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Turkey? Drop? Probably

Much has been happening in the markets recently and I wanted to take a moment to briefly discuss Turkey and all the recent news in today's headlines.

First, what's happening in Turkey. It's a very complicated subject, but basically, as the world's central banks have injected themselves in the markets, they have essentially turned their currencies into financial embodiment's of trust and faith. What this means is that if you have dollars, and I have a different currency, say yen, and another group has dollars, and the 3 of us trade, buy and sell to one another, you would see our currencies move back and forth. After a couple days you might see that you have very few yen, because I don't trust you as much as I trust the other trade partner, and so he has much more yen than you. Nothing is wrong with this picture, normal trade. But what if a trading partner starts to dislike another partner. Then the dollars or yen might stop flowing to that other partner.

Basically what's happening in Turkey is a massively more complicated and scary version of this story. In essence all of the countries in the world are thinking alot more about who they trade with, thank China and Trump, and Saudi Arabia declaring trade war on Canada for this. And as this trade war intensifies the flow of dollars and currencies becomes very important because of financial markets. Basically if you are Turkey, and you sold debt to the world, and agreed in the debt agreement to make the payments back in dollars, or if your own currency is devaluing against the dollar, it makes the value of everything in your country worth less, and less, everyday, until you have to restructure your debt and currency.

And what is really happening is that the Federal Reserve bank is taking dollars out of the world markets everyday, and as this happens, this tight trade game gets harder and harder to play.

The moral of the story is, we will know in the coming days whether or not the whole market is about to take a very big dive down. If Turkey's currency and debt market blow up, a significant amount of European banks balance sheets will blow up too, and this will most likely affect China, who's debt is insanely high and teetering on a currency that's being devalued already.

If Turkey somehow makes it out okay, and doesn't restructure, then the market probably continues to float sideways for a bit, because there is no spurt of growth currently. Only rising rates, and world debt reaching higher and higher, sucking growth from future generations. So we'll see. I've said I think we are at the all time high in US Markets for the next 20 years or so, and will repeat the Japanese 20 year drop in stock prices. But we'll see.

Either way, myself and my investors will be fine and profit from the oncoming drop and volatility. But if I'm not managing your money, be safe, there are no Warren Buffett quotes that say buy at all time highs.

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