What Went Wrong?
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- Published on Wednesday, 05 September 2012 14:52
- Written by Andrew Snyder, Editorial Director, Insiders Strategy Group
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Our economy is broken. The system we rely on for our wealth is flawed.
What the hell is wrong with us? Maybe we're just lazy... or ignorant... but we certainly should know better.
History surely tells us big governments have a tendency to go haywire.
How did we let our country go from the land of the free and the home of the brave... to the land of no 16-ounce Cokes and free money for all?
My wife says it's too late to save ourselves. If it were up to her, we'd be back to living on a remote island in Alaska. Try to find us... she begs.
She has some good points -- the northern nights are nice.
But my granddaddy didn't fight so I could run away. I'm not ready to give in. Our country still has hope. There's still wealth to be made. Washington hasn't stolen all of it yet.
But it has damn sure tried.
The Wall Street Journal tallied the numbers last week:
The growth of entitlement payments over the past half-century has been breathtaking. In 1960, U.S. government transfers to individuals totaled about $24 billion in current dollars, according to the Bureau of Economic Analysis. By 2010, that total was almost 100 times as large. Even after adjusting for inflation and population growth, entitlement transfers to individuals have grown 727% over the past half-century, rising at an average rate of about 4% a year.
That's disgusting. And it should make you more irritated than a beaver with a toothache. No matter how hard we try... no matter how much work we do... no matter how many trees we yearn to chew... our elected leaders play maestro with the economy.
In 2010, our government "transferred" over $2.2 trillion in goods and services in the name of entitlements. For a family of four... it's a burden worth $29,000.
What's worse is this is not a political scheme that will disappear with a wave of a wand if a new man takes over the White House.
Republicans have done far more to expand entitlements than Democrats. When a conservative is in office, entitlement growth has been an average of 8% higher.
They won't tell you that at the convention.
This is a story about a government that's gone mad with power. It's a story about a country that went from a nation that could do anything... to a nation of citizens who want to be paid to do nothing.
For investors, it creates an incredible headwind.
In the simplest of terms, our economy is flawed. It's broken -- like a lightbulb that only flickers.
Answer this... how can a market grow when 50% of its participants live in households that get government assistance?
It can't. It can only stagnate.
And try to figure this out... how can our nation prosper when two-thirds of the federal government's budget goes to entitlements?
That means 66 cents of every dollar Washington spends (and borrows) doesn't go to building new bridges... educating our kids... or defending our borders. That money -- all $2.2 trillion worth -- has a lone purpose... to keep 100 million American heads above water.
Again, this is not political. No politician can fix this.
My goal with all of this is to prove to you that our economy is flawed. It's different than it was 50 or even 20 years ago.
That means if you're using the same strategies that you did then... you're wrong. What worked in an economy that could thrive on its own won't work when we're running on government life support.
While we are in Las Vegas next week, I will show attendees what it takes to overcome the entitlement economy. In fact, I'll highlight three assets that are immune from what's happening. (You will be able to listen to my presentation here.)
Without giving away the spoils, I can tell you that I will highlight a mining company. But it doesn't mine gold... silver... copper... or even iron.
What it pulls from the largest mine of its kind in the world is an ancient commodity. I argue in next month's issue of Unconventional Wealth that it's the most important commodity in world history.
The reason I like it so much is it has absolutely no correlation to the overall stock market. None.
I ran a correlation analysis on the stock all the way back to its public debut... nothing. (The exact figure for the statisticians was -0.02) The S&P 500 can do whatever it wants, and this miner goes its own way.
Better yet, the company has virtually no ties to the fickle consumer economy. It sells a vital product that must be used no matter how broken our economy may be.
It represents one of the best assets to own in the New America.
Again, it is a fact that our nation is in trouble. But I am absolutely positive all hope is not lost. We can still turn this ship around.
As investors, it will take an unconventional approach. Until the majority of our citizens are doers and not takers, we need to ditch our old ways.
If you don't... you've got nobody to blame but yourself.
There is no reason to hide. Don't let politicians dictate your shot at wealth.
If we ignore them, eventually, they'll go away.
Editor's Note: There's a disturbing secret Obama isn't telling you... Congress is hiding a dark secret that could soon devastate millions of retirement-seeking Americans... one leading financial magazine refers to this event as "a time bomb." In short, if your money is connected in ANY way to the stock market, I urge you to read this eye-opening report.
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