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Ray Dalio recently published an essay called “The World Has Gone Mad and the System is Broken”. When looking at the current state of the global economy he said:

“This set of circumstances is unsustainable and certainly can no longer be pushed as it has been pushed since 2008. That is why I believe the world is approaching a big paradigm shift.”

Besides being a huge fan of Ray’s, we think his essay does a great job of explaining the major forces at play in the global economy and we found it fascinating so I wanted to discuss and share with everyone.

Here are the four reasons Ray believes “The World has Gone Mad and the System is Broken”

Show Notes

The World has Gone Mad and the System is Broken

The Golden Butterfly

Betterment Everyday

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Today we interview Joan Sotkin of Prosperity Place, who approaches money in a holistic way. Because listen, emotion matters when it comes to money.

Joan’s Story

Joan comes from a family of compulsive debtors. She was born in 1940, a time when women’s roles were pretty prescribed. Joan got married and started on the prescribed path. She became a teacher but didn’t like teaching any more than she liked being married. She felt out of place. Looking for something else, she started studying what she terms, “woo woo stuff,” like astrology and healing crystals.

In the 1980’s she began selling crystals and minerals for healing and meditation and was making great money. In 2015 money, she was bringing in $50,000 a month! And then she went bankrupt.

Joan didn’t know how to manage cash flow. Her father died and she has since learned that people often deal with a big trauma by overspending. Her field started to grow and she didn’t know how to compete. Eventually, the business closed.

Early Adopter

In 1995 Joan discovered online business and taught herself how to build websites. A year later she moved to Santa Fe with $200 and whatever possessions fit in her car. In 1997 she started Prosperity Place. It’s a place for her to teach people what she learned from her mistakes and successes.

Joan was an early podcaster too. She started podcasting in 2005. When Word Press came out she started building websites for other people.

Insanity Defined

Joan found that old saying, “Insanity is doing the same thing over and over and expecting a different result” to be true. She sees people acting out emotions through business and financial decisions over and over. You have to get in touch with your emotions in order to sustain success. We can know intellectually what to do but it still has to be done by a person (us) and a person can get in the way of doing it.

Money And Emotion

Our thoughts, beliefs, and emotions are what form our decisions. If you’ve had emotional issues in childhood, they sometimes manifest themselves in the decisions we make. If certain needs aren’t met, we feel deprived. If there is abuse or neglect, there is a feeling of being trapped in a situation. These emotions have to be expressed one way or another. That way can be healthy or it can be unhealthy.

If your “story” is always ending the same way and you don’t like the ending, you can change it. Worrying about the future doesn’t help the future. Life doesn’t happen to you, it happens to you.

Stress As A Motivator

Does stressing over a situation motivate you to work harder? In that case, stress can seem like a beneficial thing. If you weren’t stressing so much, you would sit around playing video games instead of working toward a goal that will allow the stress to be alleviated.

Being chronically stressed can cause adrenal fatigue which can lead to chronic disease. Making decisions based on fear can lead to poor decisions.

You Are Not Required To Worry

Do you feel as though if you don’t worry, you’ll fail? Some people who are very afraid to fly feel this way. Through the entire flight, they concentrate on the plane not crashing. When it doesn’t, they’re convinced that it was their worry that kept that plane aloft. They believe worry makes things happen or can prevent things from happening.

Worrying is a waste of time. It’s creating a future that does not exist. You’re making it up! This doesn’t mean you stumble blithely along through life with no plan. But there is a difference between anxiety and concern.

Whenever Joan starts worrying about money, she says to herself, “A large sum of money from an unexpected source.” Because that is as likely to happen as any doomsday scenario she could come up with thro...

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Andrew and Matt share their stories and the lessons they learned creating a blog that makes passive income but more importantly, they are going to spell out the exact steps they took to achieve financial independence.

They will cover:

How to Start a Blog (Step-by-Step Guide) – Everything you need to get started in under 10 minutes with $160. The act of paying someone to host a blog for you is easy.

How to Monetize your Blog – The only two ways that matter and the one you should avoid at all costs.

Your Creation Strategy – Make what people are actually looking for. Also, 80% of SEO is bullshit. I am not special, the internet is filled with people doing exactly what I do. The difference is, I’m just going to tell you for free.

