The first phase of our analysis deals with the spending and deficits of the US government. This is a critically important juncture, since it is where the march toward America’s Financial Endgame™ begins. This phase contains the first four stages of the twenty stage cycle that I expect to unfold as America’s current financial situation eventually implodes.
These four stages are:
- Government spending creates the appearance of growth.
- Inflation is held in check by a lack of private lending.
- Banks restrict lending because of incentives by the Fed.
- Deficits continue to mount as politicians spend without restraint.
This first phase is critically important to understand, because it is where we currently stand as a nation. The whole financial collapse and recovery that is beginning to appear all but certain stems from this string of events. Each subsequent phase and stage of America’s Financial Endgame™ flows from the ripple effects that are created by excessive government spending and structural budget deficits.
It is important to bear in mind that this scenario is not (yet) certain to unfold. The purpose of this narrative is not to scare you into purchasing gold, or serve as a form of marketing trickery. The state of America’s financial future is becoming increasingly uncertain. As individuals, we do not possess the power to pull the national economy back into balance. All that we possess the power to do is ensure that our personal financial situation and the well being of those we care about is protected.
The reason why it is important to understand how America’s Financial Endgame™ will unfold is because there are specific strategies that will be optimally effective in certain stages of the advance, collapse, and rebound. The way to make sure that your financial future is protected is to make the right decisions based on the right information. I do not possess the ability to predict exactly when a specific stock will explode or collapse in value. (And if I did, I would not broadcast those predictions for free) However, there are distinctive macro-trends that systematically tilt incentives toward or away from certain types of behavior and investing. Understanding these trends is the key to understanding the decisions that will help to propel you and your family toward wealth and prosperity.
The next installment of this analysis is Step 1 – Government spending creates the appearance of growth.