February 12, 2020
My Dear Reader,
The crisis that we have in front of us is explained best by one of the world foremost financial thought leaders. Simon Black of Sovereign Man investing laid out the situation perfectly in a 2018 article.
“The US government now spends far more money just on the interest on the debt, and Medicare/Social Security than they collect in tax revenue. In other words, they could eliminate EVERYTHING ELSE in government, from the IRS to the national parks to Homeland Security, and they would STILL be spending more than they collect in taxes. Just last year the US government posted an enormous $1 trillion loss for the year… an incredible feat considering they weren’t waging a major war, fighting a financial crisis, or bailing out the banking system. It was just a normal year. And yet they still managed to overspend by a trillion dollars. On top of that the annual trustee reports from Social Security and Medicare state that BOTH programs are rapidly running out of money and will be completely out of cash in around 12 years. And then there’s yet another debt ceiling crisis looming right around the corner; the Treasury Secretary himself believes that that the government will run out of money in September .”
What makes it worse is that many of our senior citizens and those who cannot provide for themselves rely on programs provided by the government to survive. From this, we also have to understand that Simon when is talking about when the incredible feat, he is describing the ability of the federal government to overspend by a trillion dollars without any major crisis at hand. Such as a major war or massive natural disaster. We currently live in an elongated bull market which at some point will inevitably crash. This would most likely lead to the implementation of Keysian economics at the very least. Even in this bull market, in the final quarter of 2019, the Federal Reserve injected the red hot economy with billions of dollars and cut the prime rate again. If the one of the largest centralized banks in human history is willing to inject the greatest American economy of the 21st century with (money #), what do you think will happen during a market correction?
Typically during a market correction, and not all of them are nearly as bad as 2008, real estate prices drop and stocks for larger companies see a reduction in price. Some corporations use this time to downsize, which causes a number of job losses for the American public. This can create a strain on the public welfare system. As some Americans will have to use the safety net in order to get them by until the market returns or others, who were close to retirement in the first place, decide to take off a year or two early. If Social Security and Medicare are going to be out of money in just over a decade, without a major financial collapse, what do you think will happen if the market does tank?
Tomorrow we will discuss strategies to minimize your personal tax liability legally.
To your creation and potential,