It's Happening Again and What EVERYONE is Missing

Hey there, real quick, before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience Live. It is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. According to cbo, the Congressional Budget Office, the US Government will soon spend more on interest than it does on national defense. And that's happening while the markets are hitting record highs. Everyone's screaming about AI like it's our financial salvation. That gap between what the numbers say and what people believe is the real danger here. So in this episode, I'm gonna decode the data behind the noise, the debt spiral, the consumer stress that nobody's talking about, the concentration risk hiding in your index funds, and why these signals look eerily similar to the moments right before past market cracks. I've analyzed this stuff for over 30 years as a CPA, as an advisor, as an investor. I want to walk you through what you're not being shown, what it means for your future, and more importantly, how to protect yourself against it. All right, let's break this open. This is building your money machine, where we help you master your money, eliminate financial stress so you can live a life of choice. Because earning more doesn't make you free, but a money machine does. And I'm your host, Mel Abraham. Let's go do this.

Listen, there's a pattern that most people miss until it's too late. And no, it's not AI. It's not the stock market. It's not interest rates. Here's the real pattern. People pay attention to the noise and they ignore the actual fault lines. Every single major financial shift I've lived through, and I've lived through four big ones and even more when I was a child that had the exact same structure. A shiny new thing that people obsess over. A bunch of quiet forces that everyone ignores. And then, bam. The floor drops out. Think about it. The.com, 1998 to 2000, the housing crisis 2006 to 2008, pandemic mania in 2020-21, and now this moment we're living in right now. Most people don't see it. They feel it. Things feel off, but they can't. Articulate it. So today, let's start to break it down. What's really happening. Not the media version, the real version. Let's look at the historical patterns that most people are blind to and what you can glean from what you can take from it. Let's look at the data behind it that's cited and verifiable. And let's understand the emotional and financial traps that people fall into so you understand what to do, what not to do. And in the end, let me give you the recipe to make sure that you're not only protected, but you're prepared, and you can prosper on the other side of it. Okay, so here's the deal. Bottom line is, I've seen this movie before because from the dot com era, you start to look at things. And BY Back in 1998, 2000, the world went absolutely feral for anything that ended in dot com. I mean, if someone literally launched bananapeel.com, they literally could raise $40 million just by typing the word Internet in their business plan. That's it. And literally everyone thought they were geniuses. I had friends that were paper millionaires, and I put that in quotes. I mean, the reality is that most of these were millions that existed for maybe three weeks and then the bubble burst. Listen, according to the NASDAQ historical data, the index itself fell 78% between March 2000 and October 2002. 78%. Almost 80% gone. Most people don't know this, but half of all the dot com companies disappeared completely during that crash. People lost homes, people lost retirements, people lost marriages. And here's the part that most people forget to mention. The Internet was real, but the hype cycle was delusional. Sound familiar? Okay, I got hit too. Okay, I wasn't wiped out, but I definitely got hit. All right? And I told myself, mel, you gotta learn to see through the excitement and look at the underlying system, because the excitement is how you get rich fast, but the systems are how you stay rich permanently. And that brings us to some of the things that we're dealing with today. The obvious story, if you will, is AI. AI is the current shiny object. And trust me, it's real, it's powerful, it's transformative. But the investing story around AI, that's where it gets a little messy. Okay, let me give you some facts. Not opinions, but facts. Fact one, AI spending is astronomical right now. Okay? Speaking directly from. From public earnings reports. Looking at their earnings reports, Microsoft is planning on spending over $80 billion in AI and data data Center Spending. Amazon is announced that they're going to spend 100 billion for AI and cloud. Meta expects to pay spend 60 billion in capex for data centers and AI. Global AI spending is forecast to hit $500 billion by 2026, according to the IDC International Data Corporation. And the International Energy agency reports that AI driven electricity demand could reach as much as $3 trillion annually, depending on adoption. Now those are real numbers, not YouTube hype. And here's the truth. They're not spending that money