In 1898, a Polish author named Jan Bloch published a 3,000+ page volume on modern warfare entitled Future War and its Economic Consequences.

Bloch had studied military technology and saw the rapid pace with which destructive new weapons and munitions were being developed. And he came to the conclusion that the next war would be absolutely devastating.

Bloch predicted, in fact, that the days of classical warfare-- cavalry charges and large troop movements on an open battlefield-- were over. And that the next war would entail long, bloody, pointless trench warfare that would be unimaginable in its destruction.

In short, he predicted World War I.

Bloch was even invited to speak at a diplomatic conference in the Hague in the following year in 1899, and he urgently warned the attendees to do everything they could to prevent war.

The experts listened politely… and then completely ignored him. 15 years later Bloch’s prediction came true when the Great War broke out. Millions died. Europe was destroyed.

And yet in retrospect it was all so obvious. The warning signs were there all along. But somehow the people in charge not only managed to NOT avoid war, they managed to steer directly into the path of destruction.

This is often the case with major world events, including wars and major economic catastrophes. They’re seldom accidents, nor do they sneak up without announcing themselves years in advance.

And after the crisis is over, it all seems so obvious in retrospect. Yet the people in charge failed to see it coming, and often contributed to the cause.

Another great example is the Global Financial Crisis of 2008, where banks and financial institutions engaged in high-risk behavior that nearly brought down the entire global economy.

Once again, the people in charge not only failed to notice, but they played a key role in engineering the crisis to begin with.

The Federal Reserve slashed rates to just 1% after 9/11 in the early 2000s, which led to a massive asset bubble. The Fed didn’t seem to notice.

Then when they started aggressively raising interest rates in 2005 (to help fight inflation), asset prices fell dramatically. The Fed failed to predict this too.

Banks lost billions of dollars as a result, and many banks failed entirely. This triggered a chain reaction in the financial system and the worst economic crisis since the Great Depression. And the Fed not only missed the warning signs, they steered directly into the disaster.

We’ve just seen a similar crisis unfold with this month’s bank runs.

The Fed slashed rates to zero, sparking yet another major asset bubble. The Fed failed to notice.

Banks paid record high prices to buy US government bonds using their depositors’ funds. The Fed failed to notice.

Then when the Fed aggressively raised rates, they failed to predict that asset prices (including bonds) would plummet in value, causing widespread solvency problems at banks.

Banks have even reported $600+ billion in unrealized bond losses to the Federal Reserve-- one of the banks’ primary supervisors. And yet the Fed still failed to notice.

In fact just three days before Silicon Valley Bank went bust, the Fed insisted to Congress that everything was fine in the financial system.

These experts are consistently wrong. And it reminds me of World War I: the warning signs were obvious, yet the people in charge failed to notice… and steered directly into the path of disaster.

So in today’s podcast, I spend some time exploring an important question: what other key risks are lurking out there which the people in charge have failed to notice?

At this point, frankly, it would be stupid to assume that the government ...

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