Two years ago, I was in the middle of writing my book, Conspiracy of the Rich: The 8 New Rules of Money. The book was written in real time during the height of the financial crisis and published online for free as a resource to you to navigate the troubled economic waters of the time.
While I was writing, we were in the midst of a presidential election. At the time, there was great optimism that Obama would sweep into office with his message of hope and fix everything that was wrong with the economy—and by some people's measure, the world. I wrote then that I didn't think Obama would be able to fix the economy because he didn't have any real power. Instead, the real power, I wrote, was with the Fed. My encouragement was to stop putting faith in politicians and start putting faith in yourself to save you from the economy.
Now, two years later, I'm writing on the mid-term election day. The Republicans, emboldened by the Tea Party movement are expected to retake the House and make a strong move in the Senate. President Obama, who once enjoyed a high approval rating has the approval of less than half the country. The reason is that people are angry. They're angry that unemployment is still high. They're angry that the economy has not gotten better. They're angry at the record spending and deficits the president and congress have enacted. And they're really angry about Obamacare.
Unfortunately, once again, people are putting their faith in the government to save them. As the old saying goes, "Hope springs eternal." But, as President Obama has discovered, where that hope is placed is fleeting. Today, US citizens are expected to move their hope to the Republicans and the Tea Party movement to save them and the economy. I'm afraid they'll be disappointed once again.
By all accounts, the move to a Republican controlled house, a Democratically controlled Senate, and a Democratically controlled White House will result in deadlock—not movement. At this point, maybe deadlock is good. But it won't be effective at anything. Our problems will still remain. The economy will still face the same systemic issues that caused the crisis in the first place.
Interestingly, the real power in the US, the Fed, meets tomorrow, the day after the election. While the talking heads will be focused on who won what seats in congress, the real power will be making an important decision whether to begin another round of quantitative easing, a.k.a printing money, to try and jump start the economy. The way they do this is by buying their own debt in the form of bonds.
The markets will be watching the Fed intently tomorrow. The expectation is a huge bond buy—$500 billion or more. If the Fed instead does a small buy, we may see an exodus from the markets as investors fear a gridlocked government and an impotent Fed.
Some analysts are even predicting that the stock market may be down this year, which would be the first time since 1939 that the stock market would be down in the third year of a presidency. Why? Because traditionally the third year of a presidency is when the purse strings open up. Well, as we all know, those purse strings were opened up a long time ago. Now, we're digging through the couch cushions. Hopefully we find some money there, but I wouldn't hold my breath.
So what will change today? Not much. Different pundits will be happier, but the good, hard-working citizens of this country will still suffer as they pay higher taxes and face the potential oppressive inflation to pay for Wall Street's mistakes. Maybe tomorrow will be another story.
My message has been and always will be that the government will never save you. You must save yourself. I've said it before, and I'll say it again: The only way to save yourself is comprehensive financial education. Instead of putting hope in the government, put hope in yourself. Keep reading books. Keep attending seminars. Keep putting your knowledge into practice, learning from your failures and profiting from your successes. You can prosper in this economy while others suffer—but only if you take matters into your own hand and stop waiting for someone to save you.