For anyone who remembers the 2008 financial crisis, what’s currently taking place in markets and throughout the economy feels very eerily similar to what took place back then. Even worse, politicians, policymakers, and the media are acting the same way today as they did back then, making it seem increasingly unlikely that we’re going to see a soft landing, and making it seem more likely that history is going to repeat itself.
Is Recession on the Horizon?
As bad as things are right now, there’s a definite possibility that they could get worse. But so many people are unwilling to see the world with anything but rose-colored glasses that they sometimes fail to see what is taking place right under their noses.
Just look at the conversations that are taking place among financial analysts, who you would expect would have a better understanding of the economy than most people. Analysts at Bank of American recently came out with a research note claiming that there’s about a 40% chance of the US economy entering a recession in 2023.
Can you believe that? With inflation continuing to rise, supply chain pressures pinching more companies, and shortages of labor throughout the economy, not only do these analysts not expect a recession this year, they’re predicting a less than 50-50 chance of recession next year. Is all of Wall Street on crack?
Believe it or not, only one bank has come out predicting a recession in 2022, and that in late 2022. That bank is Nomura, and it lays out the case in pretty exacting detail. But it’s surprising that no one else is predicting a recession.
For one thing, US GDP was already negative in the first quarter of this year. And the Atlanta Fed’s GDP predictions are now for a 0% change in GDP in the second quarter, which would imply a nearly certain chance of recession occurring. And if that’s the case, it means that we’re already in the middle of a recession.
Talk to anyone on Main Street USA about recession and you probably would get huge numbers of people agreeing that recession is imminent. With prices rising and forcing changes in consumer behavior, you would be hard pressed to find anyone who thinks the economy is doing swimmingly. And yet Wall Street and Washington still try to maintain the fiction that the economy is in good shape and that the Federal Reserve can engineer a fix.
Slow Motion Market Collapse
What we’re seeing instead is a slow motion collapse. It’s like watching a train wreck frame by frame, and it’s amazingly similar to what happened in 2008. One of the most disturbing similarities to 2008 is the reaction of policymakers, politicians, and other elites.
Remember how, early in 2008, we heard throughout the media and from Fed Chairman Ben Bernanke that the economy was just fine? We were told that the weakness in the mortgage market was confined to the housing industry and wouldn’t affect the overall economy.
Yet the reality was that the recession started in December 2007, so by the time we were hearing those statements, the recession was well underway. And despite all the jawboning by Bernanke, Treasury Secretary Hank Paulson, and other Washington policymakers, the economy continued to sink deeper and deeper into recession.
By September 2008, markets were in an all-out panic. We heard that the financial system was on the verge of collapse, and Congress passed a $700 billion bank bailout bill to try to stabilize things. But while Congress patted itself on the back for saving the financial system, things continued to get worse.
In fact, it wasn’t until March 2009 that the economy hit rock bottom. And even after that the recovery was anything but easy.
Despite all of Bernanke’s talk of “green shoots,” it wasn’t at all evident that the economy was recovering. And it took nearly five years after the recession started for the economy to once again show any signs of normalcy. Even after that, the recovery wasn’t at all smooth, and it wasn’t until 2016 and beyond that people really felt that the economy had fully recovered from what happened in 2008.
History Tends to Rhyme
The parallels between today and 2008 have many people understandably worried about the state of their finances. Inflation has already placed a significant burden on millions of American households, and a recession would only make things worse. And that’s why so many people are starting to look at protecting their assets against a potential recession.
Right now many investors are pivoting from asset accumulation to asset preservation. No one wants to see a repeat of 2008, in which markets fell over 50% and many investors lost even more than that. A repeat of 2008 would be especially difficult for those who don’t have 5-10 years to wait to make up for any losses they might suffer. Therefore many people in that situation are starting to turn to gold.
Gold and silver saw tremendous growth not only during the 2007-2009 recession, but also in the aftermath of the financial crisis. From October 2007 to March 2009, gold gained 25% at a time when markets were collapsing. And from there gold went on to reach new highs a few years later.
Many people remember watching the value of their investments plummeting at the same time as gold was growing. And they vowed that the next time a crisis threatened, they would protect their assets with gold.
Thankfully that’s not too difficult to do, especially with a gold IRA. A gold IRA allows you to own physical gold coins or bars while still enjoying the same tax advantages as a conventional IRA account. And you can fund your gold IRA with a tax-free transfer from an existing 401(k), 403(b), IRA, TSP, or similar retirement account.
With the ease of protecting your assets with gold, why wait until a full-blown crisis is fully underway before protecting yourself? Call the experts at Goldco today to learn more about how gold can help safeguard your savings.