America's Financial Apocalypse: How to Profit from the Next Great Depression

By the early 90s, a raging bull market was delivering spectacular returns, causing some to believe that a market collapse and subsequent depression would soon appear. As a result of these fears, some exited the capital markets altogether. Thereafter, the Internet took off causing the market bubble to swell, many high-tech stocks with seemingly limitless valuations. Over the course of its 13-year stretch, the market appreciated by over 600 percent, with average annual returns in excess of 18 percent. And we all remember what happened at the start of the new millennium. Even after the deflation of the Internet bubble, cautious investors who pulled out of the market a decade earlier missed out on spectacular returns since then. Many investors who entered the market near its peak suffered devastating losses. But most who remained invested since the early 90s are still much better off today. While this correction revealed the most recent illusions embedded within the economy, it s only a small part of what will be a larger correction in the coming years. Despite the scandals in corporate America and Wall Street, many investors fail to recognize that the post-bubble period is quite different from the Bull Run in the 90s. But today, the capital markets have been realigned with authenticity, and economics now control the investment cycle rather than hype generated by Wall Street. Accordingly, Wall Street and the U.S. Government can only hide the realities of America s decline for so long. Unfortunately, America entered the free trade paradigm as a losing participant from the start. While America remains as the centerpiece for the global economy, it relies on record debt to maintain its status as the world s strongest consumer marketplace. But this cannot last much longer. America s vulnerable role in the new economy threatens to erode the strength of its empire. Already, America has witnessed a gradual disappearance of its core citizens; the middle class. As well, poverty continues to grow while America s wealthiest quintile increases their wealth. These trends have been masked by record levels of credit-based spending and manipulation of economic data. For over two decades, several nations have benefited at the expense of America s job base and living standards. This led to a long period of excessive consumption relative to productivity. When the economic boom from the post-war period began to lose steam in the 60s, consumption began to exceed productivity, as Americans refused to acknowledge a decline in living standards. Up until the 70s, America fueled this consumption-production disparity using the surplus wealth generated during the post-war boom. During the 80s, America s growing consumption was compounded by massive government spending and a devastating oil crisis. Shortly thereafter, the consumer credit industry grew to meet the demands of a nation experiencing large productivity deficits. And today, America is vastly different than the post-war period. Rather than increases in net wealth, America s growth over the past two decades has been fueled by credit spending which has created the illusion of impressive productivity, while serving to mask declining living standards. As a consequence of these changes, America s financial industry is now one of its biggest and most profitable. Today, America is more dependent on foreign nations than anytime in its history. Declining oil reserves and a foreign-funded credit bubble have positioned the fate of this nation in the hands of the world. Soon, America will face the economic burden of 76 million aging boomers. Beginning in 2011, mandatory expenditures for Medicare, Medicaid and Social Security will start to grow rapidly. By 2025, these expenses will have swelled to unthinkable levels.