At the time of me writing this the U.S. government is still shutdown. Have you been affected?
98 percent of us will answer with a resounding “NO!” Not much has really changed. The post office is still open…garbage is still being picked up…the stock market hasn’t crashed…life as most of us know it is going on without a hitch.
Despite the very lack luster fallout from the government shutdown the media has been shouting at us every five minutes that the world is going to end. Newscasters in every city are trying to shove down our throats the idea that things are really, really bad because of this.
Well they got it half right.
Things are about to get really, really bad for Americans, but not because Congress has stopped coming to work.
The truth is the government shutting down is the least of our worries. I actually can’t believe the media isn’t reporting more about the upcoming event that will plunge our country into another recession.
Remember that double dip recession I talked about? Well it’s about to happen…and you can blame Congress for it.
Recessions aren’t usually caused by senators and representatives. Usually it’s because of market forces and depressed consumer confidence. But this time is different.
In less than two weeks America will once again reach its debt limit or ceiling as the media is calling it. Think of this as America maxing out its credit cards. After that we get cut off.
What happens when regular folks reach their credit limit? Well first off they can’t charge any more. In America’s case that would be a good thing. Our nation’s debt is at nearly $17 trillion dollars and growing by the day. Our debt load is unsustainable and if we don’t find a way to reduce it we’ll quickly find ourselves in default.
The other thing that happens is your credit rating takes a nose dive. You see your credit rating has everything to do with maintaining a healthy balance of debt to available credit. Once you reach your max debt level you tip the scales to the unhealthy side and suddenly you don’t look like such a good prospect to lenders. Therefore you have trouble getting an auto loan, mortgage, business loan and any other type of credit from a bank.
This is the same thing that would happen to the U.S., just on a much grander and darker scale. If America reaches its debt ceiling the scales will tip and we could be slapped with a lower credit rating. Countries like China that lend us money to pay the interest on our debt might look at us as a risky investment and that could have dire consequences. Imagine The Great Depression on steroids.
How do I know this will be the outcome if we breach our debt limit? You only have to look to our nation’s history to see what’s coming.
If you have a great memory you might remember America found itself in roughly the same position not too long ago. In 2011 we came upon a similar debt ceiling impasse. Republicans and Democrats fought over whether or not to raise the limit and both sides used the showdown as a way to advance their agendas.
Ultimately Congress passed an 11th hour resolution avoiding an all-out default on our debt but not before sending crippling shock waves through our fragile economy. In fact, the stock market plunged, consumer spending dried up, interest rates rose, job growth slowed and our already struggling economy was pushed back to the brink of recession.
During the debt limit debate of 2011 the stock market fell 17 percent. Even after the resolution was passed increasing the debt limit the markets remained volatile. As a result hard working Americans and retirees who have their nest egg wrapped up in the stock market lost $2.4 trillion of their household wealth. Retirement assets alone lost $800 billion.
Interest rates on a large number of loans also increased dramatically. Mortgage rates jumped by 0.7 percentage points which cost the average home buyer an additional $100 per month. Corporate loan rates also spiked by more than half a percentage point which in turn slowed hiring and spending.
Both of which triggered a slide in consumer confidence. From June through August of 2012 consumer confidence fell 22 percent. Retailers and other businesses saw their profits dry up and their earnings fall sharply.
All in all, our nation’s fragile economy was nearly pushed back into a recession. And that was all from a near default.
The truth is this story has two possible endings. One, Congress agrees to raise the debt ceiling and we continue on our merry way adding more and more debt until we can’t afford to make the re-payments anymore and we plunge into another recession.
And two, Congress doesn’t agree to raise the limit, and we plunge into a recession.
So which option would you choose? A recession now or later? Either way our economy is in for a big hit.
How do you protect your family from the next recession?
Well for one you don’t sit around at your day job, twiddling your thumbs worrying about it. That won’t get you anywhere! This time don’t wait for the inevitable layoff announcement from your company’s HR department.
Instead do what the wealthiest of Americans do. Diversify!
I’m sure you’ve heard about diversification before. Usually though it’s in relation to your portfolio. We’re told to diversify our stock market holdings between stocks and bonds so we don’t put all our eggs in one basket and open ourselves up to undue risk.
The wealthy elite of our country use the same concept but they apply it to making money. Any and all wealthy people will tell you they got that way using that very same tactic. They didn’t have just one source of income, no, they had multiple. That way if one source dried up, they didn’t put themselves at too much of a financial risk because they still had other means of earning money.
How many income streams do you have right now? If you’re like most people you have one…maybe two if your spouse also works. If one of those income sources dries up you put yourself in a very vulnerable financial situation. Suddenly you don’t have enough money to pay your bills and maintain your lifestyle.
Don’t leave yourself open to that kind of financial risk. Instead diversify your income by adding another source of wealth.
I know what you’re thinking, you don’t have time to go out and get another job. You don’t want to be away from your family any more than you already are and there just aren’t enough hours in the day to work more. You’re already tired and drained when you come home from your job, you can’t see adding more working hours to your schedule.
I get it. That’s why the only additional income stream I would ever recommend is an internet business.
Internet businesses are the best place to start when you want to keep your risk low and your returns high.
Why? Because they require very little start-up funds, have low overhead costs, high margins on products, require very little time and effort and the best part is money continues to come in even when you aren’t working…even while you sleep!
If there was ever a low risk, almost guaranteed way to make big bucks and get wealthy, this is it.
I say that from experience. I run a multi-million dollar internet business without receiving any specialized training or advanced degrees, heck I’m not even particularly smart. I’m just your average guy.
Here’s to your future and mine.