Risky is the New Safe (6 page)

Whether you went to the original release of the movie
Titanic
back in 1998, to the 3-D version released in 2012, or will attend the virtual reality version in 2020, you're still going to know how it ends. The ship sinks and people die.

The ending is no less predictable when you look around the world today and see how governments manage their budgets and manipulate the economy. Economies are going to crash and people are going to get hurt.

Of course, many
other
people will become wealthy. These are the ones who embrace risk, welcome change, and get ahead of trends. Paradigms will shift, challenges will arise, and those who provide solutions will prosper as they always have.

True prosperity is always created by value-for-value exchanges. There will be a huge demand for people and companies that solve problems. But the old tactics that we considered to be safe—putting money in a savings account, buying government bonds, and relying on government-sponsored retirement programs—are the new risky.

Many governments today follow Keynesian economic theories. Though these are widely accepted, they simply don't work. These theories are based upon a philosophy that the state not only knows best how the marketplace works (which is simply ludicrous), but also that government can actually
benevolently control
an economy (which is beyond ludicrous, as illustrated by the disastrous results of current events). Hundreds of billions of transactions are completed every day, each by someone looking for what is best for them. To operate under a system that claims that a central government knows what's best for all is not only ridiculous—it's also dangerous.

These theories suggest that countries can spend more money than they take in, and if the deficit is scaled to a certain percentage of GDP, it doesn't matter. This is no different than the analysts who were hyping zero-revenue models during the dot-com bubble. The fact that everybody wanted to believe it was true didn't
make it true
.

The whole dot-com debacle and the economic policies that governments practice today are no less silly than the old joke, “We lose money on every sale, but we make it up in volume.”

As I'm writing this, European Union governments are enduring a great deal of upheaval. People are demonstrating in Greece, and the countries that have done a better job managing their budgets are furious with the ones that did not. They're demanding these bankrupt countries slash more expenses to get their budgets in line. But, of course, the populations in those countries are rebelling. All across Europe, work slowdowns, strikes, and demonstrations are on the rise.

I strongly believe that the euro will collapse as a result of all this political unrest. At some point very soon, it will be untenable for politicians in some of these bankrupt countries to put in place the austerity that other member nations demand. The politicians in the
have
countries will find it equally indefensible to keep increasing taxes on their own citizens to subsidize the
have-not
countries. To do so would mean getting kicked out of office by the voters—something that's already happening as I type these words.

The concept behind the euro was flawed, and the way in which it was implemented didn't help matters. Instead of an actual fiscal union with centralized taxing and spending policies, the eurozone creators substituted rules on the size of member countries' debt and deficits. However, despite the fact that these rules were spelled out in the Maastricht Treaty, none of the member countries followed them—not even fiscally conservative Germany.

When the first
have
country opts out of the euro, it will have a domino effect, in which most of the viable countries no longer recognize or use the euro within a matter of months. (Or perhaps just a handful of the original member states keep the euro in place.) Most or all countries will go back to their old currencies—and when they do, they will take the opportunity to make up their budget shortfalls by devaluing the reintroduced pre-euro currencies. While this might provide short-term relief, it will ultimately make inflation worse, and cause horrendous long-term damage to each country. It will bring on a financial bloodbath that will affect the dollar, pound, yen, and all other currencies.

Many people will lose fortunes. But others will make them
. (More about that in a minute . . .)

We have set a mind-numbing record for budget deficits here in the United States. If a 2012 presidential candidate promised to actually balance the budget, he or she would be labeled an extremist lunatic and laughed out of the race. Why? Because the cuts required for the United States to live within its means would be so drastic they would incite rioting in the streets, and possibly a civil war.

In many places around the globe, we have crossed over a line that spells ominous trouble for the future.

The people who are receiving government assistance now outnumber the people who are producing and paying into the kitty. Government entitlement programs have run amok. And once you provide an entitlement for someone, they begin to see it as their right. We've lost sight of one of the basic tenets of our Constitution and Bill of Rights. To quote Thomas Jefferson:

To take from one because it is thought that his own industry and that of his father's has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association—the guarantee to every one of a free exercise of his industry and the fruits acquired by it.

The government mismanagement of budgets and entitlement programs is wiping out wealth, hurting everyone—especially the poor—and driving a wedge between wealth classes.

It's quite probable the next Hitler won't be a racist, but instead a demagogue inciting the masses to overthrow or even kill the wealthy
. And there are a lot of disenfranchised, frustrated people with entitlement and victim mentality who will buy into this quite readily.

As I was writing this chapter, I received something that I initially thought was an Internet prank, but incredulously wasn't: Katja Kipping, the leader of Germany's Socialist Left Party has called for a 100 percent tax on any income above €40,000 a month. Think about that for a minute:
100 percent!
Kipping's rationale is that “there's no additional life enjoyment, anyway” for those earning more than that. (As an aside, I do earn more than €40,000 a month, and I can assure you, there is more life enjoyment.) She admitted that she got the idea from French presidential candidate Jean-Luc Mélenchon, who demanded a 100 percent tax on any income above €360,000 year.

The problem with all this soak-the-rich philosophy is that it is in direct violation of the laws that govern prosperity. And ironically, the real victims of this philosophy are actually the poor. They're the last to get hired, the first to get laid off, the most in need of assistance, and the least likely to have the resources to deal with adversity.

Kipping is also proposing a basic stipend for all German citizens of €1,050 a month. Like most collectivists, she discounts the most important thing: Governments can give something to one person only by taking it from another. Introducing these types of onerous taxes only causes productive citizens to flee to other countries. You drive out the best producers and, once again, actually hurt the poor the most.

Some of these economic theories would have you believe that governments get to operate by a different set of rules than the rest of us—but they don't. The prosperity principles for governments are no different than they are for people.

So how did we get here? And what do we do about it? We must first recognize the cause of all this crazy dysfunctional economic theory. No matter how many political parties democracies and republics begin with, they inevitably evolve into two-party systems. The evolution process causes the two parties that remain standing to be diametrically opposed to each other in their philosophical positions. During this evolution, parties with similar philosophies are integrated into the two that survive the cut.

While the names might be different in different countries, those labels are meaningless. One party will be liberal and the other conservative. More importantly, one party will be in power and one party will be out of power. And power corrupts even some of the most idealistic, well-meaning people (not to mention a lot of cynical, ill-meaning ones).

The party in power wants to remain in power, and the party out of power wants to get back into power. And the only way to do that is by getting more votes than the other party.
And the best way to do that is to give free cheese
.

Let's say, for example, Party A offers free prescriptions. Party B sees the bet and raises it to free health care. Party A raises the ante with student loans. Party B comes back with free education.

Now everybody wants the cheese, but nobody wants to pay for it. The politicians need a majority to get elected, and there are more people who have a little bit of cheese (or none at all) than there are people with lots of cheese. So the platform evolves to taxing the productive people more to subsidize the nonproductive. The message becomes populist:

“The rich can afford more.”

“Everyone needs to pay their fair share.”

“The needs of the many outweigh those of the few.”

The population is already infected with dozens of mind viruses that pop culture, organized religion, and governments have brainwashed into them. Some of the most prevalent ones are:

• Money is bad.
  
• Rich people are evil.
  
• It's spiritual (or noble) to be poor.
  
• You have to sell your soul for money.
  
• Money doesn't buy happiness.
  
• Big companies get rich by exploiting poor people and plundering all the natural resources.
  

One of my earlier books,
Why You're DUMB, SICK and BROKE and How to Get SMART, HEALTHY and RICH!
explores the issues of programming and mind viruses in greater detail. Most people are infected with these negative beliefs about money so they're very susceptible to political platforms centered on taking from the rich to redistribute to the poor.

The two parties exploit this in their desire to remain or become the party in power. And the slippery slope begins.
We go from
Atlas Shrugged
the novel, to
Atlas Shrugged
the movie, to
Atlas Shrugged
the reality
.

They're the ultimate pyramid money games. If you practiced the same accounting practices your government does, you would be put in prison.

Governments get away with this because they control the printing presses—and when money gets scarce, they simply print more. Which of course devalues all of the existing money even more, increases inflation, and drives up the cost of living. (And again, penalizes the poor worst of all.) But this allows the bureaucrats to continue kicking the can further down the road, with the only goal of winning the next election in order to maintain or regain power.

Know this: Unless a currency is backed by something (as the U.S. dollar was backed by gold until 1971), it is inherently worthless. It's just another mind virus. The government tells you a particular bill is worth 20 dollars or pounds or pesos, but that isn't true. That's just a subjective value they're trying to sell you, and the value declines every time they overspend and print more money. It's fiat currency; it works only when you buy into the bullshit. I'm just one of the lonely voices in the wilderness shouting, “The emperor has no clothes!”

Entitlement programs are now creating the opposite effect for which they were designed: Instead of helping the less fortunate work toward prosperity, they are enslaving those people in perpetual poverty. These well-meaning, but misguided programs have devolved into a vicious cycle, and politicians are exploiting the situation to pursue their agendas.

So what are some things you can do to prosper in spite of these dangerous games being played by governments around the world?

Remember that every challenge presents a corresponding opportunity, often in disguise. But you can't assume that what worked in the past will work in the future. The pendulum may swing one way today, but it has to swing back at some point.

Play the status quo against itself
.

When a commodity becomes scarce, value rises. When it becomes plentiful, value decreases. When a problem arises, people will pay dearly to resolve it. So, let's explore how you can make these circumstances work to manifest more success and prosperity in your life.

Disclaimer
: I'm not an attorney or financial planner and I don't give legal or investment advice. Please find good legal and financial advisors who can assist you in your wealth-building goals.

I'm a prosperity coach. The only credential I can lay claim to is being a high-school dropout who got rich. I'll give you some concepts and ideas you can put into practice with your advisors, which brings us to my first rule of creating wealth:

If you want to become wealthy, don't seek financial advice from broke people
.

A couple of years ago, I paid a lot of money to attend an investment conference in California. It was one of those “pitch-fests” that featured a different speaker every 90 minutes. They would try to sell you on their strategy for the first 30 minutes, and then spend the next 60 pitching their package for sale in the back of the room.

There was the real estate guy, the penny stock lady, the investment newsletter publisher, the Forex trader, and on and on. I sat through two days of this four-day program before I reached a startling conclusion: None of these experts presenting at this conference made more money than I did. So I called the airline, moved up my flight, and went home.