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7 Steps to Lift Yourself Out of the Recession: Part 1: Resist Fear

By: Steve Johnson

1/22/2010 - 20 Comments

Fear is one of the most powerful emotions on the planet. 

This is Part 1 of an article series which takes a look at 7 steps to lift yourself out of the recession, no matter how deep it gets.

Fear is also the most important factor in financial markets because fear drives decision to buy and to sell.

Most of the actions taken by the governments since the stock market collapse of 2008, from bailing out companies to increasing the FDIC insurable amount from $100,000 to $250,000 to saving large financial institution, has been about containing the panic of financial markets.

This is about the only thing that the government has been successful at, containing the panic. 

But that doesn’t mean that the panic wasn’t needed or justified.  The market needs to adjust to the real value of asset prices in dollars that are not worth as much because of decades of inflation. 

In time the phony economy 2.0 will be exposed, and when it does fear will grip the markets only this time the Fed will not be able to calm or contain its spread. 

As unemployment remains high and benefits continue to run out, fear is already becoming part of the new culture. 

As mentioned in this article series introduction, low interest rates (inflation) cannot fix the damage created by low interest rates (inflation).  Yet no politician wants to stop the money pumping.  They know they are creating a disaster, yet they refuse to stop the madness for the sake of one more election.

The currency monetary policy of our nation leads to hyperinflation and the only way to avoid hyperinflation is to change course.

At some point in the near future, the government will have to change course and when they do the economy will begin to sink and the Fed will have to choose not to continue on the path to hyperinflation.  

They are going to have to let it sink.

Perhaps you have already been gripped with fear.  Fear can do two things, 1) it can cause you to act quickly and 2) it can paralyze you.

The best way to confront fear is to be aware of every possibility and to focus on a future position that you are certain of. 

If you are aware of the imminent possibility of the resulting phony economy 2.0, you can be prepared for the pending disaster and therefore will not be afraid when things happened that you have already anticipated. (like the next stock market crash) 

For example, anyone that lost money in the housing market crash would have been able to avoid there losses if they would have listened to Peter Schiff in 2006.

Focus on Something You Can Count On

If you are focused on a future position that you can count on, then you will be able to ignore the noise around you and remain focused on your goals, your business and your investments.  

Focus is very important in confronting fear, just as it is in starting a new business.  Set your sights on something in the future that you know to be true and whenever your keens start to wobble, refocus on that thing.

If you are informed and focused on a long term goal, then when fear comes your way you can resist acting quickly or becoming paralyzed. 

We Are All Buyers and Sellers

In Peter’s new book, “Crash Proof 2.0” he explains how Fear and Greed will forever be part of the financial systems of the world and that they are inherently good because they simply represent the unwillingness to lose something and the desire to get something.   

Crash Proof 2.0: How to Profit From the Economic Collapse

 

The result is always a compromise.  These two powerful emotions work together to facilitate a fair negotiated price between sellers and buyers. 

Negotiating a fair price is only a problem when the store of value (the dollar) is compromised and that is what the government has done by flooding the market with new money.

Inflation is the underlying cause of our pending economic disaster as it has distorted values that will result in re-negotiating fair prices.  The market will crash as buyers and sellers refuse to pay inflated prices, just as home owners refused to pay for inflated housing prices when the housing market collapsed in 2006.

The economic crash that the Fed has been able to avoid so far is still coming and you need to be prepared for it and realize that a lot of people will panic.  When they do, you need to resist it and focus on your strategy you have prepared and most importantly don’t become paralyzed.

The longer you wait for the government to restore the economy and return your house, car, job, etc. the more wealth you are going to lose.  You cannot afford to wait, get after it and rebuild your wealth.

There are plenty of opportunities out there for new business ideas and plenty of talented people to find a way to produce value.  The US is still the largest economy in the world, with the most productive people in the world. 

Don’t assume the worst for your personal finances and if hard times do find you despite your efforts, take a few days to feel bad for yourself and then get over it and move on. 

Set new financial goals that are realistic to your current circumstances and throw away your old goals.  Get together with your spouse and write down all your financial obligations and assetsCreate a plan together how you can turn around your financial situation.

In Part 2 of this article series, I’m going to talk about how unproductive complaining can become for you and the people around you, how it played a large part in the economic collapse and why you need to get rid of it.

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Crash Proof

Peter Schiff has predicted the economic hardship more accurately then any other economist in the world in this book. Everything from the housing crash to the credit crunch to the stock market. Peter has a plan to help you servive the crash. Peter explains why the Wall Street investment firms are still trying to sell you stocks, and was the house prices are likely to continue to decline for years to come.

Day of Reckoning

In Day of Reckoning, Pat Buchanan reveals the true existential crisis of the nation and shows how President Bush's post-9/11 conversion to an ideology of 'democratism' led us to the precipice of strategic disaster abroad and savage division at home. Ideology, writes Buchanan, is a false god that seeks vainly to create a paradise on earth. While free enterprise is good, the worship of a 'free trade' that is destroying the dollar, de-industrializing America, and ending our economic independence, is cult madness.

Empire of Debt

Many Americans have resisted the notion that their country is an imperial power. The idea seems to contradict the values of the Republic and its Founding Fathers. But in Empire of Debt, prominent financial analysts Bill Bonner and Addison Wiggin argue passionately that not only is the United States an empire, but it is also one whose end is coming soon.

Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse

In discussions of today's economic meltdown and what to do about it, the Federal Reserve is a stealth helicopter: it never shows up on the radar. With the exception of a few esoteric specialists and those Ron Paul Revolutionaries who burst into chants of "Abolish the Fed!" Historian Thomas Woods notes in this important book, the Federal Reserve bears a large part of the blame for the mess we're in. In the first part of "Meltdown," Woods shows how both in theory and in practice, Fed policy fueled an artificial boom and is now leading us to a much larger meltdown.