“Ask Robert” October 2010

“Ask Robert” October 2010

This week we're back with another "Ask Robert". By now you know the drill. Leave a question below in the comments, and I'll write an answer to one of them at the end of this week. Please make sure to spread the word on your social media accounts like Twitter and Facebook so that we can get as many possible questions as possible.

As you begin think through the economy and the financial issues in your life and in the world, I thought I'd do a quick note here on some of the things I'm thinking as well.

Yesterday morning I read about the real recovery that is happening—the recovery in the luxury goods market. According to the US consultancy group, Bain & Co., luxury good sales—things like leather hand bags, high-end watches, and jewelry—have grown by 10 percent this year and are expected to grow another 3 to 5 percent in 2011, bringing sales back to pre-crisis levels.

This confirms what we've known all along...the rich are getting richer.

Meanwhile, this morning's The Wall Street Journal reports that "U.S. industrial output fell last month for the first time in over a year, in the latest sign that the manufacturing boom that has helped bolster the economy is subsiding."

US manufacturing has been on of the lone bright spots in the US economy, thanks to the Fed's policy of a weak dollar, which has helped spur exports. The manufacturing sector has also been one of the few places where employment has grown. Now with the sector waning, so will the employment growth. Not good news for our "recovery".

I've written a lot lately about the Fed's efforts to stoke the economy through quantitative easing—printing money. The main case for all this printing is to keep the dollar competitive against global currencies and to keep US exports strong. And strong US exports require a strong industrial output. Seems like the efforts of the Fed aren't working anymore. The answer will be, of course, more printing of money.

What does this all mean?

It means things will get harder for the middle class and the poor. While the rich get richer and continue to buy up luxury goods, 85 percent of all college graduates, facing a 15 percent unemployment rate, are moving back in with their parents because they can't find a job. The dollar is still tanking, and savers are still losers. Unemployment is expected to remain well over 9 percent. And banks are resuming foreclosures, pushing millions of people out of homes they couldn't afford in the first place.

I feel for the middle class. They've been given the raw end of this deal because they've never learned about money. Our financially illiterate culture is showing itself. Those who know how money works are getting richer...those who don't are getting poorer. I hope that you're doing well through this crisis. I hope that you're increasing your financial IQ through books, seminars, mentoring, and more. I hope that you're in a position to get richer while others, sadly and unfortunately, are getting poorer.

Don't let this economy get you down—let it make you smarter and richer. There is much opportunity out there if you know how to find it and how to capitalize on it.

Post up your questions below, and I'll talk to you later this week.

Original publish date: October 19, 2010