image by Giammarco Boscaro
So what exactly does this mean for you and I when it comes to social and economic events. It means that by looking back into the past we get a very good idea of what can happen in the future. When I say look back in the past, I don’t mean last week or last month or even last year. I am referring to looking back multiple generations and even as far back as the great empires. These empires go through typical phases during conception, growth, stagnation and ultimate decline.
So why is this all so important both socially and economically. I’ll start by covering the social side and this often is highlighted by the political leaders selected by the people. Just looking back 100 years at the selection of far right leaders, gives you a very interesting reference point at what would have been happening for the average person on the street. History tells us about the roaring 20’s and how a small percentage owned a large percentage of the total wealth, while the majority struggled along after the first world war paying off debt. Income gaps were rising and speculation was at extreme levels (anyone remember the 1929 crash) and the depression after that. The backlash at that time was to select pro nationalist, in-ward looking leaders who could solve their countries economic issues. Now, is this in anyway sounding familiar. Parties in the 00’s, technology and real estate speculation while the kids are out fighting the war on terror. Global Financial Crisis, ever widening income gap with stock / bond bubbles and insane levels of corporate and student debt. Brexit and Trump a coincidence?
Hopefully you are seeing the rhythm.
So why is this important for us from an economic perspective. Most of us love our families and wouldn’t want any harm to come to them. We want to be able to provide them with the basic human needs (Maslow does a pretty good job here in his hierarchy of needs). Providing these needs is going to cost money and since most of us work and invest to provide for our family, we may as well check in to see how people did this through the ages. Unfortunately there is no silver bullet and different ideas work in different times. The key is to try and identify where you are in the cycle
The video below does a very good job of identifying ways to protect your family in times of uncertainty and when the current systems are at breaking point and no longer viable. The other questions to ask yourself right now would include:
Which assets can I own that don’t have counter-party risk
Are assets and insurance policies I use created by bureaucrats (and under what rules do the insurance policies not payout)
What assets do well into, during and after recessions
When do you switch from value to growth and growth to value
I could go on all day but I’ll leave you with one of my favourite quotes on this whole topic
It's important to learn from your mistakes, but it is BETTER to learn from other people's mistakes, and it is BEST to learn from other people's successes. It accelerates your own success.
Jim Rohn
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