Hey parents, join the LA Kings on Saturday, November 25th for an unforgettable kids day presented by Pear Deck. Family fun, giveaways, and exciting Kings hockey awaits. Get your tickets now at lakings.com/promotions and create lasting memories with your little ones. I try to keep Radical Personal Finance positive and uplifting and encouraging and motivating.

I really do. It's important to me to be a source of solutions and ideas rather than a source of complaining and whining. But I think we've all got a dark side and today, well, if you're looking for encouragement, you might want to skip today's show. Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight, and encouragement, I guess, sort of, of a type, that you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

My name is Joshua and I am your host and today let's indulge our dark sides just a little bit because life has seasons and not everything is always rosy. Today's show, I want to talk with you about the recent budget deal that the United States government has come together and passed.

And this is just one of those things that I've been watching to see what would happen, but this is a nightmare and I think we need to face it head on. Now, as we begin, I will end the show with some positive ideas and the bulk of my focus for today's show is actually going to give you just some, I have a list of 10 things that I think that you can and I can do that will help us to weather the storms that are coming in the United States over the coming decades.

But in watching the political process over the last couple of weeks, I have become fully persuaded that fiscal doom in the United States is, well, pretty much guaranteed. Now, I've done a show on it here and there, but frankly, I've always tried to keep my, tried to keep myself positive because there are so many metrics by which if we look around, we can measure positive improvements in the world.

So many metrics. And I spend most of my time thinking about those metrics. Long-term, I'm an optimist, but optimism and pessimism really are, I think, poor, they're useful as concepts in a place, but really there are times at which most of the time realism is what's important, to see things how they actually are.

I think it's every bit as foolish to go around saying that things are terrible, things are terrible, things are terrible, as it is to going around saying things are great, things are great, things are great. Life is much more complicated than that. Sometimes things are good, sometimes things are bad.

Sometimes things are good for now and they're bad for longer. Sometimes things are bad for now and things are good for longer. But I have become increasingly concerned with the fiscal situation in the United States of America. And I think that it's important to talk about it again in light of the budget deal.

Now, I did a show on this few months ago. And one of the things that I received back was some feedback of people saying, "Oh, Joshua, you've got it wrong." It may be that I've got it wrong. I'm certainly no expert in everything. I'm just a normal person with a slightly higher than average exposure to financial matters.

And I'm doing my best to call it the way that I see it. If I am wrong, I hope that I'm wrong. But I think it's a form of cowardice to keep your mouth shut constantly when you see danger and see things that are concerning. And when we put together some of the recent events in the United States, I think there are long-term dangers.

I think it'd be helpful. Let's start today with David Stockman's article recently published called "The Night of Fiscal Infamy," because I think this is probably one of the more succinct ways for me to get across the mood that I have. Of course, I could read dozens of articles. But David Stockman is – if you're not familiar with the name, he writes his website, DavidStockman'sContraCorner.com, and he publishes a newsletter.

And he has an interesting background. He was the director of the Office of Management and Budget under President Ronald Reagan, which is an interesting – I'm not sure whether that's a benefit for him or not since President Reagan basically destroyed the fiscal situation in the United States worse than every president before him for years.

And then since then, we've just been getting worse and worse and worse. He left Washington and he went on to work on Wall Street, and now he basically focuses on publishing his newsletter. But let me just lead off by reading his article. This is called "The Night of Fiscal Infamy," posted on Friday, February 9th, 2018.

"We have crossed the fiscal rubicon, and not merely because Congress passed a $400 billion budget buster in the wee hours of the morning rather than abide a government shutdown beyond sunrise, and also not merely because the deficit is now locked in at $1.2 trillion, or 6% of GDP, during what would be the tail-end 10th year of the business expansion, fiscal year 2019, or that it is on a path to doubling the national debt to $40 trillion during what will be the 2020s decade of demographic no return, i.e.

30 million more retirees on Social Security and Medicare. What really happened is that the politics of the budget have now become even worse than the numbers. In a word, the GOP congressional leadership surrendered control of the nation's finances to Chuckles Schumer, Nancy Pelosi, Donald Trump, the military-industrial complex, and the domestic spending lobbies of every shape and form.

The conservative fiscal opposition, what was left of it, has been obliterated. Indeed, if the budget is a battlefield, and we can testify that it's exactly that, last night amounted to the Battle of the Little Big Horn for the Freedom Caucus. Eight years on from the Tea Party uprising of 2010, they, like General Custer and his 200 men, are gathering flies where they fell on the steps of the Capitol at 5 a.m.

In that context, the House vote split tells you everything you need to know. The faithless Speaker of the House rounded up every rhino, Republican in name only, careerist time-server, fiscal hypocrite, bloodthirsty defense hawk, and double-talking pork-barrel Paul that he could muster from the GOP caucus until he had 167 yes votes on the board.

He then opened his hand to the Dems, who quickly delivered the 51 votes needed to approve the bill and eventually threw in 22 more for good measure. Then and there, of course, the swamp creatures took control of the U.S. Treasury, even as Speaker Ryan sent the 67 Republican no votes out back of the Capitol to be shot.

Here's the thing. Mitch McConnell is a 54-year swamp creature, and Paul Ryan is a gutless wonder. So when Mitchells and Chuckles, as we labeled them yesterday, proffered their bipartisan deal in the Senate, Ryan had the choice of one, saying "hell no" and standing firm for a plan based on some semblance of GOP fiscal principles and GOP votes, or two, sentencing the Freedom Caucus to an ignominious end.

The finality of it, in fact, lies in the insidious essence of the deal, which is now the law of the land. To wit, the bill puts Washington on fiscal holiday until at least March 1, 2019, and in the interim, the red ink emanating from the U.S. Treasury will rise like the floodwaters of Houston last summer.

There will be no stopping it. That's because in the short run, the debt ceiling is suspended for 13 months. The Trump Treasury will therefore have open-ended, limitless borrowing authority, and no reason whatsoever to heed demands from the walking wounded of the Freedom Caucus for action, any action, to curtail the federal deficit.

The only tool they ever had, leveraging debt ceiling increases, is now dead and gone. Likewise, the sequester caps are lifted for the next two years, meaning the way has been cleared for pork-laden appropriations bills for fiscal year 2018 and fiscal year 2019. Accordingly, there will be no more shutdown showdowns and no more continuing resolution leverage for fiscal conservatives either.

Instead, discretionary spending, which has been creeping slowly higher every year due to last-minute end runs around the caps, will now literally erupt. Over the next two years, defense spending will leap by $82 billion annually, and the price the neocons and military hawks paid for that was a parallel $66 billion surge in domestic appropriations, thereby re-establishing the "parity principle" by which the warfare state and the welfare state crushed the nation's fiscal accounts.

Defense In this instance, however, you have to ask exactly what was the defense emergency that gave rise to this hideous bargain. After all, the old capped levels, which reached back to the Boehner-Obama deal of 2011, will never again be revisited. Rather than spending $13.5 trillion on discretionary programs over the next decade, it will now be $16 trillion or more.

But consider this, the entire GDP of North Korea is just $30 billion. So the Department of Defense increase alone is 2.7 times the entire economy of the only hostile foreign power that has actually threatened, verbally, the US in recent years. In fact, when you add up the defense budget of all the alleged hostiles, China $215 billion, Russia $69 billion, Iran $12 billion, and the entire GDP of North Korea, you get $325 billion.

That's less than 45% of the $716 billion bonanza bestowed on the Defense Department last night. Next, add in the defense budgets of Saudi Arabia, $64 billion, India, $56 billion, France, $56 billion, the United Kingdom, $48 billion, Japan, $44 billion, Germany, $41 billion, South Korea, $37 billion, and Italy, $28 billion, and guess what?

You still have less, $700 billion, than the DOD's cornucopia of budget resources. Yet, as that heroic American Senator Rand Paul said during his filibuster last night, nobody would be talking about defense budgets this crazy big if we were not conducting seven different wars, all of them completely pointless and irrelevant to the safety and security of the American people.

Stated differently, the military-industrial-congressional complex is now ruling the roost and has swallowed up most of the fiscal opposition, which was populated with neocons, militarists, and war hawks. That means, in turn, that it will be absolutely impossible to cut a single dime of domestic spending as far as the eye can see.

Moreover, given the rather certain explosion of debt service costs to more than $1 trillion by the middle of the coming decade and the baby boom-driven entitlement wave, federal outlays are heading toward 26.5% of GDP or higher. That compares to just 21% in the most recent year completed, fiscal year 2017.

At the same time, the drastically front-loaded tax cut will reduce revenue to just 16.5% of GDP in the year ahead. The math of it is that the U.S. is now heading for a 10% of GDP deficit on a long-run basis. Worse still, there is now no process available to slow the drift toward calamity.

As a result of last night's action on a two-year budget deal, the congressional Republicans can now dispense with a budget resolution for fiscal year 2019 entirely, even though it is notionally required as a legal matter. That will spare them of the inconvenience of voting for a red-ink-saturated 10-year fiscal plan, along with the political shame of it.

In effect, they have now institutionalized trillion-dollar annual deficits as far as the eye can see, added $15 trillion to the public debt in the next decade alone, and left the U.S. with $35 trillion of public debt and a $2 trillion annual budget deficit by 2027, which happens to be the peak year of baby boom retirements.

And that, of course, assumes no recession in the interim. Since we don't believe for a moment that the current faltering business expansion will last for a record 219 months or double the previous longest expansion in recorded history, the true fiscal facts will ultimately be a lot worse. At the same time, no fiscal year 2019 budget resolution also means no chance whatsoever for entitlement reform, not even a minor beating up on food stamp recipients on behalf of stronger work requirements, which would only save a couple of billion per year anyway.

That's because without reconciliation, getting any reform package through the 60-vote Senate filibuster has less chance than a snowball in the hot place. So now the bond market will be tested like never before. During fiscal year 2019, starting in October, the U.S. Treasury will borrow $1.2 trillion, and there will be no possible legislative action to stop it.

And that will occur even as the Fed dumps $600 billion of existing debt back into the market. Unless the law of supply and demand has been stealthily repealed by the economic gods, a conflagration of biblical proportions in the bond pits is now unavoidable. And when the 10-year yield hits 3.5% and then 4.5%, it will be Katy bar the door in the entire casino, because nothing like the drastic collision ahead is priced into equities or anything else.

Accordingly, if you want to grasp how the Fed's bubble finance and destruction of honest price discovery have left the casino defenseless in the face of the reckoning just ahead, you can't really find a better illustration than the recent ionization of the XIV. As the estimable Doug Cass summarized it, "Indeed, it took a bit over six years for XIV, an inverse VIX product, to rise from $10 to $144, but only one day for the product's price to implode to zero." As blogger Quoth the Raven tweeted this morning, "Six years of picking up pennies in front of a bulldozer wiped away in one session." That's what happens when bubbles burst, and we are now sitting on the mother of all financial bubbles.

As we argued on Fox Business today, what happened on the floor of the house yesterday may finally be the red swan. At the least, it will prove to be a major inflection point in ending the financial fantasies of the last three decades. We called it the night of fiscal infamy, and it surely was.

End of article. Now, the first question that most people ask with regard to articles like this, discussions like this, is, "Well, what do I do about my investments?" Let me clear that question right now. I have no idea. Go ask someone else and try to find their answer, because I have no idea.

I can make a number of arguments that countries are not companies. I believe that's true. I can make a number of arguments that would say, "Well, things always work out in the long run." I believe that's true. But I have no idea, and guess what? Neither does anybody else.

We're all just making guesses. But we are in a world that has become completely unconnected from anything in history with regard to government spending. How is that going to impact your investments? I don't know. I don't know. I don't know if anyone else really knows, because David Stockman, for all of his experience and his clarity, may very well be wrong for years in terms of what he expects.

I certainly have been wrong in my predictions. I thought there was good, strong evidence that the United States would, during the calendar year 2016 or 2017, would go ahead and enter into recession again. It felt long overdue to me. I was wrong, totally wrong. Now, are we entering into recession right now, or the stock market gyration to the last couple of weeks indicators of anything?

I don't know. What I do know is I have no idea about what the next few months will look like or that even the next few years will look like. But it seems to me pretty clear that over the coming decades, we, at least in the United States and many other places in the world, will face major societal upheaval.

And one contributing factor to that is going to be the spending of the U.S. federal government. Now, the last time I did a show like this, I received a number of emails from very intelligent and thoughtful listeners suggesting to me that I am undereducated in this particular area. That may be true.

But essentially, what was recommended was that there are no limits to government spending. There is no problem with governments running eternal deficits, that because of the taxing power and because of the fact that federal debts never have to be paid off, that there are no problems for the long term.

Well, I was trained that way too. I was taught by Keynesians when I was in college, but I've come to think that basically the same suspension of any rationality that's required for most of the modern scientific things that are supposedly taught by experts applies to fiscal management. Basically, more and more, it seems like many people who want to be leaders on various questions of scientific investigation, and I'm happy to lodge economics under one area of scientific investigation.

That's more of a social science than it is a hard science. But basically, what so many people want you and me to do is to deny any bit of our practical experience and to deny any appreciation of history and to fundamentally say, "Well, you just got to go along because the experts say so." Well, I may not understand, but at the end of the day, I got to figure out what do I do in my life.

And things don't look very bright over the next few decades, at least not from my perspective. It's a little bit hard for me to take politicians seriously when in the recent discussion over discussion. What discussion? When nobody actually sits down and says, "Are we going to cut spending anywhere?" Here's what's happening.

Everything is interrelated. I don't see clearly enough in order to articulate all of the interrelations, but we spend so much of our time in the US American culture arguing about politics and money, money as it relates to politics. Because of course, politics, the politician that you and I elect is the one who gets to write the checks to figure out who they want to pay back for putting them into office.

Here's what's happened though. That's become increasingly meaningless. I read a book last year by Tyler Cohen called The Complacent Class. And it was so interesting to me because he brought out some ideas that I hadn't really thought of previously. One of the ideas that he brought out in that book was he talked about how in the past, political debates mattered because so much more of government spending could be determined by an executive who's in charge.

And yet today, whatever executive is placed into the White House in the United States of America, they have very little ability to actually make a difference. Because of the steady growth, excuse me, Freudian slip, because of the steady growth of federal spending on entitlement programs and military spending and interest on a debt, the actual percentage of the budget that an executive could control has steadily decreased from, I didn't look up the numbers, forgive me, but majority of the budget to a tiny, tiny percentage.

I have these numbers here from the Office of OMB, the Office of Management and Budget for 2015 of federal spending. And here was what it was in 2015. Total federal spending at that point was $3.8 trillion. The largest percentage of federal spending is 33% or $1.28 trillion, which is – which is spent on Social Security, unemployment, and labor.

33% of the budget by Social Security. Social Security is an area of government spending that is not only bankrupt, has been bailed out multiple times, but faces a demographic crisis in the future because of fewer and fewer workers and the massive growth of new – more and more people retiring, the massive growth of the baby boomers.

Younger people, even though birth rates are higher in the United States than they are in many parts of the world, especially Europe, birth rates are too low and especially too low to support the large wave of the elderly. But that's 33% of the budget. Now, next biggest category is Medicare and health, which is $1.05 trillion, 27.24 – sorry, 27.42%.

If you add that to the previous 33%, you come up with over 60% of the budget that's dedicated to Social Security and Medicare. One bit of kudos or at least President George W. Bush tried to have a conversation about Social Security. It ended in total disaster. He wrote about it in his book, in his autobiography, The Hard Decisions.

He wrote about how one of his biggest frustrations with presidency, one of his biggest regrets, was that he couldn't push the discussion further to talk about some kind of discussion of privatizing some form of Social Security. Did you in the recent political environment, have you heard any serious politician discuss any changes to Social Security or Medicare on the federal level?

I haven't heard of one. Supposedly, the Republicans and the GOP was supposed to have some kind of fiscal conservatism. And yet from the very beginning, President Trump, when he was then candidate Trump, always proclaimed that he had no intention of making any changes to entitlement programs as Social Security and Medicare are discussed.

That's 60% of the federal budget that no politician will talk about. Next, of course, is military spending. In 2015, it was $609 billion. As you just read in the Stockman piece, we can expect that to continue increasing. That's 15.88%. Well, let's just add that up. Now we're at 76%.

76% of the federal budget on Social Security, Medicare, and military spending. I thought Stockman did a pretty good job of showing how disgusting the military spending of the United States of America is. The US military can't seem to win a war, hasn't won a war since World War II.

And yet we keep on sending money constantly, telling them, "Well, you can't seem to win a war since the end of World War II, so we'll just send you more money to spread all around the globe and tell everyone what to do." It's disgusting. Now let's add one more.

Interest on the debt in 2015, $229 billion or 5.97%. Add that up, we're now at 82.5% of the federal budget for the year 2015. 82.5%. And yet when's the last time you heard an honest political debate among political opponents who were actually dealing with a single bit of the 82.5%?

You don't hear it. But what gets worse and worse and worse is all the political infighting. And everybody thinks the wrong thing about the other person. Now here's what's amazing. When you actually start digging into the numbers, what you find is that the people who sell themselves as conservatives, especially fiscal conservatives, are actually the worst of the lot.

You know who spent the most money in the last rash of presidents? Reagan and Bushes. You know who's the most conservative fiscally? Who do you think in the recent past few decades of political history, who was the most fiscally conservative president of the past few decades? The answer, surprisingly, President Obama.

I say surprisingly for many people, because although he never really championed himself as a budget hawk, in actuality, that's what happened. And there's this whole raft of conservative political ideology that says, "Oh, President Obama is going to spend this into oblivion." He wound up being extremely conservative in terms of fiscally.

Now we can argue about the causes, because that certainly wasn't his goal. He never proclaimed that as, "This is my number one goal." But let me read you just an article here by an author named Dan Mitchell. This is interesting. Mirror, mirror on the wall, Obama definitely was not the biggest spender of all from October 16, 2017.

"I've learned that it's more important to pay attention to hard numbers rather than political rhetoric. Republicans, for instance, love to beat their chests about spending restraint, but I never believe them without first checking the numbers. Likewise, Democrats have a reputation as big spenders, but we occasionally get some surprising results when they're in charge." President Obama was especially hard to categorize.

