I am one of the world’s most positive people (honest, just ask any of my friends– I’m one of those people many love to hate because I smile ALL THE TIME). However, today I’m afraid I’m going to be more “Debbie Downer” than “Susie Sunshine” so I apologize in advance…
As I write this, stocks are soaring. The DOW is up 113 points and the S&P 500 is up a full percentage point. Hooray, right? I’m sure most people are feeling pretty happy about this and believe that the worst of our problems are behind us, but unfortunately I disagree. The fact of the matter is that America’s standard of living is falling at a faster pace today than at any time since the Great Depression.
According to Stansberry Research, a leading financial research firm, America’s real median income is down almost 10% since the fall of 2008, and Americans have lost roughly $5.5 trillion in asset value, or about 8.6% of our wealth. Ouch. And I’m sure you’ve all heard the news that we have an absolutely unprecedented number of people on food stamps– the latest numbers I saw from CNN showed that food stamp use rose to a record 45.8 million, or nearly 15% of the population(!) in May of this year.
So what gives? How can the stock markets be performing so well with all of the tumult in Europe and the tremendous unemployment here in the U.S.?
Well, perhaps it would help if we viewed the stock market through another lens, a “sound money” lens. Let’s take a look at what the S&P 500 looks like when you price stocks in ounces of gold instead of U.S. dollars:
Wow…the stock market doesn’t look so high now, does it? In fact, looked at through this lens we are now below the lows of the market that we saw in 2009! And you can see the huge bull market that gold has enjoyed since the year 2000 (and the corresponding S&P 500 bear market). Eye-opening, isn’t it?
And what about the U.S. dollar itself? Let’s take a look at that measured in gold, courtesy of “Priced in Gold“:
No wonder we feel poorer! This is a real-life current day example of our inflation article from a few weeks ago. We are living it right now, and as prices rise our savings and the real value of our wages declines.
So the talking heads on CNBC might be whooping it up today, but Houston, we still have a problem!
My question to you, as always, dear Kung Fu Finance reader, is “so what are you going to do about it?”. I hope you are training and working hard on your financial education and preparing for battle. It is extremely dangerous to fall into a state of complacency given the world situation just because the markets appear to be “up” today. That would get you KILLED in battle in kung fu, and believe me, you are definitely in battle with your money today…it is only getting harder to keep your money, save your money, and invest your money.
Your only chance is to get smart, get ready, get educated, and prepare!
As Robert Kiyosaki, one of my personal Kung Fu Finance masters says, “Prepare for bad times and you will only know good times”.
Are you prepared if the market drops 300 points tomorrow? Are you prepared if the U.S. dollar continues its long fall down to its intrinsic value (0)? Are you prepared if that fall suddenly accelerates?
I hope so! Let me know what you’re doing to prepare in the comments on the blog, and as always, thank you very much for reading!
To your financial success,
— Kung Fu Girl