If We Are Heading into a Depression, Do This

Question


Hi Scott,

I have been reading people saying that all this stimulus (especially in the US, where the Federal Reserve is printing trillions of dollars) will soon lead to massive inflation, and then recession. Even the world’s biggest hedge fund manager, Ray Dalio, says we are heading for a depression. And I have to say I agree. I am a long-time reader and have heard you say before that your advice does not change. But surely it must now, given this unprecedented moment in economic history?

Kevin

Scott's Answer


Hi Kevin,

I agree, it does look like we’re heading into a very deep recession.

Yet will that lead to a full-blown economic depression?

Honestly, I have no idea.

That’s because the global economy is far too complex for black-and-white economic predictions.

Personally, I cringe when I hear the word ‘depression’ bandied about.

Why?

Because it’s a very emotive, click-baity word that’s not particularly useful.

After all, if you’re a small business owner who was already struggling to stay afloat before we went into lockdown, the next few years could feel like a depression to you.

On the other hand, if you’re cashed up and ready to buy, a market downturn can be a life-changing experience.

And that’s the rub: it’s your financial situation that matters most, not some arbitrary classification that an economic historian may, years from now, use to describe this economic period.

So what’s my advice?

Back yourself, son! You seem convinced that we are heading into depression, so start preparing for it immediately. Begin to aggressively pay off your debts, squirrel away a sizable savings buffer, and start looking for extra ways to earn dough. 

Or, in other words, start following and applying the Barefoot Steps.

Scott