Republicans automatically assumed he was profligate because he started his tenure with a Keynesian spending binge and the Obamacare entitlement. But after a few years in office, some were arguing he was the most frugal president of our modern times. So I crunched the data in 2012 and discovered that he was either a big spender or a closet Reaganite, depending on how the numbers were sliced.

I then recalculated the budget numbers in 2013 and found that spending grew at a slower rate the longer Obama was in office. And when I did the same exercise in 2014 using another year of data, Obama looked even more like a tight-fisted fiscal conservative. Or to be more accurate, what I basically discovered is that debt limit fights, sequestration, and government shutdowns were actually very effective.

Indeed, the United States enjoyed a de facto spending freeze between 2009 and 2014, leading to the biggest five-year reduction in the burden of federal spending since the end of World War II. And it's unclear that Obama deserves any of the credit since he was on the wrong side of those battles.

Anyhow, I've decided to update the numbers now that we have eight years of data for Obama's two terms. First, a brief digression on methodology. All the numbers you're about to see have been adjusted for inflation, so these are apples-to-apples comparisons. Moreover, all my calculations are designed to show average annual increases.

I also made sure that the stimulus spending that took place in the 2009 fiscal year was included in Obama's totals, even though that fiscal year began on October 1, 2008, while Bush was president. We'll start with a look at total outlays. On this basis, Obama is actually the most conservative president since World War II, and Bill Clinton is in second place.

Obama, total outlays, 0.8%. Clinton, 1.5%. Bush, 1, 1.8%. Reagan, 2.6%. Nixon, 3.3%. Carter, 4.0%. Bush, 2, 5.1%. And LBJ, 5.9%. But total outlays doesn't really capture a president's track record because interest payments are included, which effectively means they get blamed for all the debt run up by their predecessors.

So if we remove payments for net interest, we get a measure of what is called primary spending, total outlays minus net interest. As you can see, Obama is still in first place, and Reagan jumps up to second place. Primary spending, Obama, 0.7%. Reagan, 1.9%. Clinton, 1.9%. Bush, 1, 2%.

Carter, 3.2%. Nixon, 3.3%. Bush, 2, 6%. LBJ, 6%. I would argue that one other major adjustment is needed to make the numbers more accurate. There have been two major financial bailouts in the past 30 years, the savings and loan bailout in the late 1980s and the TARP bailout at the end of last decade.

Those bailouts created big one-time expenses followed by an influx of money from asset sales and repaid loans that actually gets counted as a negative spending. Those bailouts added a big chunk of one-time spending at the end of the Reagan years and at the end of the George W. Bush years, while then producing negative outlays during the early years of George H.

W. Bush administration and Obama administration. So if we take out the one-time effects of those two bailouts, which I categorize as non-TARP for reasons of brevity, we get a new ranking. Reagan is now in first place, followed by Clinton and Obama. Primary spending, non-TARP. Reagan, 1.6%. Clinton, 1.7%. Obama, 2.1%.

Nixon, 2.8%. Carter, 3%. Bush, 1, 3.2%. Bush, 2, 4.6%. LBJ, 6%. By the way, Lyndon Johnson has been in last place regardless of how the numbers are calculated, and George W. Bush has had the second worst numbers. For all intents and purposes, the above numbers are how a libertarian would rank the various presidents, since both domestic spending and military spending are part of the calculations.

So let's look closely at how a conservative would rank the presidents, which is a simple exercise because all that's required is to remove military spending. Here are the numbers, showing the average inflation-adjusted increase in overall domestic outlays for various presidents. Still excluding the one-time bailouts, of course. By this measure, Reagan easily is in first place, though it's worth noting that three Democrats occupy the next positions, though Obama's numbers are no longer impressive while Republicans along with LBJ get the worst scores.

Domestic spending, non-TARP. Reagan, 0.6%. Clinton, 2.5%. Carter, 2.8%. Obama, 3.3%. Bush, 2.0%. Bush, 3.9%. Bush, 1.0%. LBJ, 6.5%. Nixon, 8.4%. The bottom line is that Reaganomics was a comparative success, but should we also conclude that Obama was a fiscal conservative? I don't think he deserves credit, but I won't add anything to what I wrote above.

Instead, I'll simply note that Brian Riedel of the Manhattan Institute has a good analysis of Obama's fiscal record. Here is his conclusion. "It is important to recognize that Obama did not stop trying to expand government after 2010. The president's eight annual budget requests gradually upped their 10-year revenue demands from $1.3 trillion to $3.4 trillion, while proposing an average of $1.0 trillion in new program spending over the next decade.

His play, in short, was to gradually trim the budget deficit by chasing large spending increases with even larger tax increases. The Republican Congress stopped him. My assessment? Obama's most important fiscal legacy was a sin of omission. Despite promising to confront Social Security and Medicare's unsustainable deficits, the president refused to endorse any plan that would come close to achieving solvency.

This surrendered eight crucial years of baby boomer retirements, while costs accelerated. With baby boomers retiring and a national debt projected to exceed $90 trillion within 30 years, this was no small surrender. In other words, the relatively good short-run numbers were in spite of Obama, and the long-run numbers were bad and still are bad because he chose to let the entitlement problem fester.

But he was still better, meaning less worse, than Bush 1, Bush 2, and Nixon." End of article by Dan Mitchell. Now, I read those two articles in their entirety to you, at the risk of losing many listeners through them, to demonstrate to you the problem. And the problem is that now there seems to be no check, not even a debate.

That to me is not obviously the problem, but a major problem. That to me is the most concerning thing about last week, the night of fiscal infamy, as David Stockman referred to it. When you have Republicans with the authority and the power and the political power to line up and pass gargantuan tax cuts, and then you have Republicans willing to line up with Democrats and pass gargantuan spending increases, we have a major problem.

I thought the Babylon Bee article, Babylon Bee, of course, a popular satire site. I thought the Babylon Bee article summed it up nicely. This is about an accurate news article. It's a shame it has to come from a satire site. Here was the headline, "Republicans Announce Plan to Pretend to Be Fiscally Conservative Again the Moment a Democrat Takes Office." Washington, D.C.

