It’s been quite a while since I’ve sent out a blog but the time has come where I feel I must do so. I also believe this blog is the most important one I’ve ever done and that it’s critical that everyone read it. When you do, please remember that I am usually a positive, not a negative person, but sometimes the truth is far from positive. We are in far more dangerous financial times than you are being led to believe and it’s critical that you understand the lies being told, the true state of things, and the things you need to do to protect yourself and those dear to you
I will start by laying out the truth as to the problems we’re now facing, then get into some of the things you can do to help yourself in dealing with them.
Lie #1- Inflation this year is not the 7% they’re saying. It’s a totally rigged number! The real rate is about double that. Think about the price increases you’ve seen. 7%? No way. They admit gas is up 58% and used car prices up 37%, but claim food is 6%, etc. Do you believe that? I am not alone on this. Google it and you will see that a number of honest and capable experts believe as I do, that the real inflation rate is in the neighborhood of 14-15%. And it sure ain’t “transitory”.
Lie #2.. That we have only 4% unemployment. Their unemployed number is 10 million people, but 18.8 million are currently receiving unemployment checks from the government. How blatant is that lie. Think about it. 40% of small businesses are gone, 200,000 more than normal, but employment is up?
Lie #3- That the stock market is fairly priced and is a sound investment. The truth is that it is way overpriced and is so primarily from the trillions of dollars they printed and gave to the banks and the big companies to buy back their stocks.. also from the absurdly low interest rates and the inflation they’ve created.
Lie #4- that the economy is growing. They claim a growth rate of 6.9%, using their 7% inflation rate. When you use the more realistic rate of about 14-15% what you get is a negative growth rate of 7-8%.. that the economy has entered a recession.
Lie #5- That the government has things under control. At this point we have massive and essentially unpayable debt.. massive debt at the federal level and for a lot of the states, the terribly underfunded pension funds at both state and federal level, terribly underfunded Social Security, massive corporate debt, massive and potentially unpayable consumer debt.. a trillion+ in student debt, massive credit card debt, and so on. Over 50% of adults today do not have $1000 in the bank. Over 50% of those over 50 today will never be able to retire.
The government is now in a lose-lose situation. Don’t raise interest rates and inflation continues to roar. Raise the rate a little and it solves nothing. Raise them closer to where they should be and it will crash the economy.. stocks, real estate, jobs.. all of it.. and the government would be bankrupt.. utterly unable to repay their debt, pay the social security they owe, the retirements, and so on.
So what happens if those loaning all this money decide the rate is way too low? That the risk of default has become too high? Some of the world’s governments are starting to decide this, and are selling our currency rather than buying it.
We are now facing a real and growing risk that huge defaults will indeed happen. And when they do, things will almost certainly become very bad. It is a fact that if the rate was anything like normal, the federal government would absolutely be bankrupt. Everything would crash.. the stock markets of the world, banks will fail in waves, the dollar will drop drastically in value.. maybe 70-80%, maybe more. Most pensions will become either unpayable or will be paid 50 cents on the dollar or less. Jobs will be lost in massive amounts, crime will explode as people who can’t eat need to find a way to do so.
Now let me stop for a minute and repeat something. I am NOT a negative person, This risk is now very real. If you wish to learn more, there are 2 people worth listening to. Go to YouTube and watch a couple of the recent videos of Jeremiah Babe and Gregory Mannarino.
So there’s the problem. The question is what can you do to protect yourself.
Here are some things to consider:
Spending.. Cut back on optional spending as much as you reasonably can.
Pay off high interest debt.. but when it comes to a low interest mortgage leave it alone, as you’re likely to make money on it.. that inflation will more than make up for the interest you’ll pay.
Investing.. We are now in a time where pretty much nothing is risk free. The best bet, if you have it, is to be getting rental income from a residential (not a commercial) property. You might also invest some of your free cash in an ETF with the symbol RJA. It’s an ETF of commodities and is likely to protect the cash you put into it. Other than that it’s a tough situation as nothing is risk free. What I am doing, and what I believe you definitely should do, is to have some gold and silver coins in your possession and perhaps investing some in silver and gold miners.. symbols SIL and NUGT.
The other thing to consider is possibly buying some Bitcoin and Ethereum.. a high risk/high reward investment.
When I first invested in them 21 months ago I estimated that there was a 70% chance of a very big return and a 30% chance I’d lose a lot of that money. At this point, despite the big drop of the last 6 months I’ve made 700% on that money.
So how do I feel now? My numbers haven’t changed.. 70% chance it will double or triple going forward, 30% chance I will lose a lot, perhaps most, of that money.
Whether you should do any of this is up to you. The problem is that, as I see it, risk is now unavoidable, as all the normal investment alternatives have way too high a probability of major losses.. stocks especially, plus real estate is now too overvalued and fixed income a pretty sure loss from continuing inflation.
So there are my thoughts at this time.
I wish you the best..
Ted
P.S. You also should consider going to my public service website.. www.moneysmartonline.com. Everything is 100% free and I’ve provided some great courses on how you can manage your money yourself and way better that 95% of the professionals. As for my credentials on this, as part of the creation of the MoneySmart project I wrote a book, MoneySmart, that was voted “Best Personal Finance Book of the Year” in 2014.