ARE WE HEADED FOR AN ECONOMIC COLLAPSE?
If you have been watching the news, scouring social media, or reading anything about the economy there is plenty of “bad” news.
Are more banks heading toward failure?
Will interest rates continue to climb to battle inflation? (It isn’t even the best way to battle inflation and isn’t required at all).
Will the government increase the debt ceiling or will social security collapse and the government default on treasuries?
Let me spoil the ending to this movie… they won’t.
It is a charade. Fueled by fear and funneled to you by media.
It is just a cycle to scare people so we don’t look at what really happened
Yep, nothing to see over here (while we print money)…
Let’s use hot-button issues to distract everyone.
Not that these might not be real issues, but definitely can be red herrings causing fighting about differences rather than looking to see where we are alike. We are alike in that want to provide for our family, feel secure or free, and be loved.
Instead, we focus on where we push each other away, find anger, even hate, and diminish love. Why, so we can fight about Bud Light ads, abortion, indictments, mask mandates, Covid beliefs, kneeling at a football game, and gun policy.
You probably have strong feelings on each of those issues, right? And we just continue fighting and blaming people that don’t see things the way you do- thanks politics.
See, my passion and drive continue to grow now more than ever.
My energy continues to expand amidst the news, the economy, and the fear that is being spread through social media, politics, and people that do not have our best interests at heart.
Every day I read Barron’s, Investor’s Business Daily, The Wall Street Journal, Kiplinger’s Personal Finance, The Economist, Bloomberg, Yahoo Finance, and more….
And I’m even starting to do YouTube reaction videos on articles that don’t give enough options, that are using faulty formulas or are misleading.
I’m also pointing out the pieces that give great advice.
This takes and puts my content in the context of what is happening right now in the world.
It gives teeth and traction to the teachings. It brings forth practicality as well.
So, as a note, if you find something you want me to discern truth from falsehood, or even to pick apart, or interpret, send it my way. If you find anything that seems confusing and want to simplify so you can learn, or even pieces that sound like a good idea, but you aren’t sure… send it my way. [email protected].
I’m here to help.
I’m dedicating my days to helping people eliminate unnecessary fear and illuminate myths so we can be empowered to live our richest life. This doesn’t mean I won’t point out the problems or tell the truth, even when inconvenient, but it does mean I will give options, and solutions, and get to the bottom of what is happening.
There unfortunately are plenty of people who profit from your fear.
There are plenty of stories that only tell part of what is happening or that are flat-out misleading.
Hear me when I say (type) this.
I STAND FOR THE BEST OF WHO YOU ARE.
It requires less fear and more truth about the economy, about money, and knowing what to do now. It requires seeing what is possible, seeing the best of who you are, and shining a light in the darkness of this narrative of fear, doubt, worry, and scarcity.
This blog, my life, and anytime I am teaching, it is to illustrate principles that call forth your prosperity and abundance, your brilliance, and the leader that you were born to be.
I’ve got your back. We are in this together.
It does, however, require dealing with reality. Reality and the truth aren’t always easy or pretty, but as Dan Sullivan and Dr. Craig Manning (mentors of mine) would say, reality is required for progress.
Reality number one.
The US is about 31.5 trillion in debt. $31,500,000,000,000.
So, should you be afraid of the Debt Ceiling? Well, the fact that the government continues to be bureaucratic, inefficient, corrupt, and without accountability, yes. But in regards to if social security is at risk June 1st without raising the debt ceiling or the government defaulting on treasuries (bonds, bills, notes) for the first time- no, at least not yet.
Let me spoil the surprise. They are going to raise the debt ceiling. Can you imagine if a business continued to go into debt, make questionable decisions, be completely corrupt, and get rewarded for it…oh yeah. Remember big pharma, big banks, or Wall Street. Not far-fetched, since it is the government that is part of allowing this to happen again and again. Cronyism or what socialists try to label as capitalism. It’s not, but the reason why people end up hating capitalism is in favor of lobbyists, allowing corporations to be corrupt because they fund the politicians.
