The student loan debt that most graduated students now have was taken on simply because they believed that a degree was the only way they could get a well-paying job in the real world. The average debt each graduate has accrued from a 4-year, nonprofit university is $27,000 and the number is even higher for those who attended private schools.

Many of these young adults are now without jobs, yet heavy student debt loans looming over their shoulders. In addition to moving back in with parents to save money, many are also trying to make ends meet and cover their bills by obtaining cash advances through title and payday loan companies such as Cashnetusa.

To alleviate the stress these students loans are placing on younger adults, President Obama is now trying to pass initiatives to reduce the amount recent graduates have to pay on their loans so that they aren’t rushing to pull out Cash net loans or working 3 part-time jobs. 

So the question then arises, is it better for college graduates to have to pay their loans in full or for them to be forgiven? Both sides have their benefits.

If recent graduates were able to reduce the amount they owed on their student loans, they would be able to take higher risks – take the lower paying job with possible advancements, start a business, afford to by a car. All of these things would better stimulate the economy. It would help the younger generation restore faith in the system that has failed them, and possibly even reduce the number of protests we are seeing.

On the other hand, the forgiving of loans could strain the budget and reduce the amount of money coming into the Department of Education, which would then need to be more greatly subsidized by a government that doesn’t have any more funds to give.

Either way, the economy has the potential to be further strained. However, the opportunity to give a younger generation with an already bleak outlook a chance might be worth the financial gamble. Reducing loans would mean greater spending and more young professionals at work. Now it is just a matter of convincing young professionals that they still can obtain the careers they once sought, and convincing Congress to work towards a common goal: helping those suffering in this rough economy.

Will commodities crash?  Will stocks fall back to earth?  There is legitimate reason to believe that there will at least be an increase in volatility int he markets as investors look to a more normal market without the Fed’s trillion plus of money injections.

Depending on your perspective, it might be a good opportunity to sell stocks or an opportunity to look for bargains for the cash that you’ve been hoarding.  I’m more in the latter camp.  I’ll keep you posted on what is happening.

The result is that there is a massive standard of living shift that will occur in this country.  It might take one of two forms but it will indeed come I can assure you.  One form is via inflation.  Costs of basic necessities will increase so much that people will be able to afford less and less – examples: gas, food, energy, etc.  The other form is a depression.  A depression is essentially where unemployment shoots higher and people have less money overall.

We will get one of these forms or possibly a combination of both.  We’re already seeing this as unemployment hovers around 10% meanwhile gas prices are rising and food costs are rising.  Again, standards of living are falling.  This trend will continue.

This country has millions of workers that do not have the skill sets necessary to compete in the new global economy.  Furthermore, the country has millions of workers who expect a higher wage than the global market dictates – hence, the flight of jobs to other countries with cheaper labor.  Unfortunately, in order for jobs to flow back to the U.S. there will need to be a standard of living shift and American workers will need to accept a lower wage and lower standard of living.  Of course, they will kick and scream but this is a process that is unavoidable.

Additionally, as commodity prices increase due to Fed policy, businesses are soaking up the extra input cost and compensating for it by keeping their labor costs as low as possible.  Of course this means that even as corporations finances improve, they still don’t hire anyone.

Lastly, as we move forward, it’s apparent that we won’t be returning to the economic levels of a few years ago.  There simply isn’t the growth to hire all the workers that need jobs.  A few years ago we had millions of workers selling mortgages, millions of workers building homes, millions of people working as real estate agents.  These industries have been slashed immensely and the remaining jobs are few and far between.

The employment problem is structural, and it requires structural solutions.  The Fed holding interest rates low and printing money is not a structural solution therefore do not expect it to do anything to improve our real economy.

The fact is that Americans more than ever are skeptical on the future and for good reason.  More people are waking up to the reality that the years of “prosperity” in the past were nothing but a sham.  Sure, their financial statements understand this due to the loss of fictional wealth that people assumed they had, but emotionally and psychologically, this is starting to set in.  As people remain unemployed for over a year, psychologically, people realize that things are not going to return to the past glory.

This is all pushing society towards a utter collapse in confidence.

The ramifications of a loss of confidence can be staggering.  This is crucial to understand.

A currency crisis, a financial system crisis, food shortages, hyperinflation, all of these events are on the table in a loss of confidence.  What have you done to prepare?

There are significant events that will undoubtedly play out over the coming years and most people will be blindsided by them.  A few of you will heed the warnings and make preparations for a wide range of possible events.  I hope you are in that group that takes action, because it’s not likely to be pretty.

The loss of confidence has already started and is gaining momentum.  Keep your eyes peeled, you’ll see glimpses of it everywhere.

Stocks have been rising in September due to the increased certainty of more quantitative easing programs by the Federal Reserve.  This is an intended byproduct of their inflationary policies – nominal asset increases are intentional results of these policies.  Alan Greenspan has made it clear that higher stock prices make people feel wealthier and can help them spend and boost the economy.  The problem is that people are still bailing out of the stock market at a record pace.

The other problem is that when priced in gold, stocks are not really moving higher, because gold is moving higher at a faster rate than stocks.  This is what we can expect more of.  Higher stock prices nominally, but lower stock prices when priced in the non-manipulated form of pricing, gold.  Assets will continue to lose value when priced in gold – this means stocks, houses, cars, etc.

The Fed can create the illusion of prosperity, but cannot ever create real prosperity.  Printing money never leads to prosperity.

Make sure you’re prepared to keep your purchasing power and wealth in safe assets such as precious metals.

Millions of jobs have been lost and are absolutely not coming back.  There is no sector or new economy that is able to create the growth necessary to bring back a massive wave of hiring which is what we need to recover.

Much of the economic “progress” has been nothing but government stimulus and bailouts.

Lastly, housing is still a disaster and is getting worse.  Home values might plummet another 20-30% or more.  Please understand that I own a home so this is bad for me.  I am just calling it as I see it.  Housing will not recover and real estate will be dead money for another decade at least.

You need to focus on these realities even if they are tough to swallow.  Be focused on capital preservation.  Stick to your financial strategy and focus on what you know to be true.  Ignore the idiots on CNBC and economists like Paul Krugman.

Prepare for the worst and hope for the best.  You’ll be ahead of millions of people.

You need to own some gold no matter how much wealth you have.  It is the only real insurance out there in a world dominated by academic politicians and central bankers.  They will seek to save themselves, not you.  Therefore, gold is the only safe haven.

Don’t ignore the gold story.  It’s a risk you can’t ignore.

Or maybe you should consider trusting something else… precious metals, specifically gold.  The shiny yellow metal has many, many critics but its the only form of money that has withstood the test of time.  Gold has never been worth zero and has been recognized as a store of value for thousands of years.

As the economy crumbles, the dollar WILL be compromised.  The dollar will be debased based on the Federal Reserve policies to prop up the economy.  You need to diversify.  You need to invest in physical precious metals.  Consider gold coins and silver coins as a place to start.  You need to act soon.

Part 2: