Chris Martenson is one of my favorite economic analysts to follow. He is well known for his work on the intersection of energy, the environment, and economics. This particular video is a piece of promotional content leading up to an economic summit that happened in September of 2018.
His brief interview with David Stockman (former director of the office of management and budget under Ronald Reagan, congressman and author) should give you a solid idea of what the future holds for us economically. In a nutshell, it’s not good.
They are predicting a simultaneous collapse of the stock, bond, and real estate markets.
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David Stockman immediately points out that the federal reserve has quarterbacked 20 years of unprecedented economic expansion and in 2008 the other global central banks joined in, because they were afraid their currencies would appreciate too much against the US dollar and would thereby crush their exports. When the fed prints money, they devalue the US dollar because there are now more dollars in supply. That means that it now takes more dollars to buy goods and services that come from outside the US.
Stockman says that the economic stimulus caused by the central banks moving in lock step with each other has over-inflated and caused bubbles in just about every market.
Much of the money they printed went straight to banks and into buying stocks, bonds and real estate. Some was used to supply the US government with cash flow, so the fed bought US treasuries and lent money to Uncle Sam. Uncle Sam repays these debts to the federal reserve by collecting taxes from you and me, but the federal reserve has now reversed course and is no longer buying treasury bonds. It’s allowing bonds to mature, getting principal back from the US government and NO LONGER lending it back to Uncle Sam.
The federal reserve is taking the punch bowl away! The fed claims it’ll raise interest rates too. The days of nearly free loans are ending and with it economic expansion and the taxation that supports our overly-indebted country.
The other central banks are sure to follow and with liquidity being pulled from the financial system, what goes up must come down.
He says that a financial contraction is imminent globally and the shockwaves will be felt by everyone.
The law of supply and demand will now have an opportunity to take over and the prices that have been pushed up through financial engineering will certainly come down, and most likely come down quickly and violently.
David Stockman says that the risk of a 2008 style financial crisis is at least as great and likely greater than it was in 2008, because we have had 10 years of emergency measures that grossly expanded debt levels, and too much debt was what collapsed the markets in 2008.
Things are tremendously out of whack and reversion to the mean is the natural flow of economic mother nature and the upcoming snap back-to-center has all the makings of the most serious one in the history of recorded finance.
In economic circles, this violent reversion to the mean that’s coming is referred to as the, “great reset.” It makes it sound palatable.
He says that the Fang stocks (Facebook, Apple, Amazon, Netflix, Google) have increased in combined market capitalization from 1 trillion in June of 2013 to 4.2 trillion in June of 2018. He says that they are great companies, but in no way justify tripling in value in 5 years. He goes on to say that Facebook losing 120 billion in market capitalization in 1 hour after missing their recent earnings estimate is a great example of what is to come. It’s argued that deformation of the financial markets has lead to overly inflated prices, and that will lead to a rapid decrease in prices as it is simply reversion to the mean and justifiable values.
He points out that Mark Zuckerberg lost more than the gross domestic product of Iceland in one hour in his own portfolio after Facebook missed quarterly numbers!
He says that massively out-sized financial values will have to come back down-to-earth and that by many metrics, values are even more extended than they were on the eve of the dotcom bubble in March of 2001.
You may or may not remember that the NASDAQ lost 30% of its value in 13 days, and lost 80% over the next 2 years, all while brokers and financial advisors were telling their clients to stay invested. I know because I was one of them! It’s what we were told to do by management and their management, and their management.
I pay attention to many different financial analysts and some believe that our markets still have lots more upside ahead, but also recognize that we are much closer to the end of this economic expansion, then we are to the beginning.
How will you protect your wealth from the upcoming recession or even great-great-depression? How will you protect your income? What will you do when commerce stops and many people lose their jobs? How safe and secure is your job?
My goal isn’t to scare you. It’s to provide serious value. When the downturn arrives, you’ll be glad you found out as soon as you did, but probably wish you would’ve acted on it sooner. Now’s the time to set up a REAL PLAN B.
If no one is hiring, people will go to the internet looking for ways to make money from home and those who are there first can help that wave of people and profit from them. One of my favorite quotes by Abraham Hicks is, “Economy is a personal thing and there are those who thrive, while others do not.” You can get wealthy during a recession or depression by being smart and by being prepared.
If you need a pick-me-up because I’ve just depressed you, check out how Tony Robbins says to break negative thinking!
Matt T. Nathanson
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Stuart talks about vision moments. My girls screamed with delight, as they touched snow for the very first time and like a light switch, I instantly realized that no job was worth missing my kids’ childhood and making quality memories together. That’s the vision that keeps me motivated. I’m putting the effort in now, so I have free time and extra money to make memories with my wife and kids for many years to come.
PRINCIPLE #2 INVEST IN YOURSELF
“Every day I make sure that in some capacity, I’m investing in myself. Unlike school, as a self-learner, you get to choose the areas you’re enthusiastic about and you get to choose the people that you’re learning from.” The most important investment I’ve ever made has been in me and my education, not a 401k. The return on your investment is the ability to earn income, no matter what the economy is doing.
PRINCIPLE #3 DO THE WORK
Find someone who has what you want and do what they did! Find someone who’s willing to teach, who’s been there and done what you’e looking to do, and follow their lead. I tried to build several online businesses early on, without a guide, and failed. Then I found the SFM and their guidance allowed me to succeed. It’s designed to help anyone go into business for themselves online.
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