Media hype creating fear is part of the process for more spending (above the 31.5 trillion of debt) because of Janet Yellin saying we could default on treasuries (government bonds people use to store cash and get returns).
And, it is this massive amount of debt that has added to the reasons Brazil or China don’t want to use the US dollar anymore for trade.
Next reality or issue.
The Federal Reserve.
Make no mistake, they are the ones primarily responsible for inflation. They added at least 40 percent (likely much more) to the money supply in the last few years.
That is watering down the soup.
That means labor isn’t backing our dollar, policy is.
That means that value creation is no longer king, printing is.
This happened through a policy called Quantitative Easing. Add more money without value and you will have inflation. Then, the Fed, decides the best way to battle it is through interest rate hikes. Oh, who benefits from higher interest rates? The Fed maybe? The ones that make the policy have more money than they have lent out and now charge more for it. Hmmm. Fox in the hen house possibly?
And the Fed, when they printed money, gave much of it to two places.
Wall Street and Banks.
The banks then bought treasuries at a very low-interest rate during 2020, 2021, and 2022. Instead of lending out the money they bought these low-interest rate treasuries to create liquidity and thought it would add to their safety. But, unfortunately, the group most responsible for inflation said they would battle it by raising interest rates, lowering the value of the treasuries for those that bought the previous years.
Oh yes, this was a big problem for Silicon Valley Bank (SVB). When people started taking their money out, creating a very quick cycle of withdrawal thanks to our ever-connected internet economy, SVB had to sell the treasuries at a loss because investors could get higher interest rates by buying new treasuries at twice or more interest.
This created capital depreciation (lower value on their treasureis), putting the bank, and its depositors at risk.
And just between SVB, First Republic, and Signature Bank, it tapped into 36 billion dollars of the 123 billion the Federal Deposit Insurance Corporation (FDIC). These three banks represented more of a hit than 25 of the banks that failed in 2008.
So maybe think twice before doing a CD at the new more attractive interest rates. Or before you feel that 250k that is insured really means something (only if the government steps in when the FDIC is out of money).
In 2009, FDIC money was fully used and then TARP and another government program accounted for almost 2 trillion of bailout for the banks, which is part of the 31.5 trillion the government owes now.
FDIC is money that comes in the form of premiums from banks, not taxpayers, but can’t account for almost half of the US banks reported to be insolvent if people ask for their deposits back.
So now what is the fed doing beyond raising interest rates? The Fed is telling you who they are, we just have to look and listen. They are now using quantitative tightening, to pull money back out of the money supply. So, I guess that is one way to admit you were wrong.
Ok, so we are almost through the reality part and can get to what you can do about it.
But it is essential to address the negative cycle of news.
There will be plenty of negativity reported around Crypto, mostly deservedly so. But most crypto that deserves to be made fun of is meme coins like PEPE, Dogecoin, and other shitcoins (my term).
See, Initial Coin Offerings (ICOs) bring these Shitcoins to the market, allowing people to pump and dump and essentially steal money. Many of the same bad actors/characters on Wall Street have no moral compass other than profit at all costs. This zero-sum game of hype and greed leads to the losses of many hard-working, uninformed people that are speculating yet thinking they are investing.
As these faux Crypto coins fail, and as thieves continue to advertise and steal, there will be a cry for regulation. But remember, there was a cry for regulation of the banks in 2008, yet here we are again, with half of the banks not solvent if people withdraw their money as I just mentioned.
If the type of regulation our government is interested in actually worked, we wouldn’t be back here again.
In the wealth gap of the haves and have-nots, funded by taxpayers and with the stress and strife of the W-2 laborers, people don’t have much left over to invest or build assets.
This is exactly why people get into gambling their cash on overhyped real estate or crypto.
They borrow to try to make up for lost time and they do all they can to get out of debt or prepare for retirement. The debt is due to overpriced education for their kids, lengthening of car loans keeping them in debt longer to keep payments low, or overpriced housing due to artificially low-interest rates now leading to high rents with the increasing of interest rates (this is only naming a few of the issues).
