When the economy hits the wall it is the average person that suffers most because they are often ill-prepared to muddle through. Certainly, a few of the .01% will take a hit but even after losing a great deal of wealth most will remain wealthy and basically unscathed while the same cannot be said of the average man or woman on the street.

Do not be deceived into thinking the elite .01% play by the same rules as the rest of us. The fact the system stumbles along does not guarantee that we will not suffer financial harm as individuals. The article below delves into how on the economic battlefield of life our enemy is carrying an M16 while most of us are armed with only a stick.

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Deter_Naturalist
Deter_Naturalist

A billionaire who loses 90% of his wealth is still rich beyond my imagination. A person who scrimped his whole life to save $250k (near the median for retirement savings, I think) who loses 90% is wiped out.

The problem is, this cycle cannot be tamed. It's a function of human nature, baked into our social behavior. Booms and busts dot all of human history. The last financial mania anywhere near the magnitude of the one we're in was probably the twin manias of France's John Law's Mississippi Scheme and England's South Sea Bubble, both about 300 years ago. Before that was Holland's Tulipmania, where at one point a prized bulb commanded a month's income from a typical buyer.

How is that different from people buying a round lot of NFLX when it was $420/share? Well, the latter example is WORSE by a factor of ten.

This isn't going to end well. And it will be interesting to see who was really rich (and a 90% draw-down leaves them rich) and those who looked rich, but were flying on borrowing, and when that blows up, they jump off ledges.

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