Understanding macroeconomics and how it affects your assets is vital. Especially your efforts toward investing for retirement. I feel that is the most important page I've written for this Web site so far. This topic will impact millions of Americans.
We'll be discussing the economic forecast in this page. I'll present some viewpoints that may be difficult to accept. But we will also see a very good end result.
The purpose of this page is to encourage you to seek more information to prepare and empower yourself. The old way of parking your money in one spot or leaving it in the hands of a manager are going away. You will need to be more active in watching out for your own money.
Active management is critical now. And that requires knowledge that in the past wasn't always provided. Maybe by design? That lack of information kind of fed the old system with millions of people willing to send their money to a mutual fund and just assume nothing bad could happen.
And that plan worked for a long time. For some, it still will. For a while. But the macroeconomics of our world are bringing change.
For any of you not sure about the definition of macroeconomics, here it is...
"the branch of economics dealing with the broad and general aspects of an economy, as the relationship between the income and investments of a country as a whole."
We will actually be looking at the economies of the entire world and how they relate to our own lifestyles. The viewpoints presented are from a fantastic book that will help you prepare for very possible and in fact highly probable events that will impact your lifetime of work and planning for retirement.
The real estate bubble drew most of the newspaper space when it became a housing crash. Too bad it wasn't front page news before that time. It was addressed by a few people, but those voices were quickly shot down.
Not many wanted to see the truth. The party was on and most didn't want to think about it ending. And there was plenty of money to be made by plenty of people from that housing bubble.
Understand that a bubble is an asset value that rises with no underlying fundamental drivers. Just changing investor psychology.
Our bubble economy started with the declining manufacturing growth in the 1970s. Then the government began to embrace deficit spending. A little bit in the 1980s, but then it became intoxicating. Now we are faced with trillions of dollars in debt. More than the government will admit.
So what does that have to do with your retirement account? Or your job? Great questions. I'll give you a quick overview and will offer a tremendous book to fill in the details.
Realize that there are still several intertwined bubbles out there. They are being supported by two huge efforts to keep them inflated for as long as possible.
Those two temporary supports are massive currency printing and unsustainable government debt. The U.S. doesn't own the patent on this strategy. Keep an eye on world events. Other countries racing to debase their own currencies and adding their own massive debt will affect our situation. Remember, investor psychology drives bubbles!
When these two supports cease to work, the other bubbles will come crashing down and will literally wipe out years of hard work and saving.
It won't happen right away, so you will see things that will lead you to believe all is well and things are getting better. There will be loads of people making fortunes who will tell you to stay the course.
But instead of hearing what they say, watch what they do. Be assured they understand macroeconomics. Are some of the big names quietly slipping out of stocks? How will bonds hold up when inflation hits hard. They won't because bonds are affected by interest rates. Quickly.
Jobs will be affected as well. We are not in a "bearish cycle." We are in an evolving economy. We won't be going back to the old way. We will be moving forward.
My strongest recommendation is to read "The Aftershock Investor." It will lay out how we got to this point, what to look for to anticipate and recognize the falling bubbles and how to prosper. You will find out what jobs will be in real danger and what positions could actually thrive.
The authors, David and Robert Wiedemer and Cindy Spitzer will give you a look at what to expect and how to handle it. After accurately predicting the events that led to the last crash and even offering suggestions to avoid part of it, this time around more people seem to be listening.
You really need to get this book and read it. Especially if you doubt any part of this message. No one wants runaway inflation. No one wants people's 401k accounts to be wiped out because a stock broker told them to hang in for the long haul and the stock bubble deflated when the artificial supports gave out. Or they just lost buying power do to a dollar collapse.
You will get a good blueprint on how to protect your family financially. The understanding of world macroeconomics will take the emotion out of the decision making. Emotion clouds the facts.
You've read me quoting Robert Kiyosaki many times when I write that "Knowledge is the new money." This is becoming a political economy. Lack of understanding and lack of leadership have placed us in a dangerous position. Not just America, but the world. Most governments have embraced crushing debt as a sort of free credit line.
But our country has led the world before and will again. We will come out stronger. It will hurt for a while. It will hurt many people and will hurt a lot. But eventually, "We The People" will have had enough of the gamesmanship. We will get back to fundamentals. We will make stuff. Good stuff that lasts and we will return to values that built America.
Get a copy of "The Aftershock Investor." Study it and make informed decisions. Be aware of how macroeconomics does influence our future.
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