Quantcast
Sign up

Financial Education Blog

Blog Author
Blog Month

The Real Problem with Money and the Stock Market

The Real Problem with Money and the Stock Market

It’s Friday afternoon, and I’m writing this at the close of one of the worst weeks in the stock market in a couple years.

Yesterday, Thursday, August 3rd, the Dow took a 500 point nose dive, putting it in the red for the year. Today, the stock market rallied a little, gaining back 61 points.

Overall, the week was a financial blood bath.

  • The Dow is down 5.75 percent
  • The FTSE is down 9.77 percent
  • The Nikkei is down 5.42 percent
  • Oil is down 9.22 percent
  • 10-year yields are down 0.25 percent
  • Unemployment is still at 9.1 percent

Only gold came out unscathed.

It’s up 1.26 percent for the week.

For months, I’ve warned about the coming showdown between democrats and republicans regarding the debt ceiling. And this week’s show didn’t disappoint, complete with a last-minute deal that nobody likes.

In the end, the debt-ceiling deal didn’t address the real problems in our economy. This week’s crashes in the stock market are evidence that investors are beginning to realize we’re in for another recession - and possibly even a depression.

The chatter in the mainstream media is picking up regarding a double-dip recession. And everybody is jumping at the bit to point out the real problems in the economy.

Tim Fernholtz writes in Good magazine in an article entitled, “Don’t Call It a Comeback: We’re Not Too Far from Recession 2.0”:

“The real problem is deceptively simple: We’re not making, buying, or selling enough stuff. People are still focused on paying off their mortgages and credit card bills to spend money at businesses the way they used to, and businesses are reluctant to hire or increase wages until sales go up.”

The Economist writes in “Bernanke to the rescue?”:

Ask why if you want; there's no shortage of reasons. American growth dropped to stall speed in the first half of the year, and the government is content to saddle the recovery with substantial fiscal tightening over the next year. Europe is on the brink, and its leaders are on vacation. Falling markets will add to reduced confidence. At this point, the self-fulfilling spiral back into recession is underway.

I’m sure a whole host of other reporters and experts will come out in the coming weeks to point out what’s really wrong with our economy now that the double-dip recession bandwagon is in full swing, especially as the Fed prepares to meet next week.

This week’s activity is expected to force the Fed into action, many are guessing… should be an interesting week.

What you’ll find is that the general consensus is that the problem with the economy is that we don’t have enough spending, and therefore not enough inflation, a.k.a. debt.

As such, many are expecting the Fed to inject some sort of stimulus into the economy… perhaps a new asset buying program.

One thing we know, the Fed fears more than anything else is deflation. And Helicopter Ben has shown he’s willing to do almost anything to push inflation… perhaps, that’s why Gold is the only thing rising this week.

And why central banks are buying the yellow stuff en masse. Something that Ben Bernanke apparently can’t explain. Or maybe he’s just playing dumb.

And that gets to the heart of the real problem with our economy. It’s built on funny money.

The reality is that the dollar isn’t money, it’s debt.

And the debts are piling up.

As a currency, the dollar is toast. All currencies eventually are.

The Fed could save the dollar for some time by allowing deflation. But they won’t. They’re more concerned with growth than they are with sustainability.

So, you’ll continue to see the printing presses rolling at full speed. You’ll continue to see big swings in the markets. And you’ll continue to see gold, a true safe haven from inflation, rise.

Buckle your seat belts. It’s going to be a wild ride.