because AI is profitable. They're spending it because not spending it is dangerous. This is not innovation. This is literally an arms race. Okay, Fact two, market concentration is the highest in modern history. When you look at the S and P global index, the top seven companies make up over 36, 37% of the entire S&P 500. Let me put that in English for you. If just a handful of CEOs catch a cold, your 401k is going to get long. Covid. I mean, the bottom line is that there is such an inordinate concentration of wealth or value in the stock market in seven companies that it is scary. Fact three, AI profitability is unproven. Even OpenAI, they're valued at $500 billion and they're still losing money monthly based on the reporting that they've done in their investor briefings. Okay, that doesn't mean AI is a scam. Just don't, don't get me wrong, it just means that the valuations are running ahead of the profits, just like the dot com, just like the housing, and in fact, just like crypto in 2021 and NFTs. But again, here's what I want you to understand. AI is not the real story, even though it's the one that's catching all the headlines. It's the distraction. Because underneath it all, that's where things get serious. Because underneath it all is where the monster's hiding under the bed. Okay, let's talk about the first. The first element, and what I'll call it is the hidden force. The thing that we don't see is the debt spiral we're in. Okay? Most people will hear the term national debt and they shrug. They shrug. Let me explain some things so you start to understand what's going on. The CBO, the Congressional Budget Office, said that the US national debt is at $34 trillion and is projected to reach $50 trillion within a decade. Interest payments this year alone are approaching $1 trillion. By 2025, 26, we will be spending more on the interest on the debt than on national defense. And by the early2030s, interest payments could surpass Social Security. We're, and this is the thing that we need to realize. We are literally borrowing money to pay interest on previously borrowed money. And if I tried to do that in my business, being an accountant, okay, My other accountant colleagues would tackle me. All right, Debt structure. This debt structure locks us as a country into persistent inflation, which is a parasite to your wealth. It locks us into higher long term taxes because one of the only ways they're going to be able to right this ship, it locks us into the, the, the promise of possibly printing more money, which puts inflation back in the game. And a, it puts us in a fragile financial foundation. Okay? This is one of the most important forces shaping the next decade. And almost no one is really talking about it or taking it seriously. Hidden force number two. And that is what I call the productivity mirage. People believe that AI will instantly boost productivity, but that's not how technology works. Historically, when you start to look at the research from the Federal Reserve bank and all that stuff, electricity took 20 years to impact productivity. Computers took 15 years to impact productivity, and the Internet took 10 to 12 years. So when analysts are looking at it and saying AI will double productivity by, by next Tuesday, I'd like to sell them a bridge, okay? Because right now companies are laying people off. They're spending billions on AI, they're taking on debt to fund growth, and they're hoping that profits will catch up. That's not productivity, that's financial caffeine. And it works until it doesn't. And I'm not, it's not about fear mongering, it's about you looking at the reality of it. Because look, I'm investing in these markets too, but I'm investing with my eyes wide, wide open. Okay, I want you to do the same thing. Hidden force number three. And we're going to talk about how do you counteract these and prepare for these? Is that the strong consumer lie? See, the media keeps insisting that the consumer is strong. Really? Based on what? Look at some of the studies or the Federal Reserve data. Okay. Credit card Debt is at $1.3 trillion all time high. Delinquencies are rising fastest in the 30s, the 30 to 30 ages. Delinquencies are rising like crazy. Savings rates are the lowest since 2005. So we have more debt, more delinquencies, and we have lower savings. How are we going to get financially ahead? Auto loan delinquencies are the highest since 2009, 60% of Americans live paycheck to paycheck, according to Lending Club. Holy moly. Okay, people aren't spending because they're doing great. They're spending because they're drowning. They're using debt to fund normal life. Groceries, gas, rent, insurance. Heck, we can do buy now, pay later for doordash. There's something wrong with that. This is not resilience. This is quiet financial collapse. Okay, hidden force number four. Corporate earnings are masking weakness. Okay, earnings look great, people say, but dig into the data. Let's look at it. Which I do weekly. I look at company earnings weekly, and I see the cracks. Okay, the S and P global.

