someone propose that the British confiscate all of the Crown’s assets, redistribute them, and create a new currency based on handshakes and birdcalls. The only person I saw receive applause during the debate was a man who told each candidate how bad things were in the country and that their priorities were a mess. So, I’m all caught up in the blistering nonsense of the UK, another nation rapidly losing its identity. Let’s go home! So, What Have You Americans Been Up To? What on earth has happened to America in the last two weeks? Catch me up. What’s the hot gossip? You guys… tell me everything. What moral panics have we started? What political idol worship have we devolved toward? Oh, there’s a debate tonight? Really… the day I get back? Are they going to discuss ANYTHING that matters? We’re almost $35 trillion in debt now… so nothing seems to have changed… And we know that’s a lie… because we haven’t discussed all the unfunded government programs that implode in a decade. It’ll be at $36 trillion by the time we all start a new diet, quit that diet, promise tomorrow’s the day to work out, read about a new diet, buy a book on that diet, let that diet book sit under a takeout menu from a new restaurant chain, and then the NFL season has begun – to distract us again from the fact it’ll be $37 trillion by December. That’s what matters. But everyone is trying to get me to read articles about Toronto’s political swing to the right… people warning about food wars… the collapse of home sales… and everything else that was obvious… but we just had to wait for the story to evolve. These are all things we warned about… I guess in 2022. What Happens Next? I don’t see the market crashing this year. There is too much liquidity and too much passive investing. Although I could expect a crunch into October… maybe correction territory. There’s too much-continued expansion in liquidity – and the world tends to see a real crisis before the next major upswing. They’ve been trying to make climate change the real threat – the thing that requires ungodly money printing and investment – on top of more control over the population. It’s not taking. So… I’ll go with history… and just say war. I must warn about the headlines I expect to see in 2025, 2026, 2027, and 2028. If I were gambling… and saying what I think will happen in the future, it would look like this. That said, this is forecasting – which is typically a futile exercise. I just see it forming. - In December 2024, the Fed says it’s ready to cut interest rates due to deep recessionary fears emerging in manufacturing and housing. As rates drop, a supply-demand imbalance favors… buyers as more owners look to get out and buy elsewhere. This is the lesson of 2008. Homebuilder morale starts to fall. - In 2025, the next leg of the battle between the U.S. and OPEC sees oil DOWN, not up – with a race toward efficiency in drilling. Oil hits $60 but finds some level of stability in that range. M&A activity continues across the Permian and accelerates in Colorado. The U.S. moves to 14 million barrels per day – requiring much more midstream assets – but we still have the same refinery challenges in the future. The economy shows negative growth in Q2 2025 - and everyone blames libertarians who don’t want to borrow 7% of GDP anymore. - In 2026, the U.S. markets face a massive liquidity crunch starting in late February, aided partly by government interest spending and issues with shadow banks. This is the start of the down curve of the liquidity cycle – but passive investments continue to dominate the market. Congress considers Passive Investing for regulatory changes because of the blatant overconcentration problem, but Fidelity and BlackRock spend enough lobbying money to make the problem disappear. Eventually someone realizes that the Fed’s fiscal repression of the front-end of the yield curve is why markets screamed higher into the previous fall. - In late 2027, China invades Taiwan. This is inevitable, as the U.S. is running an 8% deficit by then and can’t afford to keep the military upgraded. They’re already ending the two systems in Hong Kong. If that happens, the global economy will take a serious hit – largely due to supply chain issues around semiconductors. This is where all that passive investing could backfire. - The election of 2028 is about the hard truth ahead in the next four years. Social security isn’t going to make it with drastic reform – as the timeline for the expected insolvency speeds up to 2029. We will have promises to keep the foot on the gas and honor social security promises. Republicans push for austerity. Democrats for higher taxes to afford it. In the end, the latter wins. By 2028, self-employed Americans will pay 12.8% (maybe even higher) for social security on all dollars up to $250,000… and surcharges accelerate on ladder levels up to $400,000. By 2029, the U.S. will have the highest combined tax level on anyone making $400,000 or more anywhere in the world – including NO payment of health insurance and medical care. The solution is massive fiscal repression by the Federal Reserve to keep the game going, higher-than-expected inflation, and an overwhelming bastardization of the dollar. If I’m right, you have three years to prepare. Make the best of them. But if you think the last 30 years represent policies enabling a stable U.S. economy… I wish you plenty of luck. Once again… our answers are finite assets, wealth protection, companies that can absorb inflation and maintain high moats, strong management, and premiere real estate. This is the end game of a 30-year exercise in the Federalization of everything. But don’t worry. They’ll claim that real inflation (on the things that matter) is 3%, that unemployment is 4%, and that wages are up. It’ll just be more of the same bullshit as always. Stay positive, Garrett {NAME} Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()