Well, Hi everyone, and welcome to another wise money tools video. Glad you could join me this week. You know, I love when new economic news comes out. It's so funny how you they get the viewpoints that are totally opposite from one another. They'll have a couple different guests on their each one talking about their particular point of view. You know, economists and weather forecasters are the only jobs that you can have and be 90% wrong all the time. And you still get to keep your job. It's really interesting. Economists are just as bad as weatherman, there's one economist that I started following way back in the late 80s. He had written a book and on some of his past forecasts, and they had been right.

So obviously, when an economist gets it right a few times, you tend to pay a little attention. And in the book he talked about he sees the future and when we could expect a major downfall in the economy. And what was supposed to happen in the late 90s, early 2000. Well, sad to say, since that book of the 80s, he's pretty much been wrong. Yet, I still see. He's out there selling newsletters, he's written another couple books. And I just don't get how they stay in business and be so wrong so often. Anyway, you know, I remember when I was a teenager, as a long time ago. By the way, my mom worked for a guy who, I don't think it was an economist, but he was some sort of a forecaster. And man, he had a huge following. And this is pre internet, of course, but his book was a about the coming crash that was just gonna rock the world for decades.

The forecasted crash was supposed to happen in the mid to late 80s. And I remember 1987, I was a kind of a maybe within the first couple years as being a financial advisor. And if you know what happened in 1987, we had this thing called Black Monday is still the worst one day loss in the stock market history. So this is happening. I'm sitting there live watching this in my office and thinking, Oh, man, here comes this guy was right. And smart is gonna tank and we've got decades of gloom and doom. Well, unfortunately for him and his followers, the market recovered, literally within a few days. And by the end of the year, it was even positive, it pretty much didn't even look back from that day till 2000. Then, of course, you saw what would have we remember what happened in the late 90s, with the dot-com boom. And then we finally did have a really decent set back in 2000-2001.

Anyway, all of his followers, I mean, these guys were really doom and gloomers. They were prepared, They had bunkers, and food storage, and all this kind of stuff totally missed out on everything. So anyway, going back to this current economist, I don't really want to mention his name, he's kind of popular. But anyway, his forecast was by 2005 things were gonna look so bleak, the baby boomers, were gonna be pulling all their money out of the market. And because that segment, the baby boomers was such a huge part of the population, that the markets are just gonna tank. And we're gonna see Bedlam for the next 20 to 30 years. Well, as you know, 2005 came in when 2010, 2015. And now we're pushing into 2020. And still nothing like that has even remotely come close, and couldn't happen. Of course, I don't know if, if it's totally off the table now. Of course, anything can happen.

But people gave so much credence to these guys like him. And like I said, they can always be wrong and never be right and still be on the top of the news channels when it comes to news. Alright. So it's kind of those stock newsletters that you get, you know, they all start out saying something like. And so predicted that Google would be a winner. And now he has another stock for you that could make you rich, I'm sure you've seen those. I read through a lot of them get a laugh, because they all have that same format. It's either gloom and doom, and you better subscribe to my newsletter. So that can tell you exactly what to do before the economy crashes and you lose everything. Or it's you need to get my newsletter so I can make you millions with my next stock tip, because what I will show you is a secret that no one else knows.

And you know, it's funny about the secrets that you know, the statement about this is a secret. Well, if you know anything about the markets, the only way a stock goes up in value is it becomes a very high demand stock. The more people want it, the higher the price goes. So if it's a little known secret, and no one knows about it, then there can't be much demand and this stock is not gonna go up. Right? It's all about demand. Of course, they want you to think that you're getting in early before everyone knows about it. Look, we live in a technology age where information is spread to millions and millions of people and literally seconds. There aren't many secrets out there certainly not secrets that come from a newsletter that was printed three months ago. Okay, so what's the news of the day sorry, all the backstory there. We've seen two sides of the spectrum regarding the economy and a potential recession.

One side says that we've got this inverted yield curve. And we talked about that a few weeks ago. And they point out the recession is on the way, nothing we can do about it. The other side says that the fundamentals of the economy, like spending and housing, they're doing really well. And we're not gonna see a recession for at least two years. Not sure where they come up with two years, since they can't predict next week. But that's the two stories, both opposing views. One makes you a bit uneasy, and maybe scared. Got a run for the hills, the other encourages you to keep spending and investing. Now, I believe the 2008 crash was preventable. If you recall, the crash was spurred on by the mortgage debacle, over $2 trillion dollars was essentially rode off by banks and lenders, which in turn, you know, beg the government for intervention and what they quoted or what they called quantitative easing. That's how that came into play. I love the names of the government programs, quantitative easing and other words bailout, right.

The feds print money, then loans that fabricated money to the government than the government makes the banks whole or at least flush based on banking rules. And we the people get to pay $2 trillion back to the feds, all right? Don't you love it. However, none of this really had to happen. The real reason for the debacle or one of them, I should say, was the rule that's called mark to market. What that means is a bank has to mark the value of its assets or its loans to the current market price. So if a bank loan $250,000 on a home for example, and the homeowner got a little behind in payments and his home maybe after the devaluation was worth $150,000, let's say, well, the bank and they're wonderful rules, mark the asset worth less than its original loan amount. And by bank rules had to foreclose and sell the property.

This is where the term a short sale comes in. Because there's a shortfall, which means they're selling the home for less than the loan amount. The hundred thousand dollars that was essentially evaporated in this example, was covered by the government by the feds printing money. The reason I say the entire crash was unnecessary, is had banks eased up on their lending practices and wrote out the tough times with the homeowner, they'd have been made whole. And then some years later, had they not played the mark to market came and just said, Hey, we're in this with you, we know things are gonna recover at some point. And as long as you can keep up with your mortgage payments, we're gonna make this thing work.

However, what happened is that banks became well, banks wrote off this $2 trillion. But then they were made whole immediately, that let them become extremely profitable almost overnight. And they've made boatloads of money because they never had to pay these loans back. Banks had little skin in this game. And basically use this the short sales to get rid of the assets that weren't marked to market at the price that they are that the lending the value, and then were made whole. Now, on the other hand, those with money and knew we wouldn't be down forever, we're able to pick up properties for pennies on these short sales. And have been just rewarded handsomely. We've probably made more millionaires by the banks and the government faulting on this thing than an almost any other event in our history. All thanks to us, the taxpayers, the millionaires thrived.

So had they simply eased up on the mark to market rules we'd be in much less debt is a country. And many thousands of families that lost their homes and their businesses would still be living in those homes today. So we don't have to always go into a recession and feel like it's gonna turn us all upside down. If the industry, the banks, the markets were just smart and work with sound principles. And know that these recessions and corrections are just part of the natural phase of the market. I think we could prevent a lot of debacle from happening. There's more, I like to talk about, you know, the the depression and how it was actually longer than it needed to be. Some of the things that the government has done during these correction periods have actually turned it out or turned out to be worse.

Anyway. So when you're thinking about what's gonna happen over the next couple years. And you see two opposing views, it's hard Believe me, it's hard to know which one to you know to believe, just know that probably both of them are wrong. Both of them have been wrong for many many other predictions. And probably not panic to just be smart. I would say this is a time to be a saver, save save save a mass capital, because we are gonna see a recession at some point. And those that have capital are gonna be able to capitalize on that market.

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