Fact set says this unit volume is down in many consumer categories. In other words, the number of units people buy is down. But it's the price increases, the inflation that's masking the shrinking demand. So it looks like revenues are up, but the revenues are up because price has increased, not demand. Demand has decreased. And we're seeing that. And it's hidden buybacks. So companies that buy back their stock from shareholders are artificially boosting earnings per share. Think about this. Earnings per share is basically your earnings divided by the shares outstanding. And they want to see an increase in earnings per share for Wall Street. And one way to do it is to earn more. But the other way to do it is they buy back shares of stock. So now there's less shares of stock. When you do that math, and the earnings per share look like they went up. Layoffs are pushing margins up in the short term, and revenue growth though, is slowing for many of the tech companies. So this is not a thriving economy. This is a made up Instagram filter. Frankly, if we're not careful, that leads me to hidden force number five. And that is the corporate lifespan is shrinking. This one shocks people. According to McKinsey, in the 1960s and S&P 500 companies, they literally stayed in the index for about 33 years. Today it's about 15 years. But they're also seeing a shrinking expectation where they think soon It'll only be 12 years. Technology.

The technological turnover is literally brutal. Which means this betting your entire future on today's winners is statistically a losing strategy. Even the mighty fall. Think about Kodak, Nokia, ge, Sears, BlackBerry, Netscape, Blockbuster. I can go through all of them. Because the history is littered with the forever companies that lasted not so much forever. Okay, think about this. Let's go back to 2008. The housing market wasn't cooling, it wasn't correcting, it was collapsing. Okay. From 2006 to 2012, the case, Shiller Data said this, home prices dropped 27% nationwide. Okay. Some markets, Phoenix, Miami, Las Vegas, they crashed 40 to 50%. People lost everything. People walked away from their homes. People emptied their retirement accounts to stay afloat. Me, I was one of the few people around that had the liquidity. Why? Because I built a system, not an identity, around the things that always go up. You know, while everyone was panicking, I was buying assets that would triple later. And the big lesson is this. When everyone else is drowning in noise, the person with the clarity builds the wealth. Okay? I think about this from a martial arts standpoint. I've been in the martial arts for decades, and I spent. I spent time. I lived and trained in Japan, and I've earned multiple black belts. And one of the lessons that stuck with me is this. You don't react to the punch. You respond to the pattern that leads to the punch. See, most people watch the fist. Professionals watch the shoulders. They see the breath, they see the stance. They see that minor shift in the weight. And right now, AI, that's the fist. But the patterns. Debt, productivity lag, fragile consumerism, concentrations, corporate turnover, all that stuff, that's the shift in the weight. That's the pattern. And most people, they're not trained to see it, and they're not seeing it. And when you start to look at this, when I went through the cancer and all of that stuff, everything in my life got violently clear. I realized systems mattered. I realize structure matters. I realize that waiting for the right time is a fantasy. And when life hits, and it will, you have to rise to your level of preparation, which means that you have to prepare for the level that you need to be at. Not your hopes, not your goals, but your preparation. And the economy is no different. So what's the real trap? And what do we do next? Okay, people aren't betting on AI. They're betting on comfort. They want certainty. And I totally get it, okay? They want something that always goes up. They want that feeling of safety. But history has shown us again and again that hope is not a plan and comfort is not a strategy. AI is not your savior. The markets are not your saviors. The government is not your savior. And when the punches come, they always do. And when they do, you don't rise to your goals. You rise to the level of your preparation. Okay? Here's what everyone's missing. Okay? No one is saying this out loud, but you don't have to predict the future to win the next decade. You just have to understand the patterns. Fragile consumers, unproven profitability, rising debt over concentrated markets, companies living on a financial caffeine, governments addicted to borrowing, and investors chasing the shiny object instead of the real signal. I might change everything eventually, but the thing that determines whether you feed your family, retire with dignity or live a life of choice, that's not AI. That's discipline. That's awareness. That's preparation. That's margin. That's emotional control under pressure. That's how you behave when everything feels uncertain. The thing that everyone is missing is this. We're not in an AI boom. We are in a fragility boom. Hiding behind the AI story. Okay, so what do you need to do? Let me give you some objective, practical, non hype, non promotional truths. Number one, keep liquidity in reach. Liquidity is your universal shock absorber. It's when everyone else panics, liquidity is calm. Okay? The prices that collapse. Liquidity is opportunity. Okay? Number two, reduce over concentration. Don't let your financial future be dependent on just seven companies. Diversification is your gift. It's your trump card. Okay? Especially when they're all chasing the same dream at the same time. Okay? And they're interacting and transacting with each other. Number three, stabilize and strengthen your cash flow. This is the time to make sure that you are disciplined and diligent about your spending and your income. This decade will reward the people with strong income, not the people waiting for the market to rescue them. Upgrade your skills, improve your value in the marketplace. Build margin and set yourself apart as an indispensable, invaluable person to the people you serve. Okay? Number four, stop using debt to survive. If you're using credit cards to get through the month, that's not failure. That's a signal. It is a stark or warning light. Do not ignore it and get it corrected immediately. Number. Number five, focus on durable assets. Not the hype, not the fads, not whatever CNBC is screaming about, but assets that create real value and have proven value over time. And even when the story changes, they have stayed the course and they've proven value. Watch the memes, watch the, the hype and the trends. Okay? Number six, Prepare emotionally for volatility. Okay? The market doesn't destroy people. Our reactions do. Okay, if you, if you expect the volatility, then you can use it. Because during volatile markets is when a lot of millionaires and wealth is built. If you fear it, it uses you. Number seven, pay attention to patterns, not predictions. You don't need to know when the Hit is coming. You only need to recognize the stance before the punch. That's how martial artists survive. That's how investors survive. That's how families survive. And it's how you're going to survive. Listen, I've lived through enough cycles.com housing, inflation, all the waves, the recessions, cancer, rebuilds, the Ponzi scheme, to tell you with complete certainty, okay, this moment that we're in right now, it's another turning point. And like every other turning point in history, people will split into two groups. Group one will say, I never saw it coming. But group two, that was the moment everything changed for me. That's what they're going to say. The difference isn't luck. It's not intelligence. It's not timing. It's preparation. It's margin, it's clarity. It's the discipline when everyone else is drunk on the excitement. You don't need to time the market. You don't need to predict the future. You don't need to chase the next big thing. You just need to prepare. Because, yes, it's happening again, but this time you're not going to miss it. You're going to be ready for it, and you're going to turn it into an opportunity. A life by choice, not by chance, starts right now. Because you're prepared now. All right? I hope this helps. I hope that this gives you a perspective and that you find this valuable. If you haven't subscribed to the channel, do me a favor, make sure you subscribe. And you know what? Share this out. This message has to get out. So we are all prepared to capture and take hold and control of our financial destiny, because I believe to the core of my being that financial freedom is your birthright. So let's just go claim it, all right? And I'm here to guide you. Thank you. And I'll see you in the next episode. Thank you for listening to the affluent entrepreneurs with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com group and I'll see you there.

And that's it for this episode of building your money machine, where we help you learn how to master your money, eliminate financial stress, and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor, go to Apple, Apple Podcast, or wherever you