The word “recession” brings back nightmares.
In 2008 I barely survived the recession. The market became so scared that most of my small business customers canceled their orders. My financial future went up in smoke.
And the Wall Street bankers who caused the mess were smiling.
In 2020, after a bat virus shut down the world, we went into a brief recession again. It wasn’t so bad. Things rebounded quickly. Within months markets were frothing at the recovery.
I’ve never seen euphoria as high as 2020 and 2021.
But it was all a lie.
Markets didn’t go up and none of us became genius millionaires. The central banks worldwide simply created new money out of thin air and handed it out. Anthony Pompliano sums it up best:
“Americans were handed $1,200 in exchange for 40-year high inflation and a recession.”
Boom! Recently we went into a new recession. Let’s discuss.
The Washington grandpas want to warp our minds
Days before the announcement of the new recession the White House in the US released an article.
A recession isn’t a recession. They threw in unemployment as one example of why we’re not in a recession. It’s political spin. Two declining quarters of negative GDP = Recession.
I wish our world leaders would stop trying to fool us like we’re five years old and running around in diapers.
We’re not stupid.
Here’s why world leaders are running scared…
- They allowed trillions of dollars to get printed out of thin air
- They gave free money to millions of people
- They bailed out crap businesses that should have gone bust
- They created the greatest wealth inequality in human history, by letting the rich get richer from assets and the poor get poorer
- They created record-high inflation
- They created record-low interest rates that are as addictive as crack, and that we can’t seem to get off
This is a recession. Don’t get fooled.
What does it feel like
Despite the definition being up for debate, this recession feels different.
We shut the world down for several years because of a bat virus. The havoc is far from over. This whole recession feels exhausting.
We’ve been dealing with coroni-rona for far too long. And because of ignorance and selfishness, the problem will be with us for years.
When the world closes down for so long it’s impossible for it not to have economic effects. The world isn’t ending, but this recession will slow the hell out of progress.
It already has.
Prices for stuff you want to buy are sky-high. Or supply chain issues mean you have to wait more than a year to get an item.
I paid a deposit on a basic Toyota for my pregnant wife to drive our baby around in. The car has been on order for 6 months. Yesterday they told me it will be another 6 months — possibly even a year!
Businesses can’t make money if they can’t deliver goods and services to customers. Sure the demand for things like cars doesn’t go away, but it destroys cash flow in the process.
Deposits can’t keep businesses alive. They need full payment and, that can’t happen until they deliver their goods — supply chain issues prevent that outcome for many businesses.
So everything feels slow. Optimism crashes too.
The Jack Raines radical perspective
My buddy Jack is a wild finance guy.
While things feel down, he wrote that the opposite is happening. Sure the stock market has crashed and we’re in a recession. But he argues that when you go out in the street or hit a few bars at night, life is good.
The real problem is that after March 2020 all the free money that was thrown at the bat virus and given to everyday people created a bubble. That bubble led to huge euphoria.
When we live in a state of euphoria and it’s able to persist, soon it feels like the norm. Then when euphoria goes away it feels as if it’s the end of America.
The solution is to remind ourselves how crazy the euphoria was in the first place.
I mean, a bunch of Redditors effectively took on Wall Street and nearly won with the whole GameStop saga. And the crypto community experienced record gains that made Warren Buffett look like a grandpa — and like TikTok teenagers yet to finish high school were geniuses.
The extent to which you believe our economy is cratering has more to do with your perception of reality than reality itself — Jack Raines
The recession is a distraction
The Money With Katie blog provides another angle: this is a distraction. The real issues Katie argues are:
- Wage stagnation
- Rising wealth inequality due to excess money created out of thin air
Here’s how I think about it …
If you didn’t get at least a 9.1% pay increase this year then you went backward financially. If you did get a 9.1% increase then you likely still went backward, as the figure drastically understates price rises.
Because if people heard “inflation is really 15% right now” they’d protest in the street. Can’t have that now.
A recession was inevitable
Stan Drucken Miller is one of the smartest investors in the world. That’s why he doesn’t pretend he knows everything.
Stan works off odds and looks at past charts. He says we’ve been in a euphoric bull market for the last 12 years. It’s unlikely a little 6-month recession is long enough to get markets back to reality.
Then Stan says if you look at history the world has never been able to lower 5%+ inflation without a recession. Doesn’t mean we can’t. Just means we never have. I don’t like those odds.
Here’s what you should do in this recession
We’re here now. No point crying like adult babies. What can we do to survive and later thrive because of this recession? Here are a few suggestions.
Make money online
One income stream is a major risk.
Companies have, and will continue, to lay off workers. Times get tough, so jobs gotta go. I’ve told you for years: “No employer gives a f*ck about you. Their goal is profit.”
Now’s the time to learn one or two skills you can use to make money online. It’s not hard, but it does require an after-hours side hustle to make it happen.
Get a financial education
There are dozens of amazing Youtube channels — like Real Vision Finance — that can teach you the basics of money and economics.
If you don’t know how the system works it’ll continue to do you up the butt and rob you while you sleep. That’s what inflation is after all — a hidden tax that’s theft.
Don’t go too crazy with investing
Assets are on discount right now. Crypto is an absolute steal.
Yes, I’m buying but don’t go too wild. There could be more downside to come. The safest thing to do is invest the same amount of money each month into investments you’ve done your own deep research on.
Build your network
If your lame boss fires you to save money then you want a soft landing. The smartest way is to build your network.
Start conversations in the DMs of apps like Twitter, LinkedIn, and Instagram.
Make sure you know plenty of recruiters on LinkedIn, too, who are life-savers when you lose your job. When I lost mine it was recruiters that got me back on my feet — not for a fee, but because they could help.
Be kind to one another
All this crap dystopian content online is terrible.
It encourages us to attack each other and predict the end of America. Crazies have been doing this for years, except now you can do it and get ‘likes’ and even money for doing it.
You might be fine in this recession. But what about your neighbor? If they’re screwed then it has a negative effect on the community. And we all live in communities. None of us wants to go to the supermarket and see loads of people who can’t afford food.
If you’re fine then help others be fine.
Recessions are brutal. Be the vaccine, not the virus.
Debt steals from your future.
Now is the time to downsize and pay off debt. Get to a position where if a Wall Street tidal wave does wash over your house, you can swim. Don’t be the sucker who sits there, does nothing, and then eventually gets destroyed by interest rates, a lack of savings, or price rises.
Less debt, less stress.
Bold recession prediction to leave you speechless
I’m going to leave you on a high (like always)…
Euphoria is right around the corner.
Wait, what? Yep, boom times are coming soon. When markets crash we already know what governments and central banks worldwide will do.
Here’s their playbook:
- Create money out of thin air
- Lower interest rates
If the market crashes much further they’ll pull these two levers and overcompensate once more — but in the opposite direction. You can see it in crypto already. Optimism is returning fast.
So don’t be down. Recessions are a hidden opportunity to master your money and invest in your future with assets.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.