The 2008 Global Financial Crisis was a very serious wakeup call that few people fully understood.
It reminded us that massive corporations like banks and insurance agencies, can, and do, go bust from time to time.
It also reminded us that in the modern globalized world, the corporations in the financial sector are intertwined to such a degree that if some institutions fail – the “too big to fail ones” – the contagion that would follow will send the entire financial sector into chaos causing massive bankruptcies and a total financial system collapse. We were told that massive bailouts are necessary because this contagion will jump from institution to institution and from country to country.
To anyone who is not prepared, these revelations should be alarming to say the least. Especially considering that the dominoes are already falling.
All across southern Europe, in countries like Greece, Spain, Portugal, Cyprus and Italy, banks are either failing outright or begging for bail-outs and bail-ins just to stop them from closing their doors.
Capital controls already exist in many of these countries, and who knows which country or which institution will be bankrupt next? Will the next one be the trigger point that causes a total loss of confidence in the system?
Will it be 2016, 2017 or 2018 that it hits your country? When will it be your bank account, life insurance policy, retirement fund, or brokerage account that suddenly disappears one day? Or will it hit all at once and you could lose all of those things on the same day?
The fact is there is no economist, politician or pundit who is saying that the world’s financial systems are perfectly healthy. They are simply arguing over how broken, how sick and how terminal it is.
Now matter where your opinion fits in this debate, everyone can agree that a total financial system collapse is a possibility. We were told in 2008 that we were within days of it, and a Trillion + Dollar bailout was required, so of course it is possible. Not setting aside some of your wealth as an insurance against this is simply a bad choice.
You have probably heard the phrase ‘war on cash’ lately. Sweden hopes to be the world’s first cashless society. There are some benefits to this but also some dangers. This solution necessitates the countries wealth being held inside of very large institutions. If they fail, everyone suffers.
It is imperative you hold some of your wealth outside of the traditional finance sectors. Be it owning real estate, physical gold and silver stored at home or a non-bank vault, or any other asset class that does not require you go through a bank, brokerage house or insurance agency.
In this kind of a crisis the value of assets located in non financial institutions would sky rocket and protect any losses you may suffer from other investments.
So when it comes to emergency preparedness, it’s crucial that you do what you can to safely store some of your assets outside of the mainstream financial sector. Doing this could be one of the most important actions you can take.