Whole View of Economy Skewed?

I was born in 1982, and taking a look at financial records, the United States was in a secular bull market since 1982 till 2000.

This means my entire upbringing as a child was in the wealthiest nation in the world, during a bull market. Not a bad time to grow up! However that good fortune and easy times as a child may not last much longer due to the current economic outlook of the United States. Now I’m an adult trying to build a fortune in the largest debtor nation in the world. So now the fun begins.

There seems to be a few different reactions to a coming economic downturn:

  1. People who will get scared, then bitch and complain. Most likely will blame certain incidents, the president or other scapegoat for their troubles.
  2. People who will research and understand what is going to happen before it happens, then react accordingly.
  3. People who have no idea what’s going on, will soon be affected, then react later to the new environment.

I’d like to be in that minority of people who understand FIRST what can happen, then prepare in a way which will keep me financial stable and even prosperous despite a bad economy. This course of action requires the most work, reading and research which makes it a sure bet only a tiny fraction of the people will do it.

Of all the really crappy financial information I’ve screened through, I by far think the absolute best advice anyone is giving right now is Peter Schiff. He’s got two recent books out (both which I’ve read) which are excellent. Just Google him and do your own research. He’s been deemed “Dr. Doom” in the recent years because in all his past interviews he used to predict “crazy” things happening like a housing industry meltdown or investment banks defaulting. Well people are starting to take notice now.

The only thing that can “fix” the economy is a recession. This will flush out all the bad businesses, bloated companies and excessive government expenditures.

Here’s an analogy I tell friends which compares the United States to a regular guy (perhaps themselves):

Imagine a guy who works a normal job, doesn’t make all that much money, but lives a really nice lifestyle. He spends more than what he makes because he just puts everything on a credit card and makes minimum payments. He can live this way for a while, but he just goes further into debt and eventually he’s got to pay for it. He must either make more money or spend less to get out of debt.

He can’t just easily start earning enough more money to pay for the debt, so he must start cutting down his expenses.

The United States is just like the guy in debt. The only way to “fix” his problem is to get rid of the nice apartment, stop eating out as frequently, or stop buying so many expensive gadgets.

You can log onto hundreds of financial blogs which started because the owner was deep in debt, and almost invariably got out (usually in just a few years) because they cut their expenses and paid off the debt. Same thing will happen with the U.S….or at least should happen.

The bad part is, when a country “cuts down on expenses” it means the entire country goes into a recession (at least “recession” is the scary term used to describe a slowdown of spending). However the upside is when people get rid of all the debt, they come out smarter about their purchases, can operate with less and can then start saving for their futures or investing back in themselves so they CAN make more money.

I won’t bother going into anymore economic analysis than that, it’s your job to start doing some financial research on why the dollar is falling and will continue to fall, but it brings me to this point:

In the coming years, it’s imperative to be working harder than ever before. Absorption of sound financial information is essential. I’d also highly suggest you increase your savings right now…just in case. Research, reading and frugality will be more important than ever before (Well, not EVER….I mean in my generations lifetime). This is also an excellent time for lots of opportunity, as you’ll find lots of new opportunity when things are being shaken up!