Investors Who Ignore The Fear Mongers Will
Prosper
The Dynamic Wealth Report
June 7, 2011
by Corey Williams, Editor
Last Tuesday, the House of Representatives overwhelmingly refused to
raise the limit on how much money the Federal Government can borrow.
What’s more, the Federal Government has already borrowed nearly $1
trillion this fiscal year (since October 1, 2010). This year’s deficit
has pushed the national debt to the current limit of $14.3 trillion! That’s a big and scary number…
Never one to miss an opportunity, the fear mongers are out in force.
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They’re talking about the perils of the Fed’s continuing down their
current path of deficit spending. And they don’t stop there. They’re
also quick to point out Americans growing dependency on the government.
They believe the system is broken and disaster will strike sometime in
the next year.
To that prediction I have to say…. Give me a freakin’ break. Even if
they’re right, there’s no way anyone can possibly know when the end of
America will come. Just ask the preacher who predicted the end of the
world was coming on May 21, 2011.
Clearly, it didn’t work out too well for him. We’re all still here. And
it won’t work out for the fear mongers predicting the collapse of
America either.
Obviously, making doomsday predictions is a fool’s game.
It’s just too bad there are so many pessimistic fools who get taken in
by this type fear mongering. They’re so paralyzed by fear they simply
want to survive.
We’ve got a better solution. You don’t have to merely survive on the
gold and silver you have stashed away. You can prosper!
I’ll tell you how in a minute. But first, let me explain why.
The rising national debt and budget deficits aren’t even close to the
biggest thing to be afraid of. In fact, they’re normal at this point in
the recovery from the 2008 credit crisis.
I don’t have enough space to go into all of the details here. But
suffice it to say, the Great Recession was different than other
recessions.
The most common type of recession is caused by a slowdown in the
business cycle. It is the trough of the business cycle that ends with
economic contraction.
But the Great Recession was different. It resulted from something in the
financial system breaking. Almost overnight, it caused a drastic shift
in the way the global economy operated.
In short, recessions caused by the system breaking down are much more
difficult to recover from. In fact, the last time we had a recession
caused by the system breaking down was the Great Depression!
I believe one thing that separated the Great Recession from the Great
Depression was the Federal Government’s willingness to spend more money
than they collected.
More importantly, bringing these deficit spending programs to an end too
soon will cause the economy to fall back into recession.
Here’s the bottom line…
Increased social spending is driving the current deficits. But the food
stamps, unemployment benefits, and tax cuts are preventing much greater
social ills than a rising national debt is causing.
Do we really want to see breadlines and shanty towns springing up across
the country?
Clearly, we don’t want people to be dependent on the Federal Government
forever. But in the short-term, it’s better than letting the economy
fall into a depression.
Right now is not the time for spending cuts and a balanced budget. Our
economy is still too fragile. We need to continue the deficit spending
until the economic recovery gets stronger.
The key to reducing our national debt lies in the future. But not until
the economy is healthy enough. That time will come when the housing
market finally stabilizes. But until then, we need the stimulus to keep
us from falling back into recession.
As unappealing as this situation is, it’s not the end of the world.
Eventually, the economy will work through the imbalances the housing and
credit bubbles caused. But right now, we need fiscal and monetary
stimulus to boost the economic recovery.
And despite all of the rhetoric, the Fed and the government will provide
that stimulus.
What does that mean for you?
Don’t listen to the fear mongers. Stay invested. And buy the dips.
Sure you could survive by hiding in your basement with piles of gold and
silver. But in the long run, buying quality stocks at a reasonable price
will lead to prosperity.
The web 2.0 IPO market is red hot. We can expect to see a number of
initial public offerings from social media and other internet companies
in the weeks ahead. This week’s IPOs include Fusion-io (FIO),
Taomee
Holdings (TAOM), and Pandora Media (P).
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