U.S. Facing Argentina’s Financial Future?
I have a friend who fled Buenos Aires in 2002 with nothing but the shirt on his back. He said, “One day I was rich, and the next day I was poor. One day my house was worth $450,000. Today it might be worth $45,000 if I can find a buyer.” His final words were, “What surprised me was how fast the change came. We had no warning. The change came overnight.”
Although the conditions in Argentina are not the same as in America, there are similarities that concern me.
Argentina is an example of what might happen to America in the future. Only a few years ago, Argentina was a rich industrial powerhouse with a fantastic standard of living. It was a rich land, a favorite place for many Europeans. In many ways, it was more European than South American. But in just a few years, this very rich country became a poor, debt-ridden, bankrupt nation with a weak currency. Money left, and so did the rich. Taxes became high, and the currency collapsed. Corruption was everywhere. There was a real potential for anarchy to erupt.
Could that happen to America in a few years? Most Americans think not. Unfortunately, too many Americans have come to expect that the government will solve their problems. I am afraid that, rather than solve the problems, an older America will vote for more government and higher taxes. With Social Security the most popular act ever passed, I am afraid that those who depend upon Social Security will vote once again that the younger workers take care of them. If that happens, taxes will skyrocket. While it took hundreds of years for the Roman Empire to finally collapse, with today’s speed of money transfers, the great American Empire could fall pretty fast.
Rich dad noted that one of the reasons the Roman Empire fell was because the Romans never evolved from a basic technology of conquering and taxing. If they had evolved, their empire might have gone on for centuries.
Unfortunately, great empires seem to forget that they need to evolve. Spain was also a great nation that grew by taking and not creating. So it too fell from greatness after attaining great power and great wealth. It fell from power because it did not evolve.
Hopefully, this won’t happen to America if Americans are willing to face the problem honestly and allow people and businesses to solve the problem once and for all.
Understanding Exponential Growth
Imagine I have a magic eyedropper. And it’s magic because the drop of water that comes out of this eyedropper will double every minute. So I put a drop of water in your hand, one minute you have two drops and after another minute you got four drops and after five minutes you can fill a thimble up.
So now imagine we’re at a football stadium. And you’re handcuffed to a seat in the highest row in the stadium. And now I put one of these magic drops of water down in the middle of the field and it starts to double every minute just as it did in your hand.
And the question is how long does it take you to escape from your handcuffs? The shocking answer is: 50 minutes.
It doesn’t matter how big the stadium, you only have 50 minutes to escape. And the troubling part is that the stadium is still 97% empty at 45 minutes. Just five more minutes and it’s completely full. That’s an exponential or geometric progression.
The coronavirus is growing exponentially as well. And that’s why understanding how to stay healthy and protect your wealth during a crisis is so important.
How To Stay Healthy In The Face Of Coronavirus
I’ll preface this with the fact that I’m not an expert in diseases, nor am I a medical professional. But I do make sure to talk to experts in those areas to be as prepared as I possibly can. As always, I encourage you to seek out your own information and experts, but I’ll share here what I’ve learned.
In talking with Dr. Martenson and Dr. Nicole, there are a few things you can do to up your protection against the coronavirus.
Wear a mask. The CDC doesn’t say you need this, but Dr. Martenson points out that the first thing a medical unit will do is put on a mask when there is a patient with the virus around. What Dr. Martenson points out is that what the CDC is really saying is they don’t have enough masks for everyone.
Take vitamin C. Dr. Nicole points out that they are running trials in China with high doses of vitamin C to some good results. Dr. Martenson shares that one of the things that it’s really bad about coronavirus is not the virus itself killing you, but that it activates your own body to go a little haywire and create a lot of damage through free radicals. Vitamin C helps to prevent these free radicals.
Sanitize. Whether washing your hands or using hand sanitizer, it’s important to frequently sanitize your hands so you can prevent the spread of the virus. It’s transmitted like the flu, so you have to be extra cautious just like you would with the flu. But it’s not just your hands, make sure to sanitize your surfaces too, especially your phone, which is very dirty.
How To Stay Wealthy In The Face Of Coronavirus
I’ve spent years thinking about how to prepare for a crisis to preserve my wealth…and to grow it. There are both short and long-term things you can do to prepare through the five g’s you need to survive any economic crash.
The world still runs on oil. If you don’t have enough gas, you can’t get around. It’s that simple. In a major crisis, there is always a run on gas. If you want to be prepared for a crisis, the first thing to do is to put some fuel reserves aside in case your local stations are out of fuel for a time.
People across the United States have posted photos of empty shelves at the local grocery stores. Funny enough, it’s empty shelves of toilet paper. But the reality is that local economies simply don’t carry enough food and supplies for a real crisis. Shelves empty fast. If you have a pantry, stock it with non-perishable food. Get the vitamins and supplements you need. Take the time to buy now in case you can’t later.
Firearms are a sensitive topic, but I believe in the right to keep and bear arms. Besides simply enjoying guns and shooting them for sport, I also want to be prepared should I need to protect my family and my property. I hope it never comes to the point where I have to do this, but should it come down to it, I’m prepared and so should you be.
Property is an essential need for survival. Even in an economic crisis, people need a place to live. I’ve invested in real estate in both up and down markets for years, not for appreciation, but for cash flow through rent. Just like in the Great Recession, an economic crisis can provide incredible buying opportunities for real estate. And with mortgage rates at near all-time lows, there are many ripe investment opportunities out there to build future wealth today.
Recently, my friend Jim Rogers, co-founder of the Quantum Fund and Soros Fund Management, was on Kitco News. He believes that while the impact of coronavirus might be less than the panic-induced media thinks, the economic impact could still be severe. Jim points out that we’re overdue for a global recession and what’s happening around the world is hitting businesses very hard. Governments are panicking, cutting rates, and printing money, Jim points out.
In the face of this, gold is a safe haven. Even though the spot price of gold has gone down, that simply provides a buying opportunity. In the face of a true economic crisis, people will flock to what is historically real money, and that is gold and other precious metals like silver.
Editor, Rich Dad Poor Dad Daily