The increased interest rate to “battle” inflation has led to a housing supply shortage. People are holding onto homes they would have sold (but can’t even rent at the price of their low-interest rate mortgage) and now driving people to rent, increasing the demand, and therefore increasing the price of rent.
Again, thanks the Fed.
Oh, and the government isn’t capable of fixing it. They are stuck in a morale hazard because they are funded by banks.
Real regulation means less funding. Real regulation isn’t in policy it is in penalty. Jail time and big fines. Something the fat cats haven’t had to face as they put our economy on the brink.
Wall Street and banks have massive interests through lobbyist and campaign funding. This is why the regulation isn’t effective. It is protecting the wrong people (definitely not the depositors).
The regulation isn’t real and doesn’t help.
Now you can see why I’ll be dissecting financial articles and so-called experts.
There is too much vague and misleading information leading to confusion.
Often publications, media, and financial talking heads are talking out both sides of their mouth (go to Garrett.live for this commentary and my reactions).
In recent articles, it would say inflation is high, so the solution is to invest in stocks.
But in the same article, it would say stocks are risky, be more conservative – WTF?
There is plenty of talk about FDIC-insured deposits being minimal risk or treasuries (bills, notes, and bonds) being seen as the most risk-free investments due to the unlimited taxing power of the government. But other articles talk about the debt ceiling creating the risk of default. This narrative further provides an excuse to raise the debt ceiling, losing accountability and creating more reckless policies leading us down a very dangerous road that repeals investments from other countries and destroys the value of the dollar.
Expect them to raise the debt ceiling though as I mentioned earlier, even if they delay it past June 1st for a bit, but not long.
Most articles I am reading tell you to put money in the stock market.
Yep. That never changes.
It never matters what is happening in the economy or market, they say to invest no matter what.
Hey, the market is down, buy while it is on sale.
The market is flat, buy before you miss out on it going up. Then they give silly examples of why Q2 is always a good time to buy historically (not properly understanding causation and correlation) giving erroneous advice.
Or, the market is going up, buy NOW (hitting the greed gland).
Other articles are praising cash.
Warren Buffet is putting more money there or Family Offices (extraordinarily wealthy families with a dedicated financial team) are sitting on the sidelines.
Yes, they are storing up cash because they know there is lots of opportunity coming in the chaos of the economy.
But what is at times not mentioned, if interest rates continue to increase, the value of your treasuries will decline (the very reason banks are having problems).
I have yet to read an article saying that cash values are an alternative. Why?
BOLI (bank-owned life insurance) is currently where most banks keep all allowed qualified reserves. This helps them avoid capital deprecation and was key in getting better interest rates these past few low interest-rate years.
These can be an attractive alternative because you can tap into these tax-advantaged accounts anytime (unlike IRA or other Qualified Plans), your money is protected from ever going down with market volatility or economic downturns, and you get a myriad of benefits including asset protection.
The cost or catch?
You have to be with one of a few dozen companies, fund them properly, and wait 3-5 years before they break even and start outperforming other safe, fixed-income alternatives.
These mutual life insurance companies are much more stable than most banks and aren’t at risk of being insolvent or requiring a bailout and have their own version of FDIC called the Life Guaranty Association of 250k to 300k of cash value protection. In Utah, my home state, there has never been a single dollar tapped into.
Yet FDIC is already 36 billion down this year.
Oh, and with all the news, you are going to find more people touting the benefits of gold and silver. First, if things are going to get as bad as these preppers say, you better get toilet paper, batteries, bags of rice and beans, and learn to hunt.
And, there is merit to being prepared, even if it isn’t likely to happen as soon as preppers think. And, by the way, if I have to live in a world where I have to kill people to survive, I think I’ll just go out in the first wave.
Gold and silver are great as a hedge, but are volatile and susceptible to market manipulation- great for some of your money, but those that tell you this is the answer, are limited at best and likely wrong.
