Another financial disaster could be happening soon.
Some of the ripple effects of the 2008 meltdown are still being felt today.
And despite Donald Trump’s best efforts, there’s a strong chance an unavoidable crash is on the horizon.
Trump’s economy is doing relatively well.
Unemployment numbers are at historic lows, and the stock market is still on fire.
Trump’s tax cuts and deep regulatory rollbacks inspired more business investment and even brought in more government receipts.
Investors aren’t worried that Trump is going to chop them down at the knees with burdensome regulation.
That wasn’t the case under Barack Obama.
His regulatory policy made investors cautious, and his meddling with the economy led to the slowest economic recovery in history.
However, for all the good Trump has done for the economy, a crash is almost certainly inevitable.
The 2007-08 crash was spurred by the subprime mortgage fiasco.
Instead of allowing the economy to heal on its own, the banks were bailed out and government spending ballooned.
The national debt under Obama doubled over his eight years.
And our spending problem remains today, which is a ticking time bomb.
As the debt balloons, interest payments on the debt get more and more unmanageable.
Meanwhile, interest rates for the people remain low.
Most savings accounts are near worthless because they don’t even keep up with the rate of inflation.
We’ve been able to subsist off of debt because foreign investors still believe in the dollar, but there’s nothing set in stone to ensure that trend will continue.
This house of cards will fall, just as it did in 2008.
The only way to get out of this mess is to make substantial cuts to government spending, but neither party in Congress is interested in doing that.
Roughly two-thirds of the federal budget is spent on Medicare, Medicaid, and Social Security, and anyone who suggests cuts to these programs is instantly destroyed.
But the reality is the pain is coming, one way or another.
These programs are already insolvent. If we don’t make cuts, they will go completely broke.
There simply aren’t enough workers paying into them.
The age for social security needs to be raised.
When Franklin Roosevelt first introduced social security, it was a 1% tax on the employee and the employer would match that 1% contribution.
Also, life expectancy was much shorter.
That tax has since multiplied by a factor of six and people are living decades longer.
The eligibility age for social security needs to be raised, and over time, we need to switch to a privatized system where workers actually get to keep the full contributions they pay into it.
And regulation in the healthcare market drives up the cost dramatically.
Simply allowing for pricing transparency and more healthcare packages would slash costs without hurting quality.
These are just a few solutions that need to be done.
However, Congress won’t act.
That’s why you need to take your own financial destiny into your own hands.
It wouldn’t be a bad idea to have some of your money in gold to hedge against market uncertainty; the price of gold is up right now, which could be a sign that people in the commodities market believe a crash could be imminent.
This is when it helps to be a savvy investor.
If you’re nearing retirement, be careful with indexing.
History says the market will rebound over time, but you may not have time to ride out a decade-long downturn.
However you choose to proceed, don’t get blindsided by a rainy day.
The storm is definitely coming.