The Final Shakedown Will Be Uncontrolled

Never Have We Made So Many Chips!

Let the chips fall where they may is a figure of speech which means, "What happens happens" or "Let the imminent events unfold." This metaphoric term dates back to the 1800s and alludes to chopping wood,  "chips" refers to chips of wood. This phrase uses the image of a person chopping wood and letting the chips fly everywhere instead of trying to be neat and chop on one side so they'll fall in a pile. It implies the woodcutter should pay attention to the main task of cutting logs and not worry about small chips. It is often joined to a statement that one should do what is right, such as, "No matter what the consequences, I'm going, to tell the truth about what happened and let things and events unfold as they may.  

This phrase is sometimes thought to be a misquote of the phrase "Let the cards fall where they may" which refers to one's fortune being told by a tarot card reader. The card reader generally asks her client if he has any preference in how she would lay the cards out and this was the usual response. At any rate, the idiom meaning "let things happen the way they will" has not applied to, and may not be an option when it comes to our modern day economy. The ship has already sailed when it comes to a hands off approach because central banks across the world are so deeply involved in manipulating the markets they have become very distorted and no longer reflect reasonable values.

It has become abundantly clear that when it comes to the "economic chips" the powers that be have no intention of letting them fall where they may. However, several factors determine just how much influence can be applied to the how current economic policies unfold. Continuing with the metaphor of "falling chips." Things like the size of the chips, the rate or speed at which they fall, and the number of chips in the air may make them uncontrollable. My point is we could find ourselves up to our neck in chips in a blink of an eye and in the middle of an economic tsunami, all bets are off as to how successful efforts to stem a catastrophe might be. This means during the final stage of the global shakedown events will be uncontrolled and become very wild.

The world might soon witness a major shift in the value of one investment over another as investors seek firmer ground. Derivatives, currencies, plunging stock prices, air rushing out of a bond market bubble, how debts are structured, and the timing or direction from which problems arise will play into this "great unraveling". We are constantly reminded that investing involves risk, including the possible risk of principal or capital. Foreign investing is subject to additional risk including currency fluctuations, but what many people don't realize is no matter what they invest in or how they choose to salt away their wealth or savings risk is always lurking. Values constantly change and the unfortunate situation of having your wealth in the wrong place at the wrong time can be devastating, the inability to access your funds can make the situation even more dire.

The economic overlords will and do have the power to change the rules, when this happens it generally is not to benefit you or me. During times of economic chaos, you can only hope you will not be the one thrown under the bus. With much of the world looking down a road paved in promises that are economically unsustainable, it is likely many will be broken. Pensions and other payments granted to us in our later years are the kinds of promises that are at risk of not materializing or being cut. If indexed to inflation this tie can swiftly be cut or broken and it will not be pretty when we see the buying power of these promises rapidly diminish.

How Will The Dominoes Fall?

Much of this revolves around the issue of debt a subject of great importance to both lenders and borrowers, and again timing can mean everything when determining whether a creditor will totally default or force a lender to suffer a major write-down of their expectations. Debt is generally set to be paid over time and a balloon payment coming due at a time when money is difficult to borrow can be the kiss of doom. Inflation or deflation, as well as a big shift in interest rates, will determine the true winners or losers in this brutal game. You can't get blood out of a turnip and chasing someone for years through a legal system at great cost often only adds insult to injury.

I contend the amount of money and free currency (able to move around and be deployed) actually standing or remaining after the next major economic meltdown begins will be the determining factor of whether inflation or deflation is indeed the flavor of the day. A person may think they are wealthy or have real wealth, but will they be able to tap into it and move it about? Often "paper wealth" is merely a promise of future value. Many people would be shocked at just how little in the way of tangible assets many very wealthy people own and to find much of the wealth people own is on paper, and this is full of risk. What is often missing or overlooked is tangible fully paid for items and things that are likely to hold their value and in the direct possession of the owner. People tend to avoid tangible assets in their control because they are often inconvenient or need to be insured.

Going forward we find the size of the chips, and the order in which they fall is both unpredictable and does matter in determining how an individual's wealth is affected. The story of the gold miner who labored for years then gave up and walked away set things up for the next young lad who started in to hit gold in days and strike it rich highlights that being right is not always enough, the value of tenacity should not be underestimated, and timing is crucial. The world has indeed become a giant casino and a game of chance, at stake, is just how much of our wealth we as individuals can protect. When we talk about contagion it is easy to imagine the dominoes falling, but have no doubt the direction they fall often determines which if any will remain standing. In my opinion, luck and caution will have a lot of impact on our individual fortunes as we move through the financially violent period before us.