Some of you might still feel the 2008 crash and burn in the worldwide economy. Some of you might have been caught off guard.So let's see what it is all about in short and common terms.
It's not the first time something like this happened. Sometimes more locally than global,but in the end is something of an old story.
So in 2008, what happened was an economic display of the saying "Don't stretch more than your blanket can cover". What I am amazed by even now is that no one saw it coming.And by no one, I mean people that could have done something to prevent it. I saw it, but not in the exact proportion (I'll tell you later on why), and well, I was and still I'm not in any position to influence even the market of the vegetables the old lady sells few streets away. So we either have our destinies held in the hands of the blind people or ignorant ones. And ignorant it is. Because,if you remember what started the fire was the Lehman Brothers bankruptcy. And that was no mistake. It was a premeditated act, to make an example out of that company for everyone that stretches more than they can cover. While a logic goal, it was totally messed up. Because markets panic. And in stock markets decisions are made within seconds, sometimes only on superficial information. So, L.B. goes south, market sees it, while the people that took the decision don't feed any information into the system. All panic, start selling short, everyone remembers that guy X,company Y owe them money, margin calls come to a flow. And everyone tries to get their hands on money. But the issue is that at no point there will be so many printed money to cover the quantities of transactions. And what started as a snowball fight turned into an avalanche.
Now, what can you do to craft a safety net? First stop spending what you don't have. I know that car looks shiny and that brochure for summer in Cabo is tempting. And you should go for it.Maybe when you'll come home you won't have anything else that a "Foreclosure" post on your door.
If you have money to invest, two words: Precious metals.I am following their markets for over 4 years. I still pummel myself in the head for not getting my hands on as much silver as possible.Why silver? Well, I don't have exactly the purchase power for gold or rhodium. But to make it simple... how much interest does your bank pay for your deposit? Depends on the country of course but as a simple example, U.S. maximum deposit interest I could find was 1.1% /year.That while if you try to get a loan,they go up to 5%. So that's a 400% roughly in profit for giving you someone's else money. So, let's say you have.... $10.000.We're gonna make some simple math,excluding taxes and fees and the little mazes that every country's laws have.So if in 2007 you would have made a deposit,now you would have got in your balance ... less than $10.500. Now let's put that money in gold and silver.In 2007 gold started at $648/oz and silver at $13/oz. Today, gold is at $1840 and silver at about $42. Translated, gold would have got in your balance almost $29k and silver $32k. That is 19 or 22 thousand dollars profit. How is that compared to the $500?
Now I know it seems boring and tedious, and even more sounds over hyped, but this is the reality. You can buy it and have it delivered, or keep it in a pool account, works the same.
I remember an interview from 2 years ago when an economist said "If I'm forced to keep currency,I'll take only coins: the metal they are made from is at least worth something"
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