The Everything Bubble: America's Next Economic Crisis?

Mike Maloney 
MAY 19, 2017

This urgent, 35-minute presentation from Mike Maloney is a must watch. You'll see overwhelming evidence that stocks, bonds, and real estate could be in biggest bubbles of all time.

Be sure to get your free copy of Mike’s best-selling book, Guide to Investing in Gold & Silver.


This is the first time in history that there is an everything bubble. In 2000, we saw this with stocks. In 2008, we saw this with stocks and real estate. Now, we are in a bubble that involves stocks, real estate, and bonds. When this bubble bursts, it will be devastating for most people, but it doesn’t have to be for you. Read on to learn how to protect yourself from this potential economic crisis.

What is the Everything Bubble?

This has nothing to do with either political party, it is solely finance and economics.

Back in 2005, Mike Maloney became aware of certain indicators warning of a stock market crash and a real estate crash. Mike started warning people between 2005-2007 of these indicators.

Unfortunately, these same indicators are flashing red again, but it seems we have less time to prepare this time around.

Ahead, we will be looking at the stock market bubble, the real estate bubble, the credit/debt (bond) bubble, technological risks, and geopolitical risks. Most importantly, we will discuss how to best prepare for this impending crash.

The Stock Market Bubble

Stock Market P/E Ratio Chart

This is the S&P 500 Price-Earnings ratio. The price of a stock versus how much the company is earning is a very good indicator of a stock being overvalued or undervalued.

  • If the stock is priced at 4-10 times earnings, the stock is a bargain.

  • If it’s priced above 15x earnings, the stock is too expensive.

  • If it’s priced above 20, it is in a bubble.

Right now, the entire S&P 500 is running an average PE ratio of 29.19, indicating that virtually the entire stock market is in a bubble. The only time we have reached a P/E ratio this high was right before the Great Depression, and right before the Nasdaq crash in 2000. Even during the global financial crisis of 2008, the P/E ratio was not as high as it is right now.

Margin Debt Net Credit Balance vs S&P 500

This is margin debt. When people buy stocks by borrowing currency to pay for the stock, they can get what’s called a margin call: 

  • If the value of the collateral (stock) drops too low, the brokerage house will make that investor or trader cough up a bunch of currency and pay to bring their equity up to a level where the brokerage house is still comfortable letting them have the loan.

Margin debt goes along with complacency. When people are complacent they’re not pricing risk into the market. They tend to gamble and go further out onto a limb.

This chart shows Margin Debt as a percent of the economy. As we can see, it is the highest it has ever been, indicating that if there’s a crash, it will be very fast because there will be abundant margin calls. Margin calls force traders to sell positions so that they can come up with cash, forcing them to liquidate a portion of their portfolio. This causes the crash to happen much faster. It is a signal of a crash being very violent.

According to John P. Hussman, Ph.D., 

What is driving the market right now is the fear of missing out. Someone sees their neighbor making cash and they want to jump on that train also.

A gap in the market is something you need to know about.

When a stock is going up in trading during the day, and the next day it opens up at a higher level, it leaves a gap in the chart. Those gaps are a certain signal that something is going on: study: dow jones over 91% of the time the market will come back down to cover gaps.

When gaps of greater than 0.5% occur within 2% of the all-time high of the S7P 500, that is a signal that there is an exhaustion of the market: alot of the currency that is available is becoming exhausted. It is an indicator that we’re near a market top.

Hussman created an indicator for the stock market with certain conditions that would be an accurate warning of an impending financial crisis. The conditions are as follows:

  • The stock market needs to be in a condition where more than 50% of the advisors are bullish

  • The P/E ratio is above 18

Each vertical line represents the indicator, a time where both conditions were met. Indicators have historically gone off weeks or days before major historical corrections, pullbacks, and crashes. What is so alarming is that the indicator has gone off five times in just the past few months. Therefore, we are at the peak of a bubble.

The stock market is way overvalued, and we are way overdue for a recession just like the last time around. The answer is gold and silver:

If you had switched from stocks to gold and silver, even if you were a year early, you would have gained 40% instead of losing 62.8% in the stock market.

Warren Buffet’s number one rule: Don’t lose money. Number two rule: Don’t forget rule number one. This is because losses are very difficult to recover from.