During a budgetary discussion Friday, Republican lawmakers announced a plan to pretend to be fiscally conservative again if a Democrat takes office again in 2020 or 2024. The GOP said it would begin to decry deficit spending and the $20 trillion debt in order to win votes as soon as political power swung back to the opposing party.

"The second a Democrat is back in the White House, we will once again start yelling about fiscal responsibility," Speaker Paul Ryan said in an address to the House of Representatives Friday. "For now, we will continue to vote for unsustainable and irresponsible budgets that your children's children's children will pay for for centuries to come." At publishing time, Republicans further announced they would pretend to oppose giving Planned Parenthood a half billion dollars year after year once they need conservative voters' support to regain their offices.

End of Babylon Bee article. Go on. Satire. That's a pretty accurate summary though. So what can you do? What can you actually do? Because I don't want to just be black and angry today on... I can hear a friend of mine's voice ringing in my ear about my black joke, unintentional black joke.

I don't want to be black in mood and angry in today's show. I want to talk about some solutions. And here are some potential solutions. And as I get to them, I want to give you just a tiny bit of insight. I probably have a different perspective on some of these things based upon some experiences that I have that are not the norm in the United States of America.

I, in many ways, do reflect common US American culture. I have been part of common US American culture, but I've been fortunate to have a bit more of an international perspective than perhaps some other people, especially more than many other US Americans who tend to be culturally more insular and inward focused than global in focus or global in experience.

I can't claim much credit for it. A lot of that just comes from how I was raised and who I was raised by. My parents, when they were... Long before I was born, my parents worked as international missionaries broadcasting Christian radio programs behind the bamboo curtain into communist China.

And in their work living in Asia, in their work, they would frequently host people in their home who were enemies of the state, smuggling Bibles into China at the risk of their life. This was a normal thing. And so growing up, they knew many of those people. They've seen the impact of oppression and totalitarianism.

That kind of was normal. I have today experiences from around the world that are very current, that are a little bit different than I think many people. For example, I'm involved with some people in an African country and recently... It was in Kenya. Recently, there was a very contested political election in Kenya such that this particular place, they had an overnight increase in local food prices of five times.

I want you to think for a moment, what would happen if due to political unrest and political instability, your food prices in your local supermarket increased by five times? If you spend $500 a month, you immediately have to spend $2,500 a month to feed your family. But let's make it worse because if you're spending $500 a month to feed your family, there's quite a room for luxury in there.

Let's say that you've already cut your food bill to the absolute bare subsistence, which is how they live, living on a little bit of rice, a little bit of porridge, a little bit of grain, and about a gram of meat here or there as it can be spared, and now make a 5x increase in food prices.

That was this year with friends of mine in Kenya. With the political violence and the political unrest with friends of mine in Kenya, there were hundreds, hundreds of people who had their homes burned for no other reason than they happened to be from the wrong, so-called the wrong tribe.

I have one friend of mine who wound up with over 300 people living in his home. And no, that's not an overstatement. He had a large home, but they put 300 people, stacked them in the barn, stacked them in the yard. But all of these were people who had fled their homes due to political persecution in Kenya.

This is in the past few months. This is today. This is current. Now, it is in Kenya, but that's today. That's not ancient history. That's a real situation. He still has over 100 people living with him due to political violence. They've been rebuilding the houses, systematically trying to get people over.

But it's not just the loss of property, it's the loss of life. One of the men had gone back to the village where they lived to find out if it was safe to return and was killed by the political opposition because he was there. That's today. That's the past few months.

That's a situation that I'm actively involved in. I have other friends who live in other places in Africa. It's not just Africa. I have a friend of mine from Venezuela. Talk about a nightmare. When I was in college, I had a bunch of lefty socialist college professors who held up Venezuela as the paragon of socialist success.

Well, fast forward 10 years and none of them have yet recanted of they're trying to teach me that Venezuela was the way the government should be run. As the country implodes, the country implodes, the hospitals are broken, there's no food available, people are robbing trucks on the streets just to try to get a little bit of food, the exits are clogged.

The Venezuelan government says, "Oh, we can't print passports because we ran out of paper and ink." Uh-huh. Yeah, sure. So you've got massive lines of people trying to get out of the country, but the Venezuelan government says, "We can't print passports." Well, here's one for you. You think it's all Venezuela?

US IRS this month will now begin enforcing a new law that was passed a year... No, by end of 2015, a couple of years ago, a new law where if you owe the IRS large amounts of delinquent debt, over $50,000, the IRS will begin denying passports to you. So look how the government people do it.

They say, "Well, we're going to put up borders. We're going to build a wall, right? Because we got to keep the bad people out." Yeah. So there's a giant wall that goes up, and now you've surrendered your right of free travel to a government that stands up and says, "We're going to keep all the bad people out." And now the exact same government to whom you every year by law are required to disclose all of your financial transactions, to disclose every dollar of income that comes into your hands, to disclose every single person that you gave money to, this exact same entity that requires you to disclose where your money is.

After all, got to have that report on how much money is in your IRA and what it's invested in, and I got to make sure that every person that you do business with sends in a paper to the IRS. That exact same IRS that pays a whistleblower a percentage of the taxes if you cheat on your taxes and then somebody rats you out to the IRS, they're entitled to a percentage of the collections from you.

That exact same IRS that has been proven to use their power for political targeting, proven. Before the 2012 election, senior IRS executives, most notably Lois Lerner, the head of the IRS department that oversees the activities of tax-exempt groups, starts singling out conservative-leaning organizations for extra attention, investigations, and harassment.

Not because they thought they were violating the rules, but because they had words like Tea Party or Patriot in their name. And then, of course, instead of actually exposing it, Lois Lerner stages an event at a tax law conference, uses a planted questioner in the audience in order to allow her to disclose the issue on her terms.

And, of course, all of the emails disappear and walks free. And the worst thing about it, nobody cares. All of the liberals and the Democrats that said, "Oh, it's just the conservative people. After all, they're nasty racists anyway." Well, how does it feel when President Trump has control of the IRS?

Kind of stinks when there's a switch of political power, doesn't it? Now, I'm not aware of any allegations of us having done that, but, of course, I doubt it would surprise any of us to hear such allegations. The point is that that exact same IRS today, if you owe them over $50,000, will deny your passport application and disallow you from leaving the country.