They simply aren’t advising you to focus on cash flow, or investing in your skillsets and ways to earn more income, and are fearmongers that have been crying that the world is coming to an end for far too long.
Sure, they will eventually be right about the demise of the dollar (that is inevitable) or the collapse of the American empire (we have been voting ourselves into the treasury far too long), but in today’s world, in a global economy, in the age of the internet and technology, there are more ways to kick the can down the road and delay the inevitable than in the past.
Advancements in AI and technology have created efficiency that allows for bad government policy and spending, corporate greed, and collusion, to continue far longer than times in the past.
Again, value creation and exchange are the keys to wealth, not redistribution and policy that rewards corruption and woke(ness) to reign.
With that being said, I’m hearing from a lot of people who are worried about a digital currency replacing the dollar, putting us at risk for more government control and creating worry about social scoring systems and the problems
If you want a look at how this might work, turn to one app to rule them all (in my best Lord of the Rings Narrator voice…I have been called sexy Gandolf BTW, LOL).
There is an app in China called “We Chat”.
It is scary, controlling, and problematic.
The Chinese government can lock you out, cops can see what you are doing when you are holding you phone, the app can tell you where you are supposed to be and turn on and off your ability to get food, bank, and more. YIKES.
Side note, I am not going to score well (social score) with blogs like these. Guess I’ll have to hunt and fish for my food.
So, what are the solutions?
What Would Garrett Do?
Well, I am not an investment advisor anymore (passed the tests, and dropped the licenses so I could write books without being muzzled), but I can tell you exactly what I am doing.
I keep less money in the bank and moving my money to Chase, a behemoth. Behemouths get to buy the other banks like we are starting to witness and happened in 2009. These large banks are too important to the government to go under, so no regional banks and credit unions for me anymore.
I only keep what is totally necessary for my basic banking functions, only around 1 percent or less of my money in the bank between my businesses and personal- only enough to handle two months of expense.
I continue to beef up my ever-volatile Bitcoin holdings.
I have two months of expenses in some gold and silver.
Some of my money, not all like the fearmongers want you to think.
I own some real estate. Real assets will matter in the future, even if they will be more volatile in a changing interest environment. I have some, but not a ton. Too much real estate takes my time away from my favorite investment- intellectual property.
NOTE: Know your Investor DNA so you can become a better investor. Focus rather than diversify and mitigate your risk. Diversification is about to get decimated in this economy. More to go wrong, more to manage, and more to distract.
I store ALL extra cash in my cash values because the insurance companies I use have enough money to pay off all cash values for several reasons, including less fractionalized banking (not lending out the money over and over again like a bank).
That means mutual insurance companies have a conservative portfolio with lots of levers to protect my guaranteed cash value. One being term insurance premiums from other policyholders (considering an underwriter for a massive insurance company said they only have claims on 1.1 percent of policies).
Other policies protect my cash value as well. IUL is indexed universal life, which has some merit (I own one), but the costs can go up (see current versus guaranteed on any illustration).
I have zero money in the stock market (more to come in future blogs on why I’ll never put money in the market).
I’m going all in on intellectual property to support people to navigate this system of money that is breaking down, extraordinarily risky, and creating too much fear. From this blog to my YouTube channel to my books coming out in October and January.
Enough about what I am doing. Here are the things for you to IMMEDIATELY consider.
- Move money out of the bank
- Focus on cash flow – Improving yours by increasing the impact you make, adding more value, solving more problems, and reaching more people
- Create economic independence using the 5 levers – save on tax, stop overpaying interest, eliminate non-performing investment fees, restructure insurance to transfer risk and keep money by only insuring the catastrophic, and invest in yourself by developing the most important skills in this new economy
- Buy some gold and silver – one or two months’ expense, take the physical receipt and keep it in a safe.
