I become more and more worried that SERIOUS financial trouble is just around the corner. Something along the lines of the Great Depression - too many bank failures for the FDIC to take care of. Savings wiped out. 10 - 15% joblessness, if not more. Inflation - or hyperinflation. Another Black Thursday.
After all, most of the financial innovations that we rely on, take advantage of, and assume will be there forever were only invented... 25 years ago? 100 years? Innovations like stocks, bonds, and mutual funds are supposedly the key to outpacing inflation and guaranteeing a safe retirement. Investing techniques like index funds, diversification, and dollar cost averaging are supposed to see us through our golden years. But how reliable could they possibly be? Their track record is less than 100 years old! And they are all based on the assumption that we will have an ever growing economy, which requires a cheap and easy supply of oil.
Unfortunately, financial disasters - bear markets, stock market crashes, periods of hyperinflation, bank failures, recessions and depressions - are more commonplace than we might think. For example, if your retirement money was fully invested by the Stock Market Crash of 1929, you would not even have broken even until 1954 - 25 years later. According to PBS:
By the inauguration of Franklin D. Roosevelt as president in March 1933, the banking system of the United States had largely ceased to function. Depositors had seen $140 billion disappear when their banks failed. Businesses could not get credit for inventory. Checks could not be used for payments because no one knew which checks were worthless and which were sound.
Of course, financial systems have a momentum of their own, the juggernaut of history, expectations and the concept of reality. They tend to hold together far longer than logic would predict. All sorts of bubbles - dot.com, the tulip fiasco, unwise mortgage lending - could all be reasonably foreseen years ahead of time. But they went on and on until they convinced the very last nay-sayers to join in the game. And then, they burst.
Does any one think that we have a financial tipping point approaching? A paradigm shift, where the financial landscape no longer looks familiar? Where we can no longer assume money in the bank is safe and retirement is an option? On the flip side, how many of you think that all these messes will straighten out and the global financial system is in no danger?