If you're not familiar with Mike Maloney, consider this your introduction. He is a super well-credentialed economic analyst, who used to tour with Robert Kiyosaki, the author of Rich Dad Poor Dad.
This particular video is a warning meant for the general public, where he describes the current "everything bubble" in financial assets.
He says that in the year 2000 the bubble was in stocks. In the year 2008 the bubble was in stocks and real estate, and in 2018 the bubble is in stocks, bonds and real estate. When the everything bubble bursts it will be devastating for most people, but I'm sharing this video so it doesn't have to be devastating for you.
His video series, the hidden secrets of money is a must watch and can be viewed by clicking here.
Mike Maloney began warning people of an upcoming stock market crash in 2005 and we all know what happened in 2008. His early warning indicators are flashing red again and he says that it's time to get prepared for an ugly economic event.
He starts out by providing evidence of our stock market bubble. He points out that price to earnings ratios have only been this high at 2 other times in the last century, once in 1929 and in the year 2000. Both occasions led to market crashes and recessions. He points out that PE ratios are even higher than they were in late 2007, before the most recent stock market crash.
Mike then points out the level of margin debt, money being borrowed to invest in stocks, is higher than it has ever been. In addition, investors are more complacent and volatility is lower than in 2007, when consensus logic thought that everything would keep going up forever.
He says that margin debt as a percentage of our economy is also at an all time high, so when selling starts and positions lose value there will be margin calls. A margin call is when brokerage houses force those who are borrowing to deposit cash as collateral for their borrowed investment positions and few investors will have the cash, so they will be forced to sell the positions that they are borrowing, which will exacerbate downward pressure and cause panic selling.
He goes on to cite other evidence that shows the upward momentum of stock prices is beginning to see signs of exhaustion and is petering out.
Mike then turns to real estate and examines the real estate markets in Canada, Australia, New Zealand, and China, where prices kept rising in 2008 and beyond. Mortgage lenders in Canada are finally in financial trouble. The people they've lent money to can't afford their payments so the Canadian government is bailing one out, just like Uncle Sam did for Countrywide in 2008.
He shows that the price of a Canadian home today, when compared to Canadian income, is far higher than it was in 2007 and significantly higher than it is today in the United States. He reminds us that globalization connects us all and that the situation will not stay isolated to Canada.
Mike then presents a chart that shows we are also experiencing a real estate bubble in the United States. He cites Robert Schiller's research from Yale university that shows home prices have only been this expensive one other time, and that was in 2007.
He then moves on to show evidence of a bond bubble, or credit bubble. Interest rates have been on steady decline since 1981 and so bonds have been a phenomenal investment for many years.
When bond yields fall, bond prices rise. That's really all you need to know and yields have been steadily falling for 36 years. They've even fallen past zero! Did you know that interest rates are actually negative in Japan, Denmark, Sweden, and Switzerland as of September 2018? Their central banks charge member banks money for keeping reserves on deposit and that means that banks can pass the negative interest rate onto depositors, and people might actually have to pay their banks for having funds in their bank accounts! The point is to stoke spending, so there's tax revenue for governments.
There is nowhere for interest rates to go, but higher and that is bad news for economies that rely on growth to fund taxes and government spending that is well in excess of what it can afford.
Mike points to research that shows every 40 or 50 years there is a shift in the global monetary system. The classical gold standard worked until World War I, the gold exchange standard was in effect between the wars, the Bretton Woods system between 1944 and 1971, and the global dollar standard from 1971 till today. Based on cycles and history, the global monetary system is due for change and that is very bad for the U.S. dollar.
He says that the worst designed out of all these global financial systems is the global dollar standard, the one we're in now. Mike says that there are stress cracks appearing everywhere and people aren't paying attention. A crisis is coming and after it wrecks everything world leaders will get together to come up with a new monetary system and that will likely equal a currency crisis.
Mike says that the crash that's coming will not just be stocks, bonds, and real estate. It will also include many of the world's major currencies.
What few people understand is that borrowing money is a bet AGAINST the currency being borrowed. Many borrowers know that tomorrow's dollars are worth less than today's dollars because inflation is engineered into the system, so the loan costs less if the value of what has to be paid back decreases.
If the value of everything is suddenly called into question, what has value?
My answer: Your skills and your ability to generate income.
To learn how to use the internet to diversify and protect your income, click https://lp.islandtimeliving.com/lp-prepare
Mike Maloney is a bullion dealer and owns goldsilver.com, and I happen to be one of his customers. So, he obviously feels that owning gold and silver is one of the best ways to protect yourself from recessions and depressions.
But, gold and silver don't pay dividends or interest payments. They don't produce income. Protecting the value of your assets is only part of the strategy. Protecting one's cash flow is the other part.
Learning how to use the internet as a tool to support my family might be one of the best decisions I've ever made. When people are losing their jobs and no one is hiring, they will turn to the internet in search of ways to make money from home. Since I'm there first and ready to provide solutions for these people, I will profit from the certain trend that is coming.
Figure out the simplest way to protect your income. Maybe it's a second job. Maybe it's starting an online business. Whatever makes the most sense for you, do it now! Those who prepare for disaster weather the storm the best.
Related reading:
https://islandtimeliving.com/us-and-global-economic-forecast-for-2019-and-beyond/
This stuff can be depressing, so if you're looking for a quick way to be in a better mood click https://islandtimeliving.com/how-tony-robbins-says-to-break-negative-thinking/ to see how Tony Robbins says to stop negative thinking.
Matt Nathanson
Island-Time Living
Freedom Through Digital Education
