On my journey to finding better options for growing my wealth outside the stock market casino, I found many mentors who taught me what the Wall Street machine would never share.
The first guy I learned from was a man named Nelson with a huge following. He’s practically a celebrity in his industry. He pilots himself across the country in his own plane speaking to crowds who assemble to hear him share his mission with Americans of the realities of the stock market and wealth building the right way.
In our meeting he started in…
“First you have to realize the Wall Street investing system is a FOR PROFIT industry.”
“Yeah I can see that…” I said feeling like this was a little elementary.
“No, when I say ‘for profit’ I mean, for their profit…not yours. The entire system is engineered for them to make money during good times and bad, regardless of how their clients do.
Let me show you how this system was engineered.
Every economic bubble in history started with reckless expansion of money supply and credit, reckless manipulation of interest rates, or government promotions of “low-risk” something for nothing schemes.
That statement holds true for everything from the Tulip Bubble, to the John Law Mississippi Bubble, to the 1929 Stock Market Crash, to the Housing Bubble.
For example, Tulip mania was a futures manipulation and options scheme (credit with leverage) accompanied by futures rules changes enacted by the Dutch Legislature in 1636.
Every time in history, even as late as 2007, those who caused the bubbles could not see them.
Housing in particular should have been easy to spot. Anyone who could breathe could get a mortgage. Housing prices spiraled three standard deviations from rent.
Look back at 2001 and the dot com crash. I actually wrote a paper disputing the commonly held belief that the new ‘internet economy’ was bust proof…and that this new internet thing would be the answer to all of humanity’s problems.
I remember being absolutely flabbergasted when I read article after article of so called finance experts who were certain there was no way we could have another crash now that the internet was here. How absolutely foolish these people were, and they were supposedly the experts!
These lunatics dumping millions into dot com companies that couldn’t turn a profit to save their lives lost it when the easy money ran out and people started to realize the internet couldn’t reverse the gravitational pull of profits and losses. Ultimately gravity and economics wins.
The reality is that the FED and Wall Street together combine to create these asset bubbles that eventually always burst.
When do they burst?
The simple answer is: When the pool of fools driving the bubble runs out.
It really is that simple. Think of it this way…the housing bubble burst within one month of investors standing in long lines and entering lotteries for the right to buy condos in Florida.
The problem is, when these bubbles burst, they often take the average Americans retirement funds down the roller coaster ride with them.
And right now we have another bubble, several in fact.
There’s the Quantitative easing bubble, which is fancy for “The Fed is pumping billions into the market to pump it up.” There’s a student loan bubble, with trillions in student loans.
And there is the credit bubble. Today less than 1/3 of all transactions are settled in cash. There is about $7.5 Trillion per year in consumer spending annually. But there is only 1.2 Trillion of dollars, physical money, in the entire world.
(Source: Bill Bonner Letter, December 2014, Volume 1)
Credit depends on a stable currency. People have to believe they will get their money back in order to feel comfortable lending.
When the value of money becomes unstable because of rising interest rates, inflation or deflation, folks stop lending.
It has already happened in many other countries and if or when that happens in America the results could be catastrophic.
The markets are more volatile than ever.
This is the big danger we’re facing with the world economy being so technologically connected. Everything is happening faster, and economies are impacted by events across the world.
This is critical to understand. Today’s economy and market is not your father’s or your grandfather’s ‘greatest generation’ economy. It’s moving fast…lightning fast and everyone can see it.
This new economy is creating faster cycles of booms and busts because events, wars, economic problems and policies created by 100 different countries can affect our markets.
Booms and busts are here to stay and they are happening more frequently than ever before.
Take a look at the Japanese earthquake and nuclear disaster wiped out an entire year of earnings for American’s with their money in the S&P 500.
It was going along pretty well, then BAM, the disaster happens half way across the world and hardworking American’s lose out on an entire year of gains through no fault of their own.
Does that sound like a good way to make a plan? Plan your golden years, your dreams and future for yourself and your family on something you have no control over, and in fact has a history of losing almost half of its value every 10 years or so?
These wars and foreign policy disputes are increasingly impacting your ability to retire, and increasing the volatility in the market. In a second I’ll show you how Wall Street firms actually love volatility and try to create it so they can profit more from it.
The boom and bust cycle of the stock market creates a rat race effect where investors are basically in the same place where they started 10-15 years ago, especially when you take out their own additional contributions. Meanwhile Wall Street redistributes your wealth from you to them.
In the past 15 years we’ve had two crashes over 40%, and now many people are afraid another one is right around the corner.
We all know bubbles eventually burst, the question is, what is your strategy for protecting your wealth and profiting from the upswings after a crash?
You can protect your wealth from market crashes and then benefit from the rebound by using a 101 Plan.
To learn more go to http://wealthbeyondwallstreet.com/blueprint/