- Buy some Bitcoin (I automatically add more each week) – WARNING: This will be volatile, but easy to transport, easy to transfer, and deflationary. The media will continue to try and scare you away and collapse theft and wrongdoing to Bitcoin. Don’t think of Crypto and Shitcoins as the same as Bitcoin!
This is more than what to do with your money.
It is a mindset.
It is how you live your life.
The bigger the problem, the bigger the payoff.
And right now, our world has some big problems.
Hopefully, this will help you determine what to do to protect yourself and understand the game of money better. If you can take the time has been dedicated to worry, instead dedicate it to value.
Live as a value creator, a leader. How?
- Cut through the fear and be a leader
- Drown out the noise and be a value creator
- Dig deep and discover your Soul Purpose
- Focus on what you can control and take a step at a time to be the best version of yourself
The key – focus on solutions more than pointing out problems.
Complain less about politics and vote more than every few years and instead vote with your dollar and your daily actions.
Create new skills that lead to new pathways and avenues of value.
Choose responsibility and self-reliance.
Fill your days with value rather than fear.
Let go of any victimhood and opt into the producer’s creed of adding more value than you take. Learning more each day and leading more in your actions and example.
Connect with people and initiate conversations of wealth over the complaints that echo poverty.
Finally, look for where we are alike rather than being divisive in where we disagree about politicians, companies, woke agendas, and all the noise. You can still stand for what you believe in, but right now it is imperative that we come together and find a way to solve problems rather than create and complain about them.
I believe in the ever-abundant power of love.
When we chose love, when we love others, then we can become part of the solution rather than weak cries about the problem.
Let’s do this together.
Are you with me?
I’d love to hear your thoughts. Comment below.
Do you know someone that might benefit from these insights, musings, and stories?
Yes, yes, yes!!! I have been looking for solutions that put fear further and further from my consciousness. I have always appreciated your most rational voice that cuts to the chase and brings real practical solutions. So much has happened in my world over the last 14 yrs since Twilight, and with all the twists and turns, I’ve never lost sight of my desired dream of a financial foundation. I just had a few mindset issues to heal and grow thru…quite the adventure is what really sums it all up. I’ve wondered if I’d ever make it to connect with you and your company again. It’s a great start thru your down to earth blog of wisdom we all get to consider. Thank you for risking your “social credit score” as I don’t think I’d start above 5 at this point in my views of things going on 😂 The foundation is love for sure, too! I’d love to share more of where I’m at from where I’ve been and the yummy healing journey I’ve created.
It is so great to reconnect and happy to hear about your focus and mindset. I really love sharing this content and my heart through this blog. Glad it has found you and making a difference.
What a great and thought provoking post Garrett! I’ve already shared this with several others. As a small business owner sometimes it is difficult to sort through all of the noise. As you point out, none of us could run our businesses like the government, yet we are all affected by governmental decisions and forces. Navigating these roads is much easier when supported. Thanks!
Thanks for commenting (even if I bribed you)! Great to hear from you and glad you are showing so many dentists a better way.
I’m with you!
1) Create Value
2) Know thyself, let your values align your goals, and fuel your actions
3) Spread with care, compassion, patience, curiosity and above all else Love
Yes. Great great simple, straightforward summary….
Thank you for this excellent post! I love that you cut through the noise, and also focus on the positive/solutions instead of all the negative hype out there. Also that you discussed cash value life insurance, which is one of the most misunderstood (and in my opinion, undervalued) financial tools out there… Keep up the good work! 🙂
Yes. I make sure that I don’t just point out the problem, so thanks for acknowledging that. Reading so much these days and major publications are not mentioning cash value as an alternative or option at all. Important piece to consider though.
Thanks for commenting and reading.
Great article. You just saved a whole bunch of financial professionals a whole lot of time in understanding what’s going on right now. A really great perspective.
Phillip. So nice of you to say. Thank you so much b
House buying!! You’re likely being asked this a million times lately. Recently in a lot of areas, inventory is way down due to everyone. selling their houses during the wild seller’s market the last couple of years, construction slowing due to the rising material costs, and investors gobbling up inventory to turn them into rentals. This all leaves every-day folks looking for a modest home really out of luck.
In our area, houses are being listed for $269k (still very low compared to most other areas) to look attractive to a buyer, but people are getting outbid by offers anywhere from $50-100k over asking price. It’s bananas.
The question is, do you overpay for a house (buyers are even offering to pay unlimited amounts in the appraisal gaps) — thinking it all may crash down in a few years? Houses here have 2x or 2.5x their value in just 3 years. Not likely to happen again.
Would you buy a house in this market and pay the higher ask? The alternative, of course, is continuing to rent while rent prices increase too. What used to be $1,200/mo in rent is now upwards of $2k+. Investors are gobbling up rentals as well, increase rents yearly vs the old landlord who appreciated stable, good tenants. Does someone bite it and go for a home & overpay considering the volatility of real estate right now or do you see it just continuing to rise? Is it best to keep cash on hand with the volatility of things or have it tied up in a house, too?
Thanks for the detailed question.
I bought my current house when there was bidding and a crazy market in 2021. But I figured that it was a house we wanted and I wasn’t planning on selling anytime soon. This does however create risk. If I wanted to sell it might mean my down payment is at risk. But it was a lifestyle choice. Taking my income and then doubling it is the largest loan I would be comfortable with personally. This doesn’t always equate but was my comfort level. So I put a decent-sized down payment to avoid PMI and have my loan meet this criteria. The good news is I got 2.75 percent interest. Now it is much higher. But interest rates may stay high for some time.
The rents will continue to increase partially due to high interest rates and lack of inventory as people hold onto homes due to lower payments from lower interest rates mid 2022 and earlier.
I don’t see rent as throwing money away as much as keeping options open. How important is the home? Homes aren’t usually an asset based upon my definition- cash flow that leads to economic independence. This is a lifestyle choice, again.
So for me, if I were single, no issue renting. But my wife and her vision for our kids, I have bought even when thinking the market is high. When buying our cabin in 2018, I thought the market was overpriced, but then Covid and low-interest rates actually increased the equity. So hard to predict what will happen.
Supply costs could decrease as interest rates keep home ownership unaffordable and therefore reduce demand. And builders may not have as much work and therefore have to drop prices because it was pretty insane the last few years. And even though there has been a huge run-up in price, it depends on supply and demand. Inventory is low, but I still think we have a recession and downturn coming which can impact home prices.
So the issue is partially the Fed. Changing interest rates and now Quantitive Tightening. Will the government step in more like are starting to do with Quasi government programs through Fannie Mae and Freddie Mac- that impacts everything? Will the fed eventually lower the rate since they may have overreacted after printing so much money?
The thing is, what else will they invent, what policies will be implemented, and ultimately how sure are you that you will stay where you are? If you know this is a long-term decision and you have extra cash, that is one thing. But if you are stretching and the down payment or payment stretches you, be careful. With a volatile market comes less options. Then again, if you do seller financing or lease options, you can reduce your risk.
So how much do you know about real estate? How important is buying? What is your contingency plan in a recession?
I know this isn’t here is exactly what to do, but more what things to consider.
When you buy there are more expenses than you’d think. Furniture. Fixing the house up the way you want. Water heaters, softeners, or putting in a yard or a garage door opener or a mailbox. Blinds. The list goes on. It is on you to fix everything. Just remember that. Hope this helps.
What are the safest ways to invest in Bitcoin?
I buy on coinbase and then immediately move it to my wallet. Here is a video to help set that up How to Create a Coinbase Account [STEP-BY-STEP]/ Garrett Gunderson
Then move it to a hard wallet. I use two different versions. I have a video on how to move it from coinbase to a hard wallet step by step as well if that is useful.
WOW what else can I say! Probably one of the best 15 minutes of my life reading this!! I will be sharing this with everyone I love and care about in my life… Thanks as always Garrett!!
That feels amazing to hear. So happy you loved it and will share it. More to come!!!