...not just from me, but also from Rich Dad Poor Dad author Robert Kiyosaki.
...how prepared are YOU?
“The Everything Crash” Is Coming
- When the “everything bubble” was first inflated, and the reason why…
- “The stage is set for the biggest crash in world history”…
You may be familiar with the term “the everything bubble,” which the Federal Reserve has inflated. Today, “
Rich Dad” Robert Kiyosaki shows you why “the everything crash” is next — and how you can prepare for it.
Dear Ronnie,
Since 1987, the world economy has been blown into “The Everything Bubble.”
This is because the U.S. government changed the rules for investors with the passage of the Tax Reform Act in 1986. Literally, billions of dollars were lost.
The investors who lost the most were speculators who had purchased high-priced real estate. They made their purchases under the assumption that the price of real estate would go up, and the government would always give them a tax break for their losses.
In other words, the government was subsidizing the difference between the rental income and the higher rental expenses. After 1986, that all stopped.
After the rules were changed, the stock market crashed, and savings-and-loan institutions went broke. Between 1987 and 1995, a huge transfer of wealth occurred as professional investors scooped up the remains of poor investment decisions by those who were high-income earners like doctors, lawyers, engineers, accountants, and architects.
One Crash to the Next
The next major event was the dot-com bubble and subsequent crash from 1999 to 2000.
Then, less than a decade later, the global financial crisis occurred, which was triggered by the subprime mortgage crisis and the collapse of the U.S. housing bubble.
The Federal Reserve cut rates to zero and initiated rounds of quantitative easing. It eventually inflated the “everything bubble,” boosting not only the stock market but also a wide range of assets.
Then last year, the coronavirus triggered the greatest economic turmoil since the Great Depression. The Federal Reserve kicked into hyperdrive, nearly doubling its balance sheet within the space of a year.
Before too long, the stock market was setting new records, and the “everything bubble” was bigger than ever. That’s where we stand today.
What Bubbles Always Do
But do you know what bubbles always do? Pop! So the question is, could we experience another transfer of wealth again?
I believe so. The stage is set for the biggest crash in world history.
When will it happen? No one knows. Maybe tomorrow, maybe five years from today. Maybe longer. It’s tough to say what will trigger it. It could be anything, much like the single snowflake setting off an avalanche.
It could be a war, a major company going bankrupt, or a small country declaring bankruptcy and defaulting on its debt.
But I am concerned that the end is coming sooner rather than later.
The biggest crash in world history and the next great depression may be just one snowflake away.
As I said above,
when a bubble bursts, some money is transferred. Most of the losers are average investors who drank the Kool-Aid of “invest for the long term.”
Sometimes investing for the long term works, and sometimes it doesn’t. When money changes hands from winners to losers, the money itself is not really lost. The loser lost, but the money did not really disappear. It just changed hands.
Additionally, when markets crash, people need cash, so they’ll sell whatever they have that is liquid — usually gold and silver — and that’s when you see the prices go up.
“You’re Making a Big Mistake!”
Although a crash is my favorite time to buy, the market’s immense pessimism also makes it a tough time to do so. Your family and friends, possibly even your financial advisor, will think you’re absolutely crazy and try to prevent you from “making a big mistake.”
I remember when I bought gold at $275 an ounce in the late 1990s. The so-called experts were eschewing gold in favor of high-tech and dot-com stocks back then. But I knew I was getting an incredible value.
Today, with gold above $1,750 an ounce, I’d say I certainly made the right call. Thankfully I trusted my instincts and followed the strategy that has worked for me time and time again.
Commodities prices have been rising, in some cases dramatically. It seems the Fed may finally be getting the inflation it desperately wants. Gold and silver are your best defenses.
Gold, Silver and Bitcoin
Whenever there is chaos in the world, investors get afraid and look to move their money and investments into the safest place. That place is considered gold by many.
This is because gold exists outside the heavy-handed manipulations of the Federal Reserve. As the Fed tries to manipulate the dollar, the stock markets and real estate, it causes an infection. An infection of our assets. You can save yourself from this infection by investing in the world outside of the Federal Reserve, mainly in gold, silver, and Bitcoin.
The best characteristics of silver are that it’s affordable enough for most, and it has a huge upside. Silver is more important than ever as it is used in electronics, technology, and as a powerful anti-bacteria, which in the “Corona-Verse” we live in today, is a huge reason to look at silver.
Like gold and silver, Bitcoin is also a direct competitor of the central banks — which is why I buy all of them.
People will line up to warn that such “investing is risky.”
However, the important detail to note is that not everyone defines “investing” the same way. Many amateur investors bought into the real estate market when it was hot and prices were soaring. They invested in the hope that home values would keep going up and up.
They probably had plans to flip their properties and make a quick $50k. Investing for the purpose of capital gains instead of cash flow is the very definition of risky — and it's not the type of recession-proof real estate investing I’m talking about.
Experience Wins
As I mentioned, the people who were hurt most from the 1986 tax law change in the U.S. were the average-joe investors who were following the advice of their accountants. Unfortunately, when it came to investing, they were sloppy Joes.
Generally, crashes aren’t that bad, but the emotional panic that occurs during such financial downturns is. The problem with inexperienced investors is that they have not yet been through a real bear market, so how would they know what a market crash and a bear market feel like, especially if it goes on for years?
As with many things, those with experience are in the position to win.
My “rich dad” simply said, “It is not possible to predict the markets, but it is important that we be prepared for whichever direction it decides to go.” He also said, “Bull markets seem to go on forever, which causes people to become sloppy, foolish, and complacent.”
Today, times are pretty good for investors benefiting from “the everything bubble.”
The question is, are you ready for “the everything crash?” Because it will come, and while it’s easy to make money in a bull market, only qualified investors will make money in the next bear market.
Take advantage of this time to invest not only in the markets but also in your financial education. It will pay big dividends when others are losing it all.
Regards,
Robert Kiyosaki
