Since buying a ounce of silver in 1980, when I was 14 and the price soared to about $50 an ounce, I've been interested in the economy. I've been watching it seriously since a reading a book predicting a coming Great Depression in 1990. We didn't have a depression, technically it was called a double dip" recession, but the economy sucked for a full six years, 1990 to 1996. Most people forget that now.
At this point, I believe our economy is about as stable as a house of cards, resting on egg shells, sitting on the back of a unicorn that's standing on stilts. In other words, the financial system we all rely on might as well be powered by unicorn farts. It sounds funny, until you remember that unicorns don't really exist. We're running on illusions (or delusions), at this point. One little thing, the right thing at the wrong time, will bring it crumbling down into a pretty serious, and lengthy, economic downturn. And that's gonna suck for most people.
Recession? Depression? It doesn't really matter. What matters is that you can become aware that things will be financially sketchy, on a big scale, for quite a while. Once that seeps into your brain, you can do things to cope with this downturn, or even work to take advantage of all the great opportunities that it will present.
Why am I so focused on the next recession, and money and economics in general? 1) Unlike a big issue like global warming, this next economic downturn will affect people much sooner, in the next year or two, and it will affect EVERYONE. Global warming is a huge and serious issue, but it will seriously affect a fairly small number of people in the early years, and won't be a serious issue for most people for 10-20 years or more. A really bad economy could literally wipe us all out long before that happens. 2) It's always been something I find interesting, and have spent decades now learning about. 3) Because of the larger social changes we're in the middle of, this next economic downturn will destroy whole industries, iconic American institutions, and will probably provide the biggest opportunities most people will see in their lifetimes.
Here's where we stand right now. The United States has a recession, on average, every 4 to 10 years. The last technical recession was in 2008, and the Federal Reserve started lowering interest rates, in response to growing worries, in October 2007. So purely from a time standpoint, we're in year 10 or 11 of a 4-10 year cycle, depending how you figure. Simply put, we're overdue for a recession (or depression), just on the timeline scale.
The U.S. National Debt, the amount of money our country owes people, is $21.974 Trillion. That's 21, 974, 000, 000, 000 when written out. That's a really big "credit card bill." That's $2 Trillion more than when President Trump took office. There are currently about 328.605 million people in the country so your personal share of the national debt is $66, 871. Here's the U.S. National Debt clock. Here's the U.S. population clock (.& the world, too)
U.S. corporate debt, what all businesses together owe, is now in the neighborhood of $9 Trillion. CNBC 11/21/2018
U.S. personal debt, what individual people owe, is about $19.594 Trillion
U.S. mortgage debt is about $13.533 Trillion. This is included in the number above.
U.S. student debt is about $1.587 Trillion. This is included in personal debt above.
U.S. credit card debt is about $1.062 Trillion. This is included in personal debt above.
The average American owes $59,624 in debt. That share of the national debt I mentioned above, that's a whole different thing, and if it actually had to be paid by us, it would be added to this number.
A reminder. A million is 1,000 thousands. A Billion is 1,000 millions. A Trillion is 1,000 billions. A quadrillion is 1,000 trillions.
This is a shitload of debt we all owe. Actually, it's a whole bunch of shitloads. That's not good. Basically, our entire economy right now is like letting your college student live off their credit cards, and not making them pay anything for three or four years. By the time they had to deal with paying, the amount would be just plain ridiculous, and they wouldn't know how or deal with it. That's the situation our country is in now.
Also, interest rates are super low right now, by historical standards. When interest rates go up, and they will some day, all the payments on these incredible amounts of debt also go up.
In 2008, about $1.3 Trillion is "sub prime" mortgage loan debt began to collapse, because a lot of people simply couldn't pay those mortgages. That was the main trigger of The Great Recession of 2007-2009. Those loans were called "sub prime," because they were loans given to people who didn't have to have great credit, like people used have to, to get a home loan. On top of that, those loans were sold to other businesses, then they were turned into weird, complicated, financial investments called CDO's, (collateralized debt options), and pieces of those were sold to all kinds of investors, most of whom had no idea how those CDO's really worked. When a critical mass of people stopped paying their mortgages, the CDO's went down in value, and the whole system collapsed.
Confused? Of course you are. So here's model Margo Robbie, in a bubble bath, explaining sub prime mortgages in the movie The Big Short. That movie was based on true stories from The Great Recession. If you think "student loans" every time you hear her say "sub prime" you'll get the idea of what's happening now. Oh yeah, when these crash, so do most colleges, college towns, and college sports, in the U.S.. Yeah, it's going to get pretty nutty in the next few years.
The gigantic rise in student debt since 2008 happened because student loans took the place of sub prime mortgages, were sold and repackaged into investments called SLABS (student loan asset backed securities), which are nearly identical to CDO's, and now more than a million college students are delinquent in paying their student loans. Like I said above, the total mount of student loans is $1.587 Trillion, more than the total of sub prime mortgage debt, which crashed the economy in 2008. In addition to that, most other forms of debt have reached levels we've never seen in all of human history.
Meanwhile, the stock market is high priced, has peaked twice and dropped back in the last year. It peaked again, lower than the high of last year, and can't seem to get much higher. Stocks are, by and large, priced really high right now. The world's greatest investor, Warren Buffet, is sitting on $112 Billion in "cash" right now, and can't find any good deals to invest in. Everything big enough for him to buy, is overpriced. He said that in a CNBC interview last month.
These are some of the underlying factors of why I've been telling people to get ready for a serious recession for the last year or year and a half. It's getting close. Get ready. Maybe next week. Maybe next month. Maybe in the next 6 to 12 months. But, it'll happen.
Here's another scene from The Big Short that explains the mortgage loan market in more depth.
