Dear reader,
"A sum of money that is owed or due"
Since the market meltdown before the lock down in march the markets have recovered back to their normal highs. The crisis looks like a bump in the road if you compare it to the major down turns from 2000 and 2008. The reason for all of this is the fact that there has been so much money printed during the last months that the financial debt bubble has been rising ever since and will continue on this road.
This week I am diving into the fact what has happened in the last few months that have made it happen why the markets are back to normal. Also what the effect is of continued money printing and what will happen when we run out of air. Finally I am going to look at what you can do to profit successfully from a possible down turn in a next financial crisis.
Just print more:
Because of the lock down, economic uncertainty and the stock market at it all time high the American economy is standing on the edge. With China looming to become the worlds largest economy America would do anything and everything to keep their position. While the world is recovering and economies are opening up again the Federal Reserve has been printed more money in the last five months then it has during the entire decade since 2008.
While America is country that lives on debt, it is debt is on life support. The federal debt to GDP ratio 136% for 2020 while in 2005 this was just 57% it has nearly tripled in the last 20 years. The average debt per citizen is just under the $90.00,- and growing. While the nation is going in debt the consumer debt has grown by 1.1% for the first quarter of 2020. The biggest group of debt carriers with regards to credit cards is between the 40 and 60 years of age. Once these people stop working what will happen to their credit and will they be able to enjoy retirement?
When the music stops:
What happens when the music stops? How will we live or what would the world look like? Because of the fact that the governments are printing so much money in so short of time and the market is back to it all time high the speculations of another possible much greater crash is just around the corner. They have placed another band aid to keep the bubble inflated. But for how long can they keep it this way and what happens when the bubble pops?
Once the bubble pops the dollar and many other currencies in the world will become worthless pieces of paper with faces and numbers on it. In the worst case scenario there will be a hyper inflation where prices will go skyrocket, because of there is so much money in circulation there needs to be a new monetary policy. Within this possibility China is able to gain dominance and power within the stage of the world economy. What ever happens we are in interesting times and it is important to be cautious.
Success in a financial crisis:
What to do when the market is going to tumble down? What are the safest investments at the moment? There has been one financial instrument that has been able to stand the test of time and that are the precious metals. Gold and Silver have been around for thousands of years and have stood the test during any down turn. They have been able to stand as a strong financial hedge against the economy and a possible down turn.
Investing in a bear market can lead to great returns, but investing some of your money in safer assets such as the precious metals can be beneficial over the long term. Most people have no investments in these products such as physical metals but more in paper assets. The paper assets are leveraged 100x so the chance that you can exchange your paper assets for the real once is zero to none. Some of the greater investors advice that you invest 10% of your portfolio in assets such as gold and silver. Other investors suggest that you keep on purchasing the metals every year to keep your money save against the economy.
More first time investors have joined the market than ever before. Buying big companies at their top like Tesla, Amazon and Apple. While everyone is giving the market one little breath, the seasoned investors are fleeing the market for saver investments. What ever you do be careful with debt and investing. It is okay to have some debt for financing a house or buying a car. But watch out with buying everything on credit. Pay off your debt and keep your money save.
Thank you for reading,
Franklin, Moments2Success.
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