There are 3 undeniable trends that I see that will impact everyone’s lives. You need to be aware of these trends and plan your life accordingly because those who create a wealth building plan around the 1980’s or 1990’s model are headed for economic devastation.
The destruction of America’s middle class, peak sovereign debt, and globalization are inevitable. Two weeks ago we went over the destruction of America’s middle class, if you missed it, take the time to read it now.
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Peak Sovereign Debt
We live in a failed fiscal state. The United States deficit situation is chronic and all this talk about austerity or stimulus is nonsense… it’s over, there is no fixing this mess. We are looking at either a planned reset or a reset that will rise up from the ashes of a economic disaster.
The U.S. annual deficit is so bad that even if we cut all government, except entitlements, we would still run a deficit. Cut the military, all U.S. federal workers, even congress, and you still are in the red. The U.S. debt is now growing exponentially, increasing $10 trillion in the past 10 years. Compare that to the entire world where debt has only doubled in the past 10 years to $190 trillion. I know it’s still bad, but it’s like OMG bad when you look at the U.S.
We are now in a situation where the global economies depend on an unsustainable amount of debt. For example, think of all the federal workers and federal programs that we have to borrow money for in order to keep them funded. Well if you lay off those federal workers or end those federal programs, what do you think will happen to the fraudulent economy? I am not advocating to keep the fraud going, I am just pointing out that we are so deep in the fraud now, that the fraud has become normal… so when it all ends, it is going to end badly. Every business will be effected, our economy has ballooned itself off of endless borrowing.
In the end this is all that matters to us as individuals, how will peak sovereign debt effect our lives? No ponzi scheme can last forever, eventually the fraud will end, doesn’t mean new fraud won’t arise or that all of government goes away, it just means that the current fiscal state will end. Borrowing to pretend you have prosperity won’t last forever; and in my opinion, we are seeing it come to an end now.
I think being heavily diversified into different income producing and hard assets is our best protection; real estate, precious metals, and forever stocks (world dominators). Being debt free will also shield you from hard times, if you lose your job or income is reduced, if your expenses are at a minimum, you can probably weather anything.
Update on the destruction of the middle class…
Yesterday it was reported that behind Wal-Mart, the second-largest employer in the U.S. is Kelly Services, a temporary work provider, aka a ‘temp agency.’ This comes off the latest jobs numbers from Friday which showed part-time employment to be at an all-time high! Full time jobs decreased by 240,000 last month, however, this has little to do with the unemployment number since the government includes anyone who has worked a few hours as fully employed. Sadly this trend is here to stay and this is what college grads have to look forward to, that and $30,000 worth of student loans and lost time.
Next we will discuss the most important trend that will effect your life, globalization. Depending on how you look at it, this could be the biggest opportunity in human history!