In my humble opinion, this, above, is what will happen to the student loan market in the next five years, and that will shut off a huge part of the money that now funds our nation's colleges. And that's gonna be pretty ugly...
At this point, I believe our economy is about as stable as a house of cards, resting on egg shells, sitting on the back of a unicorn that's standing on stilts. In other words, the financial system we all rely on might as well be powered by unicorn farts. It sounds funny, until you remember that unicorns don't really exist. We're running on illusions (or delusions), at this point. One little thing, the right thing at the wrong time, will bring it crumbling down into a pretty serious, and lengthy, economic downturn. And that's gonna suck for most people.
Recession? Depression? It doesn't really matter. What matters is that you can become aware that things will be financially sketchy, on a big scale, for quite a while. Once that seeps into your brain, you can do things to cope with this downturn, or even work to take advantage of all the great opportunities that it will present.
Remember: A recession is when the whole world goes on sale, and almost no one wants to buy anything.
Why am I so focused on the next recession, and money and economics in general? 1) Unlike a big issue like global warming, this next economic downturn will affect people much sooner, in the next year or two, and it will affect EVERYONE. Global warming is a huge and serious issue, but it will seriously affect a fairly small number of people in the early years, and won't be a serious issue for most people for 10-20 years or more. A really bad economy could literally wipe us all out long before that happens. 2) It's always been something I find interesting, and have spent decades now learning about. 3) Because of the larger social changes we're in the middle of, this next economic downturn will destroy whole industries, iconic American institutions, and will probably provide the biggest opportunities most people will see in their lifetimes.
Here's where we stand right now. The United States has a recession, on average, every 4 to 10 years. The last technical recession was in 2008, and the Federal Reserve started lowering interest rates, in response to growing worries, in October 2007. So purely from a time standpoint, we're in year 10 or 11 of a 4-10 year cycle, depending how you figure. Simply put, we're overdue for a recession (or depression), just on the timeline scale.
The U.S. National Debt, the amount of money our country owes people, is $21.974 Trillion. That's 21, 974, 000, 000, 000 when written out. That's a really big "credit card bill." That's $2 Trillion more than when President Trump took office. There are currently about 328.605 million people in the country so your personal share of the national debt is $66, 871. Here's the U.S. National Debt clock. Here's the U.S. population clock (.& the world, too)
U.S. corporate debt, what all businesses together owe, is now in the neighborhood of $9 Trillion. CNBC 11/21/2018
U.S. personal debt, what individual people owe, is about $19.594 Trillion
U.S. mortgage debt is about $13.533 Trillion. This is included in the number above.
U.S. student debt is about $1.587 Trillion. This is included in personal debt above.
U.S. credit card debt is about $1.062 Trillion. This is included in personal debt above.
The average American owes $59,624 in debt. That share of the national debt I mentioned above, that's a whole different thing, and if it actually had to be paid by us, it would be added to this number.
A reminder. A million is 1,000 thousands. A Billion is 1,000 millions. A Trillion is 1,000 billions. A quadrillion is 1,000 trillions.
This is a shitload of debt we all owe. Actually, it's a whole bunch of shitloads. That's not good. Basically, our entire economy right now is like letting your college student live off their credit cards, and not making them pay anything for three or four years. By the time they had to deal with paying, the amount would be just plain ridiculous, and they wouldn't know how or deal with it. That's the situation our country is in now.
Also, interest rates are super low right now, by historical standards. When interest rates go up, and they will some day, all the payments on these incredible amounts of debt also go up.
In 2008, about $1.3 Trillion is "sub prime" mortgage loan debt began to collapse, because a lot of people simply couldn't pay those mortgages. That was the main trigger of The Great Recession of 2007-2009. Those loans were called "sub prime," because they were loans given to people who didn't have to have great credit, like people used have to, to get a home loan. On top of that, those loans were sold to other businesses, then they were turned into weird, complicated, financial investments called CDO's, (collateralized debt options), and pieces of those were sold to all kinds of investors, most of whom had no idea how those CDO's really worked. When a critical mass of people stopped paying their mortgages, the CDO's went down in value, and the whole system collapsed.
Confused? Of course you are. So here's model Margo Robbie, in a bubble bath, explaining sub prime mortgages in the movie The Big Short. That movie was based on true stories from The Great Recession. If you think "student loans" every time you hear her say "sub prime" you'll get the idea of what's happening now. Oh yeah, when these crash, so do most colleges, college towns, and college sports, in the U.S.. Yeah, it's going to get pretty nutty in the next few years.
The gigantic rise in student debt since 2008 happened because student loans took the place of sub prime mortgages, were sold and repackaged into investments called SLABS (student loan asset backed securities), which are nearly identical to CDO's, and now more than a million college students are delinquent in paying their student loans. Like I said above, the total mount of student loans is $1.587 Trillion, more than the total of sub prime mortgage debt, which crashed the economy in 2008. In addition to that, most other forms of debt have reached levels we've never seen in all of human history.
Meanwhile, the stock market is high priced, has peaked twice and dropped back in the last year. It peaked again, lower than the high of last year, and can't seem to get much higher. Stocks are, by and large, priced really high right now. The world's greatest investor, Warren Buffet, is sitting on $112 Billion in "cash" right now, and can't find any good deals to invest in. Everything big enough for him to buy, is overpriced. He said that in a CNBC interview last month.
These are some of the underlying factors of why I've been telling people to get ready for a serious recession for the last year or year and a half. It's getting close. Get ready. Maybe next week. Maybe next month. Maybe in the next 6 to 12 months. But, it'll happen.
Here's another scene from The Big Short that explains the mortgage loan market in more depth.
In my humble opinion, this, above, is what will happen to the student loan market in the next five years, and that will shut off a huge part of the money that now funds our nation's colleges. And that's gonna be pretty ugly...
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