Unfortunately for most people tend to come out of no-where and take the world by surprise. They are usually rationalized with the benefit of hindsight, but over 99.99% of people completely fail to spot it. Most feel that these events are virtually impossible to spot and the ones who did manage to spot them in advance were just plain lucky.
However the reality is quite different. According to the economist Freidrich August Hayek, the role of the economist is precisely to identify the aspects of the situation that are “hidden from the untrained eye.” The one reason why most people are unable to spot an impending financial crisis is because they only see the visible immediate effects of economic policy and miss out on the unseen. This is a failure of understanding or a failure to connect causes with effects.
In fact the study of economics has a far greater impact in our lives than most would care to understand. Ludwig von Mises, one of the greatest economists ever, once said:
"Economics deals with society’s fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen."
The world has still not recovered from the mayhem of the US housing collapse of 2008, and the situation in Europe is getting grimmer. In an attempt to fix the economic problems of today, the governments across the world over have thrown everything at their economy but the kitchen sink (the kitchen sink in itself should follow very soon). They have attempted to take the tiger by the tail. And yet there has been little by way of recovery. Almost every morning the financial dailies report more bad data. Inflation is rising. Incomes are falling. Governments across the world think that their economic policies can fix the problems in the world today. They are wrong... but they don't understand that they are wrong. And what is worse is that they don't understand that their actions are creating a far bigger problem for tomorrow. Of late busts and bubbles are becoming more frequent than they have ever been before in history. Such collapses have one common theme – which is that the “little guy” is the one who is hurt the most. For those with proper training in sound economics it is not so difficult to spot what is coming. Busts take place because of real reasons triggered by the actions of the “elephant in the living room” (the Central Bank). People cannot understand what is coming because they have failed to notice this elephant. The writing is clearly on the wall. The warning bells are getting louder. The financial crisis that is on its way is much bigger than what we have ever seen. Never before in our lifetime has our money, wealth, savings, and our entire financial future been in greater danger. The coming crisis is going to be like what we see in Europe today… but only much worse. The next decade or so would bring with it massive cycles of wealth destruction with most people losing more than half their wealth.
This is one of the reasons I have started this blog. This won’t stop the impending financial disaster that is coming by our way… but can surely help you to avoid getting trapped in the cycles of wealth destruction that are coming by our way.
Do watch this space.