And you voted for it. You voted for it because you wanted a government official standing at the border saying, "Papers, please." Friend, we deserve what we got. We deserve what we're going to get. Now, I told you this was not going to be a fun show, but we deserve it.

Now, you look for solutions. I don't know of a single solution on a political space. I don't see it. If we go through almost every single area of society, I can find...this is just the tip of the iceberg in problems, and I see no political solutions. You say, "Financial solution?" Uh-huh.

Show me. Show me the financial solution. Show me the serious proposal by a serious economist. I don't even care if they are full-throated Keynesians. Just show me a serious proposal of anybody who thinks that we could ever even stop running a deficit. It's all games, and the day of reckoning will come.

Now, when will it come? I don't know. How long can we keep pushing this snowball downhill? I don't know. A decade? A couple of decades? I have no idea. But I do know this. I used to listen to people who would make dire warnings about the future on different political issues, different fiscal issues, and I used to think, "Nah, they're overstating things." That's a little bit excessive.

It's probably not so bad. I don't like to be a dire extremist. It's not very fun to be an extremist in today's world. I don't particularly like that reputation. But in hindsight, when you actually go back and you look and you say, "Wait a second. Were they right?" You know what you find?

They were right, but they were too optimistic. Things can change faster than you ever believed. So what do you do? Well, here are just 10 practical things that are the best I can come up with that I think are actually useful. Number one, build yourself into a stronger person.

And I mean that in the fullest sense of the world. You can't predict what happens out there, but you can influence how strong you are to deal with what happens out there. If I'm completely wrong and I'm indulging my paranoia, my catastrophism in today's commentary, you'll still be better off if you focus on building yourself into a stronger person.

Now, when I say stronger, I mean stronger in every sense of the word. Make yourself physically stronger. I always love the quote from Mark Ripetoe, he always says, "Strong people are harder to kill." It's true. Strong people are harder to kill. So make yourself as strong as you're able with your physical strength, with your physical health.

Make your body as strong and as competent as possible. Make yourself mentally strong. Challenge your ideas, challenge your positions, challenge your arguments, develop the skill and the practice and the habit of challenging yourself and defending your ideas. Develop your personal virtues, your self-discipline, your integrity, your work ethic. Whatever being a strong person means to you, do it.

Develop psychological strength, spiritual strength, every bit of strength that you can come up with, but build yourself into a stronger person. Because here's where I was going when I was trying to give some of those examples of scenarios that I've been involved in. The strong survive no matter how terrible the circumstances are.

I have a friend of mine who had a business in the Southern Philippines. This friend built a cell phone tower. It was a good business. So established some agreements to bring in broadband and digital service to the place, borrowed money, built a cell phone tower. There was good demand.

It was a good business. And then there was a massacre by some of the Islamic terrorists there in the Southern Philippines in the town. I think over 40 to 50 people were killed, and it almost instantaneously destroyed the island, destroyed the economy. My friend lost his tower, lost his business, and wound up fleeing with his family in fear of his life.

Had to buy protection from the leader of the Islamic terrorist organization to allow him and his family passage out of the area. It was a nightmare. But you know what? He's still alive, and he's still kicking, and he can rebuild. In all of the circumstances that I kept describing, my friend from Venezuela, a friend from Kenya, all of these people, they're still able to work.

They're still there. Because in every war zone, in every place of catastrophe, you still are going to wind up with people. And the strong survive. The strong work at it. So build yourself into a strong person. Focus on it. I'm preaching to myself. I need to be continually focusing on building myself into a strong person.

Because the circumstances that you and I face in the coming decades will be just like circumstances that other people have faced in past decades. But in the hard times, there are opportunities if you're prepared for them. That's number one. Build a strong person. Number two, build a strong family.

Build a strong family. When structures of support fall apart, we all fall back on family. Now, this is actually one of the major indications of catastrophe in modern culture. Because families have become increasingly weakened and splintered, people place more of their hopes and their needs on government. But government cannot bring people together.

The most that government can do is ensure justice for victims and ensure liberty. That's about it. I feel like I have almost nothing in common with many other US Americans. People want to get me all wrapped up in nationalism and American patriotism. I have more in common with my friend from Venezuela than I do with my next door neighbor.

I have more in common with my friend from Kenya than I do with the person across town who just sees the world in a radically different way than me. And so this is one of the reasons for the increasing pressure being placed on political systems. As families and local communities disintegrate, there's more and more pressure on the political system to solve it.

Well, when the political system falls apart, when the federal government cracks up and goes bankrupt, you're going to fall back on family whether you like it or not. We always do. So how strong is your family? When your mom and your dad's Social Security checks stop coming in, they're coming to live with you.

So how strong is your family relationship with them? When your Social Security checks start bouncing and the Medicare doctor will no longer see you and you can't be physically strong enough to stand in the lines to see the one or two who will, you're going to move in with your children.

How strong is your family? If you build a strong family, then you have a support network. You can support one another. Where are you going to go when your business goes belly up and you need money? You need to go to family. So don't worry about politics. Build your strong family.

Number three, build a strong local community with people who live near you. Physical, in-person communities. You and I can't affect people in a state on the other side of the country, but we can talk to our neighbors and we can affect our neighbors. We can engage with our neighbors.

We can encourage our neighbors. One of the most worrying trends has been the total collapse in the United States of the formerly strong local civic organizations. You go read Robert Putnam's book, Bowling Alone, and he just lays it out. And that's a decade old, more than a decade ago that he wrote that book.

Now, there are other things that have taken the place of that to some degree, but build a strong community, a strong local community. Now, those three things are a lifetime's work. Building a strong you, building a strong family, and building a strong local community, those are lifetime endeavors. But the stronger those things are, the better and the more support you'll have.

Number four, build a strong financial position in your personal finances. In short, work to have lots of money and no debt. The stronger you are, the more easily you can weather storms. Listen again, I am not predicting stock market collapses. I don't have a clue what the stock market's going to do.

The ability for companies to engage in markets all around the world and to sell products is powerful. That economic enterprise results in profit. That profit is the result of thousands and thousands of people working together to create products that people want. I am not predicting that because the US federal government can't get its act together, that all of a sudden Coca-Cola is going to stop selling Coke.

