Adapt or Die – Be Ready to Adapt Quickly to Change

It could be a brilliant move…that is, if it works. If — and that’s a big if — everything goes according to your plan.

But there is so much that can go wrong!

As soon as the group started getting ready to leave, you were quick to grab the blue flag. You were also careful to place yourself last, so that you could walk behind everyone.

As your group gets to the clearance, you gather up on the marked spot. You are tall, so no one suspects when you place yourself at the back.

WARNING: Here’s two reasons why the AUD could collapse in 2020

It’s then that the opposite team appears. The group also gathers together at their own marked spot, placed a few feet away from your group.

You spot your target straight away.

Without planning it, he’s pretty much had your same thoughts. He is carrying his team’s red flag and has positioned himself at the back of his group. He is almost like a mirror image of you.

You are now both standing only a few feet away from each other.

This could work.

As the host explains the massive challenge ahead of both teams, you look at your target. He looks back.

This is it. It’s the moment you’ve been waiting for.

You both move your flags in front of you, hiding as much of your bodies from the others as you can. If anyone else sees you, the jig is up.

You see his hand go into his bag, and take something out of it.

You grab the wrapped item from your pocket.

What’s inside, is something you spent much of last night making. For days you had been collecting string and pieces of wood. You were even lucky enough to find some bones. You are usually quite good at crafts, and you think that what you’ve put together looks quite similar to the real thing.

Quickly, while the others are distracted talking, both of you tilt the flags, extend your hands behind them and swap items.

You can’t believe it, it worked. You can’t help but smile.

You now have an immunity idol.

What’s more, you have swapped it with Sean for a FAKE idol.

How long till Sean realises the lie?

You aren’t worried. Even if he does, you are both members of different tribes. He can’t do much about it.

But, as it turns out, Sean discovers the ruse fairly quick. And what’s worse, in a twist of the game, he ends up swapping groups and becoming part of your tribe.

Now you have a huge target on your back, and an enemy gunning for you.

The game is up…or is it?

If you are a bit confused about what I’m talking about, I am describing one of Survivor’s biggest moves this year.

Survivor is a reality show that places players on an isolated island where they have to work as a group to get basic needs but also compete against each other.

I’m not a big fan of reality TV but I do enjoy watching Survivor.

It’s a game of trickery, strength and wit. It’s also a game where things change fast.

That’s what I like about it. The best players can adapt quickly to change and turn it to their advantage.

You either adapt or go home.

Change in the Economic Game

It’s a bit like life. In life, change is constant.

And let me tell you, our economic game is changing.

So far, this game has included a bull market record run and asset prices running wild.

Anytime markets get spooked, well…there came in central banks with more stimulus.

But for how long can the game stay the same?

Interest rates are close to zero, or below. This week the US Federal Reserve lowered rates for the second time this year by a quarter point.

We are playing a much similar game to that of 2007, except that this time we are starting at a disadvantage, as you can see below. Last time, rates were over 5%, and went down to near zero. Today we are starting from a lower base, at 2.5%.

The Rum Rebellion - 21-09-19

Source: Trading economics

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All that easy money makes it seem like the system is flush with cash. But is it?

The Fed pumped US$203 billion this week in three instalments into markets for the first time in 10 years to keep interest rates from going higher.


The moves underscored just how deep the structural problems in U.S. money markets have become. Namely, there is often not enough cash on hand at major Wall Street firms to meet the funding demands of a market trying to absorb record Treasury bond sales needed to cover U.S. budget deficits. […]

[M]any experts say, these wild few days show that there’s not enough reserves — or excess money that banks park at the Fed — in the banking system. That means traders are this week having to pay up to get these funds, even as bank reserves total more than $1 trillion. And it suggests the Fed may again have to grow its $3.8 trillion balance sheet through quantitative easing, or debt purchases that create fresh reserves.

In short, there aren’t enough dollars in the system.

Oil has thrown a spanner in the works this week also. Last weekend an attack on Saudi Arabia’s Abqaiq and Khurais plants eliminated 5%  of the world’s oil supply, affecting production.

Oil prices spiked bringing instability and volatility after spending years at lows.

What’s more, after spending years ignored, gold is also surging. It’s increasing on the escalating trade war, central banks buying record amounts of gold and on the prospect of negative rates.

And while after the last crisis we got a boost thanks to China’s growth, there are increasing signs that China’s economy is slowing.

Wherever you look, things are changing and what’s worked so far may not keep working for long.

Don’t get complacent. Get ready for change and change with it.


Selva Freigedo Signature

Selva Freigedo,
Editor, The Rum Rebellion

PS: HOODWINKED! Why Australia’s ‘miracle’ economy is a farce. Download your free report to find out why.

Selva Freigedo is a research analyst for The Rum Rebellion.

Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table.

Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default.

Selva has also lived in Brazil, Spain and the USA.

Back in 2000 she was living in the US as the dot com bubble popped…
And in 2008 she was in Spain as the property market exploded and then collapsed…

She has seen first-hand what happens when bubbles burst.

Selva joined Fat Tail Investment Research’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.

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