- It's David here from Freedom Founders.
I want to talk to you
today about where we are
in the economy and the marketplace.
You know, the economy since
the Trump administration
took office almost two years
ago, a year and a half ago,
November of 2016, January
1, 2017 into office.
The economy has been on, really,
an uphill trend, overall.
Stock market, real estate
market, the economy,
unemployment has gone down.
Overall, companies are expanding.
We have the tax reform
act at the end of 2017,
which has given more money
to profits, which has been
given out, in many cases, to employees.
All that's good.
In fact, the consumer confidence right now
overall is great.
Which means people are
buying things today.
They're using credit.
In fact, they're using credit too much.
In many cases we're back to where we were
back pre-2008 financial downturn.
Where consumer credit
expansion is going up,
in other words, they're
expanding their credit lines
into more debt today.
And that's not so good.
The problem is that
there's such a disparity
between the truly affluent,
the really wealthy at
the top, and kind of middle
America. Which has been,
over the last 15 plus
years, has been getting
squeezed, squeezed, squeezed.
The real nominal rate of
income, of net income,
over the last 20 years
for the average American,
has been going down.
Has been actually going down.
If you utilize inflation factors in place,
it's gone down relative to
the overall buying power.
That's not good.
Most Americans have very
little actual net worth.
In other words, as long
as the economy is running,
"perfectly" in other words,
everything is running well.
There's plenty of credit financing,
people are employed,
things keep moving forward.
The problem is, we know
that doesn't last forever.
In fact, we've been on a
long streak, very long.
We're long in the tooth on this one.
And I'm not a doomsdayer, but I'm saying
that we will have a reset of some kind.
How much, exactly when?
No one knows, but when
it happens, I do predict
there's enough underlying fragility
in our economic structure
with so much debt
this country has. With
rising interest rates
which can take away
consumer spending, which can
cause the government to
suck so much of the private
capital, just to pay the
interest on the debt.
So many things that are,
one black swan event
anywhere in the global system today,
could be enough to trigger a downturn.
A re-set, a recession that
could be very, very devastating.
Especially if you don't have liquidity.
Liquidity meaning you
don't have access to cash.
You don't have cash or you have access to cash.
As long as you have access
to cash, you’ve got good credit,
and the banks are lending.
Yeah, you can live
to fight another day.
But the problem is - just what’s
happened in other downturns -
when the credit markets,
the financial institutions
have to clamp down because
of their lack of liquidity.
When the Federal Reserve
and the auditors say you
need more capital, they have to pull back.
They have to cut off lines of credit.
Lines of credit, short
term borrowers who rely
on lines of credit, all of
a sudden have to scramble
for more liquidity.
And, if everybody is
scrambling for the same thing
and the pie is getting
smaller; that affects
all the marketplaces.
So, here's my point to you:
I would seriously be
looking at your liquidity.
In other words, what's
the cash flow margins
in your business right now?
Who are your primary buyers
of your products or services?
If it's vastly the middle
America that you're
serving and providing, I
would be very, very careful.
Because middle America can
be squashed in a heartbeat.
Squashed to the point
where they're not going to
utilize all but the
absolute necessary services.
I would be positioning myself,
if I was in a business
or a service today, for
more affluent buyers.
Not everybody can do that.
But if you're one of those,
who is listening today.
And you are intentional
about it, you can do that.
Move to a more affluent market.
Yeah, you've got to make
some decisions here.
You can't just keep doing
what you've been doing,
and hope for the best.
It's not gonna happen.
As middle America gets
squeezed, their ability
to continue to buy things
will affect everybody.
Their lack of credit, they
get laid off from a job, so
back to part time, lots of
things can happen to squash
what right now seems to be
a pretty strong economy.
So, position yourself well.
You, yourself, need to have liquidity.
So, look at your debt lines right now.
What do those look like?
Do you have long term, fixed rate debt?
Which is serviceable for you as long as
you're productive and can
keep the income coming in?
That's probably okay debt.
Are you using lines of
credit, credit cards,
or commercial lines,
business lines of credit?
Those are all callable.
Are you using commercial loans?
Those are callable.
In a downturn economy,
even if you're making
the payments on time,
the banks can call those.
And if you're a good
borrower with a good track
record, a good credit score,
they come after you first.
Meaning, they come after you and say,
“We're calling your loan.
We need you to refinance.
Pay us off and go get
your money somewhere else.”
Well, again, if everybody
is doing the same thing
and scrambling for access to credit,
you're in a very no-win situation.
So, look at those things hard right now.
Who is your primary customer?
Are you dependent too much
on middle America today?
And what is your liquidity look like?
Do you have reserves?
Do you have access to
non-institutional credit?
Private capital, which
is a big thing we use
in real estate, access to private capital.
If you're not working
those areas right now,
you're probably putting yourself
into a dangerous position.
On the other hand, if
you do position yourself
correctly, when everybody
else is running scared
there's blood in the streets, you survive.
You actually will thrive.
It's a decision you've got to make.
And it's not easy to do when everything
seems to be running right.
That's the last, least 
of our worries, right?
To reposition ourselves,
but I promise you,
do it now, you'll thank me later.
Because things will turn.
The cycles will drop down again.
And either you'll be an
opportunist who will do very well,
or you'll be a victim.
You decide.
I'll see you next time,
remember always stay focused
on your freedom.