What I am predicting is that disruption in society will continue to get worse and worse. And the stronger your personal financial position, the better. Set a goal of having lots of money and no debt. "So Joshua, that's simple." Yeah, it's simple. But set a goal of having lots of money and no debt.

And the stronger your personal financial position is, the easier life storms will be on you. If you're broke and deeply in debt and you get a flat tire on your car, it can be a catastrophe. There are many people for whom that flat tire would put them out on the street because they missed their rent payment, they get evicted from their apartment, and now they're out on the street and they can't figure out how to rebuild things.

But if you have money and no debt, then now your personal tire need is no longer a catastrophe. So four, build a strong financial position in your personal finances. Number five, build a strong performance in your job. Your income is the single most important thing that will keep you going through times of economic hardship, through times of economic calamity, through recession.

Your income is vital. As long as you can sustain your income, you can weather through. If you have income, you can make different choices. You can cut your cable, you can make different choices and buy cheap food instead of fancy food, as long as you have income. If your income disappears, you've got problems.

So your income is the most important thing for you to focus on to keep you going through economic calamity. So you're going to need to build a strong reputation for performance at your job. Being a valuable worker, valuable to the company, making a difference on the job is crucial.

While you're doing it, build a strong network to help you easily transition to another job, a new job if you need one. A strong network will help you in your job and it will help you get a new job when you lose yours. This may be a good time for you to go back and listen to episodes 192, 193, and 194 of Radical Personal Finance.

That is a trio of shows dedicated to this topic. 192 is called Recession is Coming, How to Not Get Laid Off in the Next Recession. Guess what, friend, as I record this in February of 2018, recession is coming. You don't want to get laid off in the next recession.

Recession always comes. Recession is coming. You don't want to get laid off. So listen to episode 192. Number 193 is called Make a Backup Plan in Case You Get Laid Off in the Coming Recession, Simple Action Steps for You to Consider. Those are things that you could do today.

And then 194 is You Just Got Laid Off, Here's What to Do Next. My show dedicated to as a resource for somebody who just got laid off to say, okay, here's what I need to do next. Build strong performance in your job and a strong network to help you transition to a new job if you need to.

Number five, build a strong business if you own a business or consider building a sideline business or at least have ideas about alternative sources of income. In your business, look at it and ask yourself this question. What would happen during hard fiscal times in the United States? What happens to my business during recession?

Can I strengthen my business? Most businesses can press forward regardless of what happens in the government world. But some businesses can't. So if you're reliant on government spending for your business, make sure that you're building up a business that can continue to grow or at least you have an exit plan.

Next, six, seven, build a strong portfolio. Protect your investments. You say how? I don't know how you can do it, but ask yourself how you would do it given your investment constraints. My answer usually revolves around understanding your personal financial goals and starting with your personal finances. You can weather a 20% decline in the stock market pretty well if you're living where you want to live, you have minimal and no debt, you have money in the bank, and you have a job that pays you well.

In that situation, your investment account balance is not the most important thing for you. It's a little harder to weather that same 20% decline when you are deep in debt, trying to figure out how to move your family across the country to switch to a better job, and you're out of money and have nothing around with which to work.

So my answer is usually investment, sorry, personal finance planning. Out of debt, low expenses, high income, emergency fund. Then let your investment plans run. Now within the context of an investment plan, build a strong portfolio. Understand the diversification in your portfolio, understand the risks in your portfolio, and build a portfolio that will help you to sleep comfortably at night.

If appropriate in your investment plan, protect your investments. Protect them with insurance strategies, whether that's physical insurance policies to protect something like a physical investment, whether that's insurance strategies in terms of a trading strategy, protect your investments. Number eight, build a strong escape plan. You always need to be able to get out if you can, if you want to.

I consider that this IRS recent, the integration this month of these new IRS guidelines, one of the most appalling breaches of trust, because it starts to place constrictions on somebody's movement. I am so sensitive to government interaction, because government is always used as a tool of violence for those who want to exert violence on somebody else.

It always winds up in whoever is popular and powerful at the time being able to take advantage of the person who's weak. Don't allow yourself to get in the position of weakness if you can avoid it at all. For example, for a long time, one of the worst things about if you're behind on child support payments, many of the family courts have become weaponized against so many people, especially men.

If you wind up and you put yourself in a situation where you're behind on your child support payments for the court, now your passport has been restricted. That's not new. That's been the way it's been. The amounts of that, I think if memory is right, are pretty small. I think it's something like $2,500.

If you're in arrears on child support, you've got a problem. Make sure that you're putting yourself in a situation where you don't get there. Build an escape plan. If you need to get out of the inner city where you live, make a plan and get out. If you need to get out of an unsafe state or an unsafe region, make a plan and get out.

If you need to get out of a bad country, make a plan and get out. Build a strong escape plan so you can move fast. Open a newspaper, get online, study Venezuela. I do not think the United States of America would ever look like Venezuela. I don't. Venezuela is very different.

But I think it's important to study real life, current scenarios like Venezuela and learn the lessons. The International Monetary Fund is predicting a 13,000% inflation rate in Venezuela this year. Yes, you heard that right. I repeat, the International Monetary Fund is predicting a 13,000% inflation rate in Venezuela this year.

That's today. That's not the Weimar Republic. That's not Zimbabwe. That's Venezuela, a modern economy sitting on untold wealth as measured in natural resources with a rich and proud cultural heritage. A decade ago, I was sitting in a college classroom in Central America, listening to college professors expound the virtues of Venezuela and Hugo Chavez.

Today, a decade later, the International Monetary Fund predicts a 13,000% inflation rate in Venezuela this year. The refugees are lined up at the border of Colombia, desperate to get out. You always need to be able to get out. So build an escape plan. If you don't have a passport now, get one.

If you don't have an idea on where to go, make one up. Build an escape plan, because the easiest way to get around most problems is just leave. Number nine, build a strong homestead, a strong home base. One of the major tragedies of the modern era is that the government has been trying to disconnect the financial system from real wealth, the real things that you need.

And our houses and our land is a net consumer of financial means rather than a provider. Our houses sit empty. We heat them and cool them all day long while we're not there, or we drive in a car to go and work at a job that we don't like that's 50 miles away from where we live.