Leave A Comment jump to leave a comment
Yinka
8/10/2011 10:38:34 AM
The dollar crisis is here already, i easily sense through the record high of Gold. We're in it, i pity people with lack of financial education to see what am seeing coming. Savers will become losers in this new world of money.
Ann
Wednesday, August 10, 2011
A broker jumped to his death today. I wonder how many more are following suit? Isn't it a "funny" business when the real problem is the "funny money"!
Daniel
Wednesday, August 10, 2011
Guess it's time to go out and buy gold and silver. But, how does someone who is not a financial professional, like me, convert part of his savings (mutual funds...) into gold or silver? Is there a "silver store" I can go to to buy silver?
Frank
Thursday, August 18, 2011
Well with interest rates so low I can actually borrow against the equity in my home and make a profit on gold. Right now interest is a whopping 3$ per 1,000 borrowed.
Jessamin
Tuesday, August 16, 2011
I buy from Provident Metals, they are a bit better priced than Gold and Silver. But Gold and Silver is a great site. Michael Maloney wrote the book Gold and Silver and I highly recommend you read it.
Russ
Wednesday, August 10, 2011
Daniel, "Silver Store" many coin shops sell silver and gold. There are a couple places online as well: www.goldsilver.com www.apmex.com Hope that helps!
Adam
Saturday, August 13, 2011
Alexandra
Wednesday, August 10, 2011
TOO LATE TO BUY GOLD AND SILVER ...TOO LATE ...YOU SHOULD DONE IT WHEN IT WAS 700$ BUY REAL ETATE IF YOU CAN RENT
Anurag
Thursday, August 11, 2011
Guys don't worry, it's never too late.It is just the start of the game.
steve
Friday, September 02, 2011
Start reading GOLDSILVER.COM STEVE QUAYLE.COM
Alan
Friday, August 12, 2011
Robert, Can you point us to some credible resources on how we can find the exactly supply and demand of Gold and Silver avaliable on a daily or monthly basis? How do we know rather if Golda is rare? and how do we know silver is as rare as Mike Maloney say in his book? Thank you very much for your help.
JFCunningham
Tuesday, August 16, 2011
In these times, FAST income creation is crucial so you can invest in things like gold before the dollar becomes even further devalued. If you've looked at network marketing as a means to make this fast income, but are turned off by hotel meetings, pitching your friends and family, and cold calls, I have something for you. To learn more visit http://mlmliberator.com
3-to-Feed
Wednesday, August 10, 2011
The banks borrow from the Fed and also from each other, and at some point they will no longer be able to do that (it's almost a incestuous relationship), and I'm concerned they will start calling loans. They will target those with equity in their personal residences and investment properties first. That's what they did during the Depression. Either way, they win - at least for a time. It will be either that or fail, and the banks don't give a darned about people. Do you have any thoughts on how to hedge against having several loans at once called?
warren
8/11/2011 1:57:38 AM
Thanks alot for acepting me as a member here but the only adviise i have forever one is that,nothing is too late and u can still get to where you want too.Dollars has falling but you have not and will not if you who you are and what you want to bee..Gold be bee the fastest way of making money in our current business market but there are also a lot of businesses than can do much better.. All thanks to Robert T. Kiyosak
Jason
8/12/2011 9:53:27 AM
Why is silver not going up?
Tony
Friday, August 12, 2011
Three reasons. First, the silver market is much smaller than the gold market; a lot of people still see it solely (and wrongly) as an industrial metal. In the past (say, a year ago), silver went hand-in-glove with the direction of the stock market because it was tied to industrial demand. That's changing. Last year if people had talked recession like today, people would have dumped silver fearing a lack of demand for it, and that would have driven the price down. Second, investors had to sell assets in order to cover their margin calls. They are far more likely to sell their silver assets than gold at this point, so that puts another big downward pressure on the price of silver. Third, in times of financial panic, investors traditionally turn to gold to protect wealth. Right now, investors are flying to gold out of fear and a desire to protect their wealth. So gold is clearly in demand. Silver looks like it's not so much in demand, but normally it would have tanked given the week we just had. Taken together, the fact that silver price help up means that people are buying it as an investment vehicle and that the price is de-coupling from the market. Traditionalists are dumping it in favor of gold, but others are snapping it up, so the two are currently balancing out. But the balancing act won't last long. Once investors see that silver can hold its own in troubled economic times, they will fly to it as an alternative to gold, and then you'll see the prices do what gold has been doing for 11 years now.