A Blog’s Growth Trajectory – What you should expect in year 1, 2, 3, 4 and 5. It’s all about appropriate expectations because slow and steady wins the race. Going viral is bullshit. Winning online isn’t about being the fastest, it’s being the one left after everyone else gave up.

How You Will Fail – It’s going to happen, and it’s going to happen a lot. Learn about the “Equal-Odds Rule” and how it applies to every success you’ve ever seen. For me, my failures have been far more instructive than what I’ve actually done right.

Full Article Here

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On this episode, we talk to Adam Carroll who created the documentary about the current student loan debt crisis called Broke, Busted and Disgusted.

We get a lot of questions about student loan debt but we didn’t understand just how dire the state of things was until we spoke to Adam. It’s so much worse than you can imagine. When BB&D is released it will be a wake-up call for a lot of people.

For many people starting college, they have no idea what it means to take out massive amounts of student loans. This is especially true for first-generation college kids. Some of them are leaving school with $70, $80, $120,000 of debt.

So, why is college so expensive now? Federal funding for education has been cut. Bankruptcy laws were changed in the early 2000s to exclude student loans from being discharged in nearly all circumstances.

That was carte blanche for the lenders. There was nearly no way they would lose money and they opened their coffers accordingly. There is now $1.2 trillion in outstanding student loan debt.

What can you do to avoid the crushing debt? You don’t have to go to the most expensive college that will have you. Take some classes at a local community college. Not only are the classes cheaper but you can live at home to save on living expenses as well.

Get as many grants and scholarships as you can. Choose your major carefully. Make sure that your degree is in a field that is in demand and that your salary will be enough to live on and pay back your loans.

A college education is still a good investment for most people but we have to redefine what college means.

Show Notes

Broke, Busted and Disgusted (Documentary): A pro-education documentary exploring traditional and alternative higher education institutions, and the rising costs of getting a degree.

Winning The Money Game: A Rule Book to Achieving Financial Success for Young People (Book): The book by Adam Carroll which is a guide to being debt free and gain financial freedom.

Inequality For All (Documentary): One of the best ways to help people understand the challenges we face, is with a movie that can grab an audience and move them to action. And this movie will do exactly that. — Robert Reich

Is College Worth It? (Book): A Former United States Secretary of Education and a Liberal Arts Graduate Expose the Broken Promise of Higher Education.

Debt Reduction Snowball Calculator via Vertex42.com: A site for excel spreadsheet nerds. Debt elimination spreadsheet.

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Larry Ludwig from Investor Junkie is our guest today to explain what the Federal Reserve is, does, and why you need to know.

Put simply, the Fed sets monetary policy and either adds or removes money from the system. There are twelve regional Feds across the country to help manage local banks. It was created in 1913 as a way to prevent feature economic disasters. Bit of a fail I think.

The chairperson is appointed by the president but is supposed to operate independently of the government. Prior to 1971, we operated on the gold standard so the Fed made sure the amount of money matched the amount of gold. Now we operate on a “faith based” system where we rely on the government to determine the value of money.

In order to help stimulate the economy after the crash, the Fed allowed banks to borrow money at 0% interest. The rate has been that low for seven years. Lowering the interest rates is meant to stimulate the economy. When rates are low, people can borrow money to buy things they couldn’t afford before. When interest rates are raised, that means that the economy is doing well and is at nearly full employment.

The Fed is also tasked with keeping inflation/deflation in check. They have not always been successful but the average rate of inflation has been about 3% since the Fed’s creation.

The Fed also determines how much cash banks must have in reserve.

Ultimately it’s productivity that grows an economy and not slight of hand by the Fed. And a lot of economists consider all this smoke and mirrors to be merely kicking the can down the road, just delaying the next 2008 style melt down.

Is the Fed good or bad? That’s up for debate. The Fed has helped pull us out of crisis but did they create the crisis in the first place? Are they creating artificial cycles?

What can you do to protect yourself against the whim of the Fed? Make sure to have a good asset allocation strategy. Aside from that and repatriating, there isn’t much else you can do.

It’s good to understand the Fed but ultimately, invest your money in the LMM set it and forget it style and don’t worry too much about what they are doing.

Show Notes

White Beer: A crisp, summer beer.

Investor Junkie: Larry’s site dedicated to helping you become a better investor.

The Creature from Jekyll Island: A look at the Federal Reserve.

Betterment: Don’t worry about the Fed and invest your money.

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