What's the point? Build a strong homestead, a place where you want to be. Build a house that you want to be in. Make your house provide for you, not just to keep the rain off, but also make your house provide your energy for you. Make your house beautiful. Make it a house filled with love.

Make it a house that cools you, that feeds you. Put a flock of chickens in your backyard. Put a dairy goat in your backyard if you want one. Raise some fish so that you can eat protein. Plant a garden with your children so they can get good microbes in their skin.

It's proven to improve their health. Build a place that you want to be. Pay the house off so that it's a stable place to live. Back it up with money in the bank and a fruit tree out front so that you can build a stable life. Your property should provide for you.

Number 10, build a strong plan for the future. Future is incredibly bright. What happens is when you're in the middle of crises, or you're in the middle of what looks like a crisis, as I sketched out with discussion of fiscal stupidity, when you're in the middle of a crisis, it's easy to forget that the dawn is coming.

But if you look back over the arc of history, what you see is that through every crisis comes opportunity. The future is bright. Every single year, the world gets better and better and better. And ultimately, when the United States of America implodes, just like all of the other empires before us have imploded, whether that's slow and painful or whether that's quick and fast, same thing, whether it's slow or fast, something else will replace it.

And by being strong yourself, by building a strong family that supports you and that you support others, by being engaged in a strong local community, by building a strong financial position in your personal finances, by having strong job prospects or a strong business, by having a well-built, strong portfolio, by having that strong escape plan to fall back on if you ever need it, and by having that strong home base to work from and to build from, then I'm convinced you may have the opportunity to be one of those who builds the next thing.

If you go and you study the life cycle of many companies that wind up bankrupt and in ashes, it's not unusual to find an employee or a handful of employees that come out of that company and get together and say, "Now that we're unburdened from the wreckage that was the previous company, now that we're unburdened from the debt, now that we're unburdened from the corporate regulations, let's build something new and better." My hope is that you can be part of that that's new and better, and me too.

That's my best summary of the ideas that I have to improve things for the future. Don't try to convince me from here on out that politics has any hope of making a difference. I haven't really thought politics had much of a difference, made much of a difference for the last decade.

I mean, man, national politics. I hadn't really thought it made much of a difference, but just watching last week with the Republicans and the Democrats and the boondoggles of the last couple of weeks convinces me beyond measure that politics has no hope. The hypocrisy from the politicians is so thick.

It's insane. It is insane. How any normal, reasonable person can think that all...can think that those people just don't just lie through their teeth. But whatever sounds politically expedient is beyond me. Maybe there were a few handfuls. Kudos to Rand Paul for standing up and speaking on the record.

I think his speech, I went and watched some of his speech. It should be required listening in my mind for most citizens before voting. I'd love to see that happen, but whatever. I just can't buy it. I'm not really sure how to end this show. I don't have a powerful, punchy ending.

I don't have any strong closing story or call to action. I just want you to be strong. I hope this is not too dark. I don't want to compare the severity of these things. But the only example that comes to me as I think about when it comes to political stuff, I wonder about the inevitability of things.

Because I think the future is not decreed in the sense that it's unchangeable. The future is open. It can be changed. I think sometimes, I don't know if you're familiar with the Rumbula massacre during World War II. It was one of the worst massacres of World War II, massacres of Jews by the Nazis, where they killed about 25,000 Jews.

It happened near Riga, Latvia. It was huge and in an evil way. But basically, the way that the events worked out is the Nazis decided that they wanted to clear out the ghettos in Riga. They came in and they made big plans. They had the people dig these big pits.

It was so evil. They brought in some people who had been really skilled in giant massacres of people previously. They brought out bulldozers and they dug these giant holes in the ground. They had to dig them with ramps so that it would be efficient to load the people down into.

Then they swooped through the ghetto and they started grabbing all the people off the street. They actually marched them 10 kilometers, something like 10 kilometers out of the city to the planned murder location. While they were marching them there, they had guards along the road. Then they had this whole system set up.

They took the people and they marched them to a place. They told them to take their clothes off. They took all their clothes off, made stacks of them. Then they marched them naked right down into the pits and then they started shooting them. They did it very systematically down in levels where they would make force the people down into the pits and make them lie on the people below them in the pits who had just been shot.

Then the guards lined up and shot them in the back of the head. They killed 25,000 people in one day. What's the point? The point is that you always wonder, is there a point along the way which if people just simply moved and fought back that they could stop the madness, stop the evil?

It's hard to believe there's not. If you think about thousands of people being marched 10 kilometers, you can never get enough guards with guns to keep that many people hostage unless the people themselves are not strong enough to fight back. Now, at the fear of using a horrific comparison, and in no way am I comparing fiscal insanity to the Holocaust, but in a way, I often think about that.

People just standing there digging their own graves. There are many accounts of Jews being forced to dig their own graves right before they're shot. You wonder, at what point in time when somebody's digging their grave, do they not just turn around and say, "No, I'm not going to do it"?

On all of this political stuff, it's like the culture of the United States is being ripped apart. You just wonder, at what point in time are people going to stop and say, "This isn't working. The violence doesn't work." I don't know. I don't know if it's possible. I hope it is.

But I do know that if you're strong, if you're a strong person, strong family, you're part of a strong community, you're in a strong financial position, you have a strong performance in your job, strong business, strong portfolio, strong homestead, strong escape plan, then perhaps you could be one of those who could either fight your way off of that road while everyone's marching to their death and you slip away, or perhaps you can be one of those who organizes the victims to stand up and say, "No, we're not going to take this." But if you're broke, you're a weak person, your family is torn apart, you're not part of a local community, you're broken in debt, you're struggling at your work, it's not going to work.

You can't be part of the solution. So don't worry about politics. Don't worry about the federal government. I don't think much of anything is going to change this year. But work to become a stronger person. Do the good that you know to do and get busy. Because who knows if Stockman's right or not, but it sure feels to me like this last week was indeed a night that will live in infamy, at least for me.

Doesn't seem many other people paying attention to it, but for me, it was the final nail in the coffin of the idea that there's anybody in government who wants to spend less money. Don't just dream about paradise, live it with Fiji Airways. Escape the ordinary with Fiji Airways Global Beat the Rush Sale.

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