The Real Estate Bubble

In 2008-2009, real estate crashed in the United States and Great Britain, but in Canada, Australia, New Zealand and China, the bubble has kept on running.

Index of House Prices in the US and Canada

Housing prices continue to Skyrocket in countries like Canada, and Canadians are feeling the financial pressure.

House Prices to Incomes in the US and Canada

While the home prices have had corrections and been adjusted for income since the Great Recession in the US, Canada’s home prices have continued to hyperinflate. However, the housing market in the United States is far from perfect. In fact, our housing market is in a bubble as well.

House Prices vs Interest Rates

This is data from Robert Shiller of Yale University. It compares home prices from back in the 1880’s to today’s home prices. It is indexed, so if everything was at fair value compared to the rest of the economy, the line would be flat.

The blue line is representative of where we are at today. Only in 2005-2008 has there has been a bubble this big. When the next recession comes, we are going to see stocks and real estate crash.

This is all eerily similar to the events of The Great Recession. If you replace the name “Home Capital” with either Northern Rock of Great Britain or Countrywide in the United States those entities got into trouble, their depositors started withdrawing funds, the mortgaged-backed securities came back to bite them in the butt and they needed bailouts. This caused the cascading effect of the global financial crisis of 2008. Here, with home capital, the same story is starting again.

When Mike wrote his book, on page 103 he ends with the Bear-Stearns collapse. He predicted that there would be a huge bailout and massive creation of currency.

Indeed, Ben Bernanke had doubled the amount of paper dollars (base currency) that exist in the last two quarters of 2008. We ended up with about 4.2 trillion dollars printed out of thin air, where just a few years before it had been 0.8 trillion. This is why it is wise to protect your assets by investing in precious metals.

If you invested in gold even a year before the crash, today your investment would be almost double what it would be worth if you invested it in the S&P 500.

The Bond Bubble

This is the credit/debt bubble.

The Credit Bubble

This is the 30 year treasury bond. This is a perfect bull market, from 1981 to today. However, this has been going on for 36 years, and no bull market can go forever. Toward the end of the bull market, whatever has been rising for all of those years is now becoming overvalued compared to the rest of the economy, and it’s in a bubble. All bubbles pop eventually. Also, as bond prices go up, yield goes down. To get a long perspective on the cycle of bonds, we will reference Dr. Robert Shiller’s data that goes back into the 1880’s:

Long term interest rates over time

We have a cycle right here, and if you look at the trough where interest rates are lowest, then reverse and go back up again, then go back down into a trough again, you discover that this cycle is even: the number of years on each side of the peak is almost exactly the same.

If you look at the cycle we’re in today, you’ll see that if we measure the same amount of time into the future, from the peak, as we had when the cycle reversed back in the 1940’s, the cycle would put us into some sort of bond crisis between 2019 and 2021.

The thing about bonds is that they go along with a shift in the entire world’s monetary system.

Every 30 to 40 years, the world gets a new monetary system.

It's time for a new monetary system

We have been in our current system, the worst designed system, for over 46 years. The system is cracking and soon, there will likely be a G20 Summit between the world’s finance ministers to usher in a completely new monetary system. This will result in a currency crisis. We have taken baby steps away from the gold standard to nothing, and our current system of money backed by nothing will have to be replaced with something.

The Roller Coaster Crash

So what will this crash look like? It will be a two-parted roller coaster crash.

Our “recovery” from the Financial Crisis was just another bubble we were pushed into through zero interest rates and MASSIVE currency creation which warped the economy. All of that energy will be released again, and the stock market and real estate market will crash.

What is interesting, though, is that during that crash, many people are going to seek a safe haven for their assets. Traditionally, US bonds have been that safe haven, and people will flock to those when the first stage of the meltdown occurs. Then, the entire bond market will crash with everyone in it, making this crash especially painful and destructive to the economy.

What is so alarming about the timing of this meltdown is that baby-boomers are out of time. Many of them lost a significant portion of their retirement savings due to the financial crisis of 2008, but many still had time before retirement to reallocate their assets and gain back what had been lost. However, a vast majority are about to retire and won’t be willing or able to reinvest their assets into the stock market, due to being punished twice in the 21st century (tech bubble, financial crisis) for doing what is supposed to be the most prudent way of making your assets work for you.

