First shipment of PREPARE books arrived in Dallas, TX.
There is a psychological term to explain why people want to reject or push away new data when it makes them feel uncomfortable — when the new data is interrupting their world. It’s call cognitive dissonance.
Mental conflict that occurs when beliefs or assumptions are contradicted by new information. . . . When confronted with challenging new information, most people seek to preserve their current understanding of the world by rejecting, explaining away, or avoiding the new information or by convincing themselves that no conflict really exists
Your Prep Plan: How to combat cognitive dissonance.
What about you? How do you deal with cognitive dissonance?
One of the most helpful lessons I learned in my research was understanding the historical relationship between GDP (Gross Domestic Product) and federal revenues as a percent-age of GDP. For example, in 2008, federal revenues were $2.5 trillion and GDP was $14.2 trillion; therefore, revenue was 17.61 percent of GDP ($2.5 trillion ÷ $14.2 trillion = 17.61 percent).
Over the past forty years, the amount of federal revenue as a percentage of GDP falls within a narrow band between 14.9 percent and 20.6 percent. The forty-year average is 17.79 percent.
Note the forty-year average of 17.79 percent is during years of high and low individual and corporate tax rates.
I understand if you’re skeptical about PREPARE. Perhaps you’ve read other dire predictions sometime over the past twenty years that seem as if they never came true.
But before you dismiss me as just another doomsday prophet, there’s something you need to know: The situation has changed. In fact, in just the past few years, the situation has worsened considerably.
With a little common sense and the math skills of a fourth-grader, anyone can clearly see and understand what is about to happen in our nation.
America is on an unsustainable economic course, and we are rapidly approaching the point of no return. It will soon become (if not already) mathematically impossible for our nation to avoid bankruptcy at some point in the future.
YOUR PREP PLAN:
So, what are you? A doomsday prophet or a realist?
Despite what you may have heard in the news, there is no political slant to the soaring federal debt:
Since the end of World War II, the budget shortfall has grown under six Republican and six Democratic presidents; it has grown when the Democrats have controlled Congress and when the Republicans have controlled Congress; and even the twelve years of budget surplus (1947–1949, 1951, 1956–1957, 1960, 1969, 1998–2001) are almost equally split between the parties’ control of the White House and Congress. (source) Bottom line, there’s no point in pointing fingers. We’re in this mess together and we need to work together to prepare the coming economic storm.
Our current economic problems are not the result of one piece of legislation, one president, or one session of Congress. Our current economic woes are the cumulative result of a long series of fiscal policy decisions over many, many years. Let’s take a brief survey of American history since the Franklin Roosevelt Administration as it relates to fiscal policy:
As you look at economic data, there are three terms that everyone must understand: budget surplus, budget deficit, and national debt. Each fiscal year, when the accounting books are closed on September 30, the federal government ends the year with either a budget surplus or a budget deficit:
• A budget surplus is when government revenues (that is, taxes paid by you and me) exceed expenses for the current year. (That’s good!)
• A budget deficit is when government expenses (all the money the government spends) exceed revenues for the current year. (That’s not good!)
All during the year, whenever our nation’s expenses exceed income, the government pulls out the national credit card and says, “Charge it.” This means we finance our debt by selling government bonds (which are promises by the government to pay at some future time) to domestic and foreign investors (such as bond-market investors and other countries, such as China and Japan.) When we overspend (that is, have a budget deficit) we have to borrow money (by issuing more bonds) and the national debt increases.
• The national debt is the total amount our nation owes its creditors (domestic, foreign, and intragovernmental lenders and investors). This figure includes all previous deficits (plus interest owed on all outstanding bonds) minus any payments the federal government has made to pay down the national debt.
YOUR PREP PLAN: Be able to explain these three important terms.
The mother of economic storms is headed our way, yet most Americans seem oblivious to the danger. Despite the gathering thunderclouds of annual federal budget deficits and a rapidly escalating national debt, most people are simply ignoring the news and information concerning the coming economic crisis. There’s really nothing complicated about it. You only need one chart to illustrate our nation’s unsustainable course.
YOUR PREP PLAN: Put your smart phone or iPad to work.
So what do you think? Join the conversation. Leave your comment or ask a question.