Many have been saying we will have a “safe landing” in our economy. But is there a bigger storm on the horizon that could cause our economy to crash and burn? Chris Miles shares three key things you can do to prepare for the INEVITABLE economic recession or depression ahead. Tune in to find out what you need to act on NOW!
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Brace Yourself – An Economic Winter Is Coming
Welcome to our show that’s for you. Those of you who work so hard for your money and you’re now ready for your money to start working harder for you today. You want that freedom of cashflow right now, not 30 or 40 years from now, so that you can live that life that you love with those you love right now. It’s more than just about getting rich. It’s about living a rich life because as you’re blessed financially, you have a greater capacity to bless the lives of those around you.
That’s the ripple effect that I’m here to be able to create in your lives today. Thank you for tuning in. Thank you for binging and sharing with everybody else so that the show can continue. If you haven’t done so already, leave us a great review. Like, subscribe, and all that stuff. I’d love for you to follow us and keep this ripple effect going because it cannot happen without you.
Today, I want to address something that’s been on my mind lately. I’ve been listening to a book by Neil Howe called The Fourth Turning Is Here. It’s an amazing book. However, if you get an Audiobook, it is a twenty-hour book. I spent it up to 1.85 speed, and I was able to get through it in twelve hours. I just got through it. I’ve already read Generations which was another book he wrote back in 1997 talking about how everything is cyclical. There are always seasons. The season we’re in is the end of autumn right now. We’re in the fall, but we can tell with the chill in the air, you can feel it.
I love the autumn. I love it’s harvest time. I love the fact that things cool down, especially when I’m out running. I love that it’s cool enough that I don’t pour and sweat, but at least not too cold to where I’m forced to go on a treadmill because my hands are going to freeze off. I love this time of year. I love going on walks and seeing the leaves changing and everything else. This book talks about that as well. There’s a secular period, usually about every 80 to 100 years, maybe around a 90-year average cycle that happens where we repeat things, generations repeat, the same generations that come up. There are four different types of generations. They always cycle through right now.
As he is talking about this, we’re into this fourth turning, which is like a winter. Think about the Great Depression. It was like the start of the last fourth turning. That led to World War II, which was a crisis moment. We came out victorious from that crisis. That’s what led into the 50s and eventually, the 60s where it was like suburbia heaven, especially in the 1950s. If you think about it, it’s like Pleasantville. It’s almost too fake for us to think about. That was going into a first turning. We’re now in the middle of a fourth turning since the global recession.
That global financial crisis did a number to us. We’re now seeing ourselves more divided than ever. Maybe not ever, because in the 1930s, the same thing was happening politically. The left and the right were separating more and more. It took something like World War II to bring us back together and then have something to fight for. As we came out on top, even though it was a time that nobody wanted to repeat, it was still going through that hard period, almost like a reset button. It is what allowed us to build into a stronger country.
Now, you could argue and say, “It wasn’t stronger because as the boomers came up and we had the heavy movements and civil rights, which by the way, civil rights wouldn’t have happened had it not been for World War II. Following World War II, demographically speaking, racial minorities were more on equal playing fields. There was a bigger middle class. There wasn’t as much of the rich and poor as we see today. That happened as a result of us unifying posts that fourth turning leading into the first turning, which is like spring. Think of spring, summer, fall, and winter.
We’re now in a historical winter here in the United States, and much of the world is following along these similar cycles right now. It’s leading up to a bigger climax. That big climax you always hear about in movies and you read about in books that there’s going to be that big shakening. That thing that you never want to go through. When you come out on the other side, even though it’s rough and you never want to repeat it, you’re still grateful for how you came out better on the other end.
We still have more of that to go. There are different estimations they don’t know, even Neil Howell admits it. He’s like, “It’s hard to say when it’s going to be, but most likely from anywhere from the late ‘20s into the early ‘30s is going to be where we have that crisis moment. We’ll probably come out victorious sometime during the 2030s.” At least hopefully victorious. You can come out of this worse. That does happen occasionally in history, but usually, it’s not that way.
I don’t want to make this all doom and gloom but with the season’s changing, you feel like something is changing your own life. Every fall, I tend to question, “What’s the direction I need to go?” I tend to get into a mindset of how to be more efficient and how to do less. Naturally, when you go into winter, especially if you have different seasons, you want to cuddle in a blanket sometimes. At least this is me, maybe not you but this is like the hot chocolate season. It’s a season when you want to hunker down a little bit, relax a little bit more, and spend more time with family.
