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written by reader financial collapse

By Anonymous Questions, October 28, 2015

hi, Just found your site poking around for an answer to stansberry best investment. thanks.

do you think all the gloom and doom about the collapse of the us/world financial system is true — US trillions in debt, deflation, and so on.

thanks,

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jp10558
jp10558
6 years ago

I’m a new member, and far from any sort of expert on investing. That said, here’s my opinion.

I like Stansberry’s newsletters. They’re interesting, and seem to often get macro trends right, and are believable to me. Their stock picks, like everyone newsletter, are not so great. Their own reviews at the end of the year point out many products only rate a B, and they regularly have some that flat out get an F for the year. This is their own rating.

Have you read any of the paid Stansberry products? Their teasers really oversell the “End of America” and “Total Financial Collapse”, which isn’t exactly what Porter actually says in the paid content.

He doesn’t think civilization is going to end. He doesn’t think we’ll all return to bartering. He does think there are more massive credit bubbles that will hit like the 2008 housing bubble. I think there is broad consensus that the US did not really do much to prevent another 2008 sort of securitized bad debt products and leverage problem from happening again. Sub Prime auto loans, and for-profit University Student Loans both seem like they’ll eventually crash, and for that matter, Student Loans in general are getting close to the maximum I think is likely (i.e. where the immense cost of the loans starts to outweigh the earnings benefit of having a degree.)

That sort of crash could cause another 2008 crisis. Now, the other question is about the rest of the world – is the USD likely to lose it’s position as the reserve currency? Last year I would have said it was possible, and Porter sure seems to think it’s likely. Today, I’m not so sure. While printing dollars to inflate our way out of interest payment / debt problems for the nation may be considered bad, it’s less bad than confiscatory taxes, and it’s far less bad than defaulting. You might think this would have weakened the dollar, and it would, except everyone else is doing it now too because of similar economic issues. So the Dollar actually remains pretty strong.

No one really thinks the US is going to default for financial reasons. Political ones could happen, but I have to hope even the partisan congress isn’t that stupid. And China or whoever cannot “Call” our debt to them. We didn’t borrow it like a margin stock purchase. The US set out the terms of the bonds it sold, and you have to accept repayment in USD and at an interest rate and timescale the US govt set when they issued the bond. The only way anyone could get money out of US bonds RIGHT NOW is to sell them on the market, but in that case, that’s not really a problem for repayment – the US doesn’t come up with the money when someone else buys bonds on the secondary market. And it doesn’t change the US obligation either – we don’t care who we pay 0% interest to over 30 years or whatever.

So, everyone is inflating, so there’s no relative massive price changes like with Argentina currency collapse. Fiat currency is all relative as I understand it. That’s the problem with it – but it also means that even if the USD is devalued, it’s not super important to our economy as long as it stays relatively similar to other countries currencies. And the government is strongly keeping inflation around 1-2% so far, so it’s not like the price of food is going to double tomorrow. Your paycheck isn’t going to become worthless before you can cash it.

In that situation, long term we see the issues with consumer buying power going down, and it’s not great with wages not keeping pace with the inflation, but it’s far from a collapse situation. Do you know many businesses that suddenly don’t want to accept USD in the US? What do you imagine would actually have to happen to make people start demanding you pay them in gold or in kind / barter? 2008 style crash didn’t even come close.

So, Stansberry is saying be prepared for a bear market, and work out how to profit from stocks going down as well as when stock prices are flat for an extended period of time. Nothing there that’s really shocking I don’t think.

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Travis Johnson, Stock Gumshoe
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Reply to  jp10558

Well put, jp — welcome aboard!

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philly3367
philly3367
6 years ago

Wow. I agree. I watch gloom and doom type of emails and it has been driving me crazy for a couple of years. Thank you for your input. I needed your perspective.

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Fernando Macias
Fernando Macias
6 years ago

People, you just don’t get it. The next economic collapse will send the world into the dark ages. Just as soon as the government stops paying social security checks people are going to start rioting in the streets and militias are going to grab their guns and much of what is happening in the middle east is going to be happening here in the U.S.. I know we all would like to think things are going to go on forever, but they are not.

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Travis Johnson, Stock Gumshoe
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So when will this next collapse come? Social Security checks are easy, by the way — a government that prints its own money and borrows in its own currency can always send out money. The money might be worth a bit less in real terms each year as time goes on, as it has been most years for the past 40+ years, but the checks will keep coming. There is a wide gulf between “this can’t go on like this forever” and “the United States will collapse into anarchy next year” (or even in three years, or whatever your prediction might be) — “this can’t go on like this forever” was also the argument 40 years ago and 25 years ago, and there was some appealing logic behind it then, as there is some logic behind the doomsayers arguments today, but folks who hunkered down in their metaphorical bunker 25 years ago have missed some great living and great opportunities in the meantime.

I think we should be prepared, as best we can within the confines of our lives and careers, for the possibility that we could have another terrible recession, and be prepared for disasters both natural and man-made — that’s just being careful. But we should not bet our futures on a certainty that these disasters will come, and particularly not that they will come at a specific time.

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DR Hill
DR Hill
6 years ago

So true, my brother has nothing to do but listen and read this type of negative stuff. These subscribers should understand, it is all about MONEY from subscribers. You make a prediction and it happens, BANG, millions of pre-negative people jump to hear more negative news. If one listens to the news everyday for a few hours, he or she will become negative and believe, CHICKEN LITTLE!!!!

Fernando Macias
Fernando Macias
6 years ago

I’m not saying what I’ve said relying on my own predictions. People like Paul Craig Roberts, James Rickards, Ron Paul, Gerald Celante, and most notably Catherine Austin Fitts, have all predicted an immanent collapse of the economy. We are in an unsustainable path that will lead to a crash. All of the charts and present graphs show as even Mr. Donaldson shows that the present condition is very similar to the 1929 crash. All it’s going to take is an adverse reaction to the Feds raising of interest rates, a housing bubble, or any number of bubbles, more gambling of credit default swaps, oil being taken off the dollar and replaced with another currency, or the dollar losing it’s reserve value status. Any removal of a single card is gong to bring the house of cards down. You can smooth things over with denial talk but it’s not reality.

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Travis Johnson, Stock Gumshoe
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