When people stop investing in stocks, bonds, and real estate and instead hoard cash, it is devastating for something called velocity of currency. For more information on Velocity of Currency, reference Hidden Secrets of Money episodes 6 and 7.

So by now you have to be wondering, How can I best prepare for this imminent crash, and the potential for a new world monetary system? Due to the complexity of this economic situation, gold and silver are only a part of the solution. You want to have an alternative monetary system ready to go.

These already exist, and they are called cryptocurrencies. It started with Bitcoin and several others that have been introduced. Owning some cryptocurrency is wise, because if the monetary system fails, you can still execute transactions with cryptocurrencies around the world.

When Mike Maloney toured with Robert Kiyosaki (Rich Dad Poor Dad) he would talk about the fact that in a real crisis, you want the five G’s:

  • Ground

  • Grub

  • Gas

  • Guns

  • Gold

Mike Maloney adds that there should be a couple other letters to consider for this situation:

All of these things are the answer to protecting yourself and your assets during a shift in world monetary systems.

Geopolitical Risk and Technological Risk

All of the risks that exist today magnify the potential crash that is coming.

We live in a world of many single points of failure. For example, if the internet goes down, society stops.

If you haven't seen the movie Zero Days, watch it on Netflix, Apple TV,  or Amazon. It is about the Stuxnet Virus allegedly created by the US government to attack Iran’s nuclear program.

This occured a decade ago, and the virus spread to every computer on earth. But, it had a very specific set of rules for it to identify and target its victim.

Today, the viruses that exist and have been created could give anybody, anywhere on the planet control over almost anything that exists on the planet.

Suddenly, water could stop coming out of the tap, electricity could go down, and the monetary system goes down.

The answer to this would be the five G’s and Silver.

If the internet goes down, Cryptocurrency will be worthless for as long as the internet is down. However, the block chains are very robust, and as soon as the internet came back on the crypto’s would likely be available again.

Cryptocurrency isn’t a foolproof protection against this New World monetary system. Having some Gold and Silver for small transactions is crucial during this time, as well as emergency food, gasoline, and so on.

The Most Underrated Assets: Gold and Silver

Gold and Silver are actually some of the most undervalued assets in the world.

Gold vs S&P 500 over time

Gold has been in a bull market for essentially the entire 21st century. However, it is starting to capitulate, meaning we are in the third phase of this gold bull market.

Capitulation: What you want to do is buy something when it is the most unloved and ignored asset possible. Then, you want to get out of that wagon before it goes over a cliff. The proof that Gold and Silver are unloved and ignored, and therefore undervalued, is in the US Mint’s sales of Gold and Silver.

US Mint Coin Sales over time

This is the annualized dollar value of Gold Eagle and Silver Eagle sales from the US Mint. The blue bars represent Gold and the grey bars in between represent Silver. The trend over the past few years gives an impression that nobody wants gold right now, it’s unloved, and therefore it’s being ignored. This is a major signal that it is time to buy.

But here’s the thing: they’re not being ignored by everybody. 

Right now, Russia and China are the biggest buyers of gold on the planet, and when you add India into the mix, there are months when their buying exceeds all annual production on the planet. This means that the excess that they’re buying has to be coming from somewhere and it’s coming from the West. We’re selling and they’re buying.

They see the writing on the wall, they see coming, they see the potential for a New World monetary system and they’re getting ready.
You should too.

To that, we also below the cost of production for many of the mines and that is a situation that cannot last, because when that happens production decreases. So production is going down just at the time when we are going to have a crisis where everybody wants to rush into it and the only thing that can resolve that is price.

Protection & Opportunity

This crisis could be pretty bad, and you do need to protect yourself. We can’t control what is going to happen on this planet but we can control what’s going to happen to our own personal finances. The protection that you can arrange can also give you the opportunity to come out of this crisis better off than when you went into it.

If you’re going to investigate this further, you need to get educated on it. Mike Maloney would like to give you a copy of his book for free. It is one of the best ways to learn about this subject. It contains everything you need to know about investing in gold and silver, such as: