President Trump knows very well how businesses can go bankrupt and is especially familiar with what happens when you go from superstar to broke. His life has been one filled with flamboyance and success, but also with excessive risk-taking, poor timing, and grave loss of focus. Admitting to close friends and in his book, he says that his business failures originated from stopping to ask the question: “What’s the worse-case scenario?”
His think tanks and PR people are, without a doubt, telling him that one of his keys to winning the coming elections is to create a scapegoat in case of a slowdown. This will come in the form of Jerome Powell and going after the failing states, thus provoking their democratic voters to go his way, just like he’s doing with Baltimore.
Americans must be resonating with his no-filter approach, since he’s really upping it.
When talking about the U.S. economy, though, the right way to describe it is Growing, Despite Widespread Panic. Most investors are scared to death of trade tensions, Trump’s unpredictability, and of Brexit, so they can’t shake that 2008 trauma off their backs and away from their psyche.
Seriously, this bull market keeps surprising everyone. No one can believe stocks keep going up in price, even though retail participation is relatively low.
This doesn’t look like market euphoria to me, nor does it smell like a top, but there are indicators that a slowdown is only 1-2 years away, which is the reason you need to beef up your savings cushion immediately.
While your fellow Americans are out spending, you must fight the temptation and pursue ways of increasing your income, especially while employers are definitely hiring and opening their wallets to higher wages. Work more hours, if need be, but get the job done. I worked 7 days a week, 10 hours a day, for 3 straight years.
We’re definitely not operating in an economy with plenty of slack and runway ahead of us. Unemployment is already at an official record low and markets are at all-time high. Central banks are already baffled by how we’re getting such low inflation and low unemployment. I have an answer for them: it’s DEBT.
Trump wants zero rates in order to grow debt, without paying additional interest. Here’s the thing: even without paying ANY interest EVER again, the U.S. can never reach a healthy balance sheet. They’re over-spending. You could close down the military today and not spend a dime on defense and you’d still be running a deficit.
Look around you: 10,000 people are retiring every day and 9,000 out of them can’t EXIST, financially speaking, without social security. They depend on it, but haven’t saved enough, nor acquired assets.
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It’s the same with Europe. Life has become so advanced that governments using tax money to fund themselves, is not the answer in today’s age; there are too many retirees. Even if you tax all the millionaires and billionaires more, you can’t achieve the desired result. The answer is that there is no way out of this mess without making enormous sacrifices. We are enslaving generations to come.
It’s a double-edged sword, though. If the president comes out and says: “Look, we’re on an unsustainable path and we need to do something NOW,” he risks exposing weaknesses to debt holders, who will want higher rates for their bonds. It’s as if the people have to demand austerity for it to be done right, visually speaking.
Therefore, don’t expect much to change; it’s quite impossible to make things better without making them worse. In general, this is the fate of the country, but within the 330M Americans, there are close to 17M millionaires, which comprise 5% of the population.
Your solution has nothing to do with the general trajectory of the country; there are innumerable thriving businesses, which serve the domestic economy or markets abroad.
Trump will be a catalyst, driving interest rates lower, but that will not solve the issue, only limit its scope.
What we know for sure is that this environment is pure gold for precious metals investors, so keep your eyes on the prize.
Research Partner, PortfolioWealthGlobal.com
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