That I feel is coming economically as well. Part of that fourth turning cycle that Neil Howe talks about in that book, it does not look great sometimes and in many cases economically. That’s why we have the Great Depression, which was during the last fourth turning leading to World War II, which was the crisis that climaxed that happened. I’m not saying it’s going to be another world war. It could be a civil war or a political civil war, so to speak. Maybe the left and right being polarized become even more polarized. Eventually, there has to be a winning party or there’s a third party that emerges.
There are going to be changes and those changes are necessary like every winter. You have to have that death and destruction following fall and winter to create a new spring. That’s going to happen again. Economically speaking, we’ve had a pretty good run. Think about where the ‘80s were still booming into the ‘90s and things like that. Now in the 2000s, that hasn’t been as glorious other than the 2010s. Now we’re going to the 2020s, things have to go into balance. If we started to see upheavals say globally speaking, we already seen this happening.
China is practically in a depression right now. It drives me nuts when people say, “We should invest in China.” What old news are you listening to? That’s a long gone history when China was booming. They’ve been going broke lately. They’re worse than the United States right now. The United States looks pretty good globally speaking, which is why you haven’t seen a big stock market dip. We haven’t seen a big collapse. That doesn’t mean that we’re going off the dollar. Chinese currency doesn’t look any better than the US dollar. It looks worse.
We got China that’s got issues. We’ve got Europe. A lot of Europe is still dealing with inflation. We’re being told we got 4% or 4.5% inflation here in the US, but we all know that we’re lying about it. In Europe, they’re not necessarily lying about their numbers. They have 10% plus inflation still to this day. They’re starting to see their rates go up as well. They’ve been raising their rates like we’ve been raising our rates. Everything is moving towards trying to tame inflation and trying to slow things down when they’re already slowing down. Since inflation is still going up, all the banks of the world are trying to drive up inflation even more, surprisingly enough, by raising those rates.
What has to happen for that inflation to stop that they keep talking about is they have to stop lending money. That rate there, when you start to see the banks tighten their grip and say, “We’re going to stop lending money to people as often. Maybe we won’t even lend mortgages to people as much anymore.” Already people aren’t trying to get mortgages currently, but what would happen if you knew that you had to start financing things? What if you knew you had to buy a car, you didn’t have the money that saved up for it? You have to finance it. What if all of a sudden banks said, “We’re going to make this criteria stricter whether you can get loans or not?”
Imagine what would happen when the money supply dwindles. Things become tighter. That’s the big key difference. The reason why we saw such deflation was because people were getting laid off. That wasn’t the initial start. It wasn’t the stock market tanking in 1929 either. That started some things, but people still lived their lives and thought things would come back to normal again. It didn’t as much because what was happening was that eventually, money got tight. They stop trading. There’s a lot less international trade. They try to tighten the borders, much like we’re talking about now. It’s like, “We got to buy American.” That campaign was going on going into 1930, “Buy American.”
When you start restricting trade and the exchange of money, remember this, exchange creates wealth. The faster and more often we’re exchanging money with other people, the more money everybody makes. It’s not about printing more money. It’s about how fast has money changed hands with people and that creates a healthy that creates a flow of the economy. It’s like sending water around to different farms. If you all send pool the water with one farm, everybody else dies. In truth, that water might even become stagnant and maybe that farm will die too.
Fear Made The Money Exchange Worse
Exchange is healthy for an economy. If anything happens right now that stops that exchange, like in the Great Depression that exchange did slow down but then the fear made it worse. That’s the thing that politicians and even the Feds are trying to avoid. They don’t want to create more fear because if there’s more fear, it’s like when the banking crisis happened back in March. Remember when people started pulling out deposits? Think about what happened to some very big banks. They failed very quickly because of that very reason.
Money exchange is healthy for an economy. Click To TweetWhat if that happened nationwide? What if more people start pulling money out of banks? What if more people got scared to spend money because they were thinking, “I got to hold onto it because we’re going into this bigger winter,” which is true. I believe we are going to a bigger winter, but you can react differently to it. If you react in fear and scarcity, the next thing you know when you stop spending money, those companies and those people stop getting paid, and layoffs happen. When those people stop getting paid, they stop spending money and then you get laid off. That’s why they say the difference between a recession and a depression is a recession, your neighbor gets laid off, and depression, you get laid off.