Ann
Monday, August 15, 2011
It is great that silver spot is not "going" anywhere, for now. I keep buying every week. Thanks to JP Morgan, with their manipulation of the silver market, little person like me still have time to save my family.
Tony
8/12/2011 1:24:33 PM
I love when people say "The dollar is up!" or "The dollar is down!" All currencies have jumped off a cliff--to say one is "up" is to say it will go "Splat!" on the bottom a millisecond later than the other currencies. "Cash is trash" sums it up nicely: the destruction of a currency like the USD is built into the nature of it. Best to convert it to assets ASAP.
RICARDO
8/13/2011 9:46:12 AM
Certainly, buying gold or silver is a good way to save the value of your money, however in the near future how can we exchange gold and silver into liquidity?. In my opinion the best is always real estate.
RICARDO
8/13/2011 9:50:02 AM
In my opinion energy is also a good investent, remember that the deposits of oil are forecasted to dissapear in 60 years, so going green, is the best investement now.
Luis_Carlos
8/13/2011 2:02:25 PM
Hi Robert! I think USA is into a "RAT RACE". They have to work in exportation to get out and paid their bad debt. But how can they do that if there is a mundial crisis, who will import? Also China inflation will hit prices even a worst scenery. The only way I see to return a healthy economy is cutting bad assets to paid the bad debt and to inject money to the economy. The goverment must act doing things without precedents and I think that a good way to help the economy is cutting military programs.
Doris pinto
Thursday, August 25, 2011
I am Doris used every single spell worker on the internet, spent untold amounts of money and discovered they are all fakes...i was the fool though; doing the same thing over and over again and expecting different results. In the end, I decided that I wanted a tarot reading to know what my future held for me; I contacted a woman who lives locally to me and she told me about a man named (priests meruja); he does not advertise on the internet, has another job for income, has no set prices, makes no false promises and refuses to help anyone that cannot be helped and even helps for free sometimes, he will give you proof before taking money. He is a wonderful man and he was the only person who actually gave me real results. I really hope he doesn't mind me advertising his contact on the internet but I'm sure any help/ extra work will benefit him.contact him as nativedoctor101@live.com He travel sometimes.love marriage,finance, job promotion ,lottery Voodoo,poker voodoo,golf Voodoo,Law & Court case Spells,money voodoo,weigh loss voodoo,any sicknesses voodoo,Trouble in marriage,it's all he does Hope this helps everyone that is in a desperate situation as I once was; I know how it feels to hold onto something and never have a chance to move on because of the false promises and then to feel trapped in wanting something more.
Mehul
9/2/2011 12:57:40 PM
Looking forward to learn more...Thank You
Joshua
8/10/2011 6:25:50 PM
It is not too late to buy gold or silver. Yes gold has surges this week and yes there is ALWAYS the possibility of swings either direction in the short term, but the trend with gold and silver has been the same and the forces driving that trend have only increased(government printing more money, turmoil with the currency, high unemployment, corrupt Washington). Like Rich Dad said, buckle up it's gonna be a wild ride!!! I shot this vid like 9 months ago but all still holds true today more than ever. Notice the dollar figures used such a short time ago and it's only more supporting evidence to what Rich Dad is preaching in this post and I am preaching in the blog vid.. http://youtu.be/vE_BPZbRCbg
Joshua
8/10/2011 6:29:39 PM
from today: http://youtu.be/47pwZMxczx8
Shereelynn
8/10/2011 10:03:24 PM
I do agree with what Robert Kiyosaki has written in his new book Unfair Advantage, and to me, I keep thinking, why haven't we taken money into a more serious matter in the beginning. Instead of just a income balance on a statement. Could the US have pervented this trillion debt if they had taken it into account years earlier?
warren
Thursday, August 11, 2011
Shereelynn,everything is going to be al right very soon but it would have been good if we gave all the respect to money and use if for what its meant for..there are about 1000 and 1 things that can get us back to where we were..its just the matter of getting the right business to do and getting the right partners and advisers..
krissia
8/17/2011 2:15:48 PM
That is all we can do stop paying taxes to honor the wars and get more valuable assets
Rich Dad Scams

Latest Rich Dad Blog Posts