Now I believe that there are a lot more things coming up. I believe that the Feds are probably going to overreact. They’re going to over-respond. Inflation is going to be more persistent than people think. I’ve been seeing since last year when people said, “Rates will go down in 2023.” I said, bull. Guess what? They’re now saying, “They’re going to stay up and even stay up possibly into 2025.”
You Need Cash Reserves
I’m saying this as a wake-up call. I’m saying this right now to prepare for winter. You don’t become the grasshopper where you don’t prepare. The ants to prepare. You need to become more ants-minded in the sense that you’re preparing. It doesn’t mean that you don’t invest and that all of a sudden you stop everything in your life. You hoard up, board up all the windows, and hide away. You don’t have to go into a bunker.
Prepare For Winter
What I’m saying is you need to have reserves and probably more than six months. That’s why I’ve been recommending 6 to 12 months of reserves. Have that as a focus right now. If you don’t have it, that should be a top priority. While you’re building those reserves, check to see if you have any consumer debt. If you’ve got credit card balances, pay them off. Student loans, not so much. It depends on the student loan and the terms and everything else, but for the most part, if it’s high-interest credit cards, which keep going up, pay them off.
A bonus tip here. If you do have credit cards and you’re focused on trying to pay them off, 75% of the time right now, if you call up the credit card company and say, “I want to lower my rate, can you help me lower my rate?” They will say yes. That’s at least the stat has been up to this point. Now they could change that tomorrow. Understand that by the time you’ve been tuning in to this show, things could be changing. By the time that even winter does come around, a literal winter year of 2023 into 2024, things could change in the banking and the credit card industry where they get scared and they won’t lower people’s rates.
I’m telling you, do it now. The best time to prepare is when you don’t need to prepare. It’s like the best time to buy a house and get a mortgage is when you don’t need a mortgage. The best time to get a loan from a bank is when you don’t need the money. Whenever you need money, like if you get laid off and you ask the bank for money, they’ll say no. When you need something, that’s when banks don’t want to give you something. It’s like investors. If you had your money to put with an investor, then the investor says, “I need this money or I’m going to go bankrupt.” Would you want to give that money to that investor? No.
This is why you need to prepare now. Prepare when you don’t need to prepare. I know some of you right now are in this winter situation. You’re struggling and I get it. I’ve been struggling with my personal life. My marathon training and running have gone a little bit downhill over the last four months. I’ve had issues with getting in a car accident with my wife. I mentioned that in another episode too. I get that. There are things that can change and happen and create challenges. Prepare now. Find the lesson and learn from it. I’m here to tell you that for those prepared, you will be the one winning. If you’re prepared, you don’t have to fear. That’s my mantra.
The best way to prepare is to build up savings and pay off that high-interest credit card or consumer debt that you might have, personal loans, or things of that nature. Get rid of them, especially if they have high payments compared to the balances like when we talk about the Cash Flow Index. Get rid of those things. That could be your best investment right now.
Money Ripples Community
It is still a great time to invest. I’m still investing right now. I’m still seeing opportunities. Am I more diligent in doing my due diligence? Absolutely. This is a better time now than ever to have a community around you to help support you in that. This is why in our Money Ripples community, people are starting to band together and asking each other questions saying, “What’s your favorite investment right now? What are you doing?” It doesn’t mean that they’re giving investment advice, but they want to know what people are thinking and what they’re experiencing.
There are even good operators in the real estate game that are having some challenges right now. They’re having certain deals that aren’t going the way that they thought and they’ve had to adjust. I’ve had guys on the show like BJ recently. BJ talked about how he had to completely pivot and change his business model, get out of the Phoenix market, and go over to Tennessee. Those things are happening. It doesn’t mean that there’s no opportunity. I’m here to predict that there’s going to be more opportunity not just now, but even as we go into the next year or two. You’re going to see a lot more opportunities because people won’t be preparing. People will be responding. They’ll be reacting to what’s happening to them.
You need to react first and requires you to 1) Have those reserves. 2) Get rid of high-interest consumer debt, especially when there are high payments involved. 3) Get support. Make sure you get support and look for the right opportunities. Make sure you have a good community around you. If this show is that community for you, great. If there are other people’s podcasts you’re listening to, hopefully, they’re giving you wise counsel right now. This is a time that I’m excited for. The people I’m not excited about right now are those that are in the stock market. That is the place that is going to get hit the worst. It’s already being hurt by interest rates and you’re already starting to see some signs of it going lower, faster.
If we were to see this S&P go back to where it was or where maybe it would be to be back in a balance like it was in the last recession, it’s got a long way to go. This is the S&P 500, the stock market chart. You notice this is going back to the 1920s. You’ll see this going back to about 1927. Notice the line that I’ve drawn and I drew this line by the way years ago, and this line still holds pretty true. If you’re a stock trader, you’ve seen these happen before. Generally, what you’ll see happen is even with the shorter terms, stocks, and even the markets tend to bounce on their trend lines all the way up.
Notice that it dropped down badly in the 1930s. I started from the ‘40s here. There’s not much of a trend I can go off of in the ‘30s. Notice you got the ‘40s here in 1942. It bounces off that line. It gets pretty close even by 1949 to hitting that line. It keeps going up and then right there in the ‘70s, it goes back and hits that line again in 1974. It rides along that line from the late ‘70s into the early ‘80s and it takes off again, especially when things start to recover, you see it starts taking off. It doesn’t even go back to that trend line again until the global financial crisis.
Notice it’s usually really big ones. 2000 didn’t even go back fully to where it could have gone back to. I’m saying the same thing. It may not even go back to that trend line, but if it were to go to that trend line today, you see where we are now. We’re up around 4,300 as when I’m doing this a few weeks ago. The trend line though is right around 1,900 or so. That’s where if it were to go back to bounce off that line again, it could go that low. I don’t think it’ll ever break the line. It’s possible. I do believe, with the way they’ve been talking about the stocks going on, we have the magnificent seven stocks like Nvidia, Amazon, Apple, Microsoft, and Google. These companies have been overvalued.
Nvidia is like 100 times its value. We have already seen Tesla have that same problem and now Tesla is struggling right now. At least with their stock price because it was overvalued. This is what happens. What’s happening is that the value of stocks talks about the price-to-earnings ratio. They’re supposed to be based on earnings. Is the price of stocks a good buy compared to how much earnings or profit they’re making? If it’s not, why would you keep buying it? It’s like knowing that cars, maybe they inflate the average car to $100,000. You’re probably going to try to do whatever you can to make your car work until the price comes down.
The same thing with houses. You’ve already seen this happen. With the interest rates going up and the prices going up, you’re saying, “Is it ever going to be a good time to buy?” You may stay out of it. The stock market is no different than the car market, the automotive market, or the housing market. It’s a market. It’s no different. Who’s to say that this isn’t time for it to come back into balance again, back to even somewhat normal type of price valuations that haven’t been happening?
That’s what I’m saying. If there’s an economic winner that’s going to affect anybody, it’s going to be those with retirement accounts banking and hoping that the retirement accounts are going to be there in the next 5 to 10 years. My prediction is the next 5 or 10 years, the stock market won’t look great. I’m not saying it’s going to go straight down. Heck, it could go flat. Think of the lost opportunity costs you have if it does go flat. Is inflation still keeps going up? It keeps roaring away while your money becomes worth less and you’re going to say, “Shouldn’t I have been better putting that in the bank?”
People said that in the 1970s they realized the market was pretty much flat through that period. Even if you could put your money in the market around 2000 and realized it took it to about 2015 to break even and then inflation cut it in half anyways, you would’ve said, “At least in the bank, I would’ve made way more money than over those 15 year periods.” Now we’ve had a good run in the market. Who’s this to say that’s going to keep going up? Usually, people try to sell you that. They’re banking on you putting money in the market.
I’m here to tell you it’s time to be prepared. I’m not saying you sell off your stocks. You might just move your money to someplace safer. There are safer funds you could put your money in potentially keeping it safe, especially if you’ve got a 401(k) where you can’t get your money out. That’s a tough thing. The cool thing is with the whole Secure Act 2.0 or whatever that we had passed recently, we are supposed to have an option for companies in 2024 to give you a way to build up your emergency fund. Maybe if the company decides to do it, give you a match with it too.
Now you can’t put in a ton of money to build up that emergency fund. They’d max it at $2,500 a year. If you can get a company match while you’re trying to build an emergency fund, it’s like a Roth IRA that you can access from your company 401(k). We might have some different dynamics here that might add some extra safety. It could add an extra option here. Maybe not the normal 401(k), but this emergency fund could be a good deal.
Things are coming up that can change. The best thing you do is be prepared. Surround yourself with a community of people who have their ears to the ground, have been through cycles like this before, and are still doing it. The thing is I’m still investing. I’m still making money and I love it. You could be doing the same thing yourself, but it requires you to first look at reality right now. Internationally, the US looks great. In the global scheme of things, we look great and I’m even predicting that America’s got a winter coming up here. The other countries are having their winter starting right now, a little bit earlier than us, who’s to say that their winter won’t affect us as well?
That’s the thing. We have to look at it as reality. Who’s to say that the American economy, if it tanks, what would that do to the rest of the world? It will have a massive effect. The rest of the world is already teetering on the brink of going broke. US, if they start having issues, we’re going to start seeing some big troubles. It’s going to be a ripple effect, but if you’ve seen that bouncing offshores, it’s going to do that where we keep having issues with each other. I tell you this not to be fearful but to be actionable, to take faith in action.
That’s where good solid financial principles make sense. That’s where you want to make sure your debt is in a reasonable amount of control. Don’t go debt-free, I’m not saying that. I’m saying get that consumer debt, especially the high-interest debt under control. Get rid of it, pay it down, and focus on that. That has to be your next investment. That might be your best investment. I’ve had clients where we’ve recommended that.
We’ve also had people where they’ve got cash. You’re not buried in consumer debt. You got a good nest egg, but you’re wondering what to do with the money that you have. Imagine if, in ten years, the stock market didn’t go up at all. What if it was the same? What if it didn’t go down? What if it just stayed the same in ten years knowing that inflation is going to kick your butt? Are you going to be happy with where your life is right now? If your money didn’t go up at all in ten years, would you be happy with yourself?
Would you be looking back on the previous ten years saying, “In 2023, I wish I would’ve done something. I wish I would’ve done something different than just following everybody else like a lemming and putting my money in like my coworkers told me to do in my 401(k) and my financial advisor told me to do. Now that financial advisor, he’s making more money than I am. All he’s doing is making money off the money I got sitting in there, but I’m not getting paid while he is.” That’s not cool. That’s not fair. That’s not right. What’s right is you prosper even when people are fearful.
Some of the best times to make money, like what Joseph Kennedy did from 1929 to 1935. He went from a $4 million net worth to a $100 million net worth all because he was liquid. He had cash available to use to invest when everybody else was scared. That is the time to invest. It’s when people are fearful. I’m telling you, people right now are lulled to a place of complacency or they’re lulled into a false sense of security right now. They think they’re safe and things are fine. What happens when a little bit of bad starts to happen? We’ve even seen the stock market lose half of its gains already this year in the last few months.
The best time to invest is when everybody else is fearful. Click To TweetCan you take a hint? What if it kept going down? I’m not saying it will because I don’t have a crystal ball, but what if it did? How can we take action now to secure it? Invest in real assets that provide real cashflow and that secures you. What if there are more layoffs? If you have other streams of income, you’re not going to be nearly as stressed as that person who said, “I got my money locked up at 401(k). That’s losing money while I also got laid off at the same time.” It’s a double whammy. That happened in the last recession, and that will happen in the next recession, which is here.
I’m telling you, we’ve been delaying it for too long. The Feds and the politicians have pushed it off too long. That bubble will have to burst. The longer they’ve pushed it out, the worse the burst is. This is the time to prepare and this is the time to be ready for the right opportunities right now, and they’re here. You have to be able to see them in the right places.
If you have any questions, you always reach out to us at MoneyRipples.com, but in the meantime, prepare, and take action based on wherever you are in your life. Take action based on those three things I said, get rid of consumer debt, build up your cash reserves for at least 6 to 12 months, and get your money in a place where it’s safe, away from the risky markets, and look for a place where you can buy real assets. Those are the things that you can look at. Again, I’m not giving you any investment advice. I’m just saying be looking and be ready for the time when things will get worse because they will. If this is the time for you to prepare, bank in literally on that opportunity. Have a wonderful and prosperous week. We’ll see you later.
Important Links
- The Fourth Turning Is Here
- Generations
- BJ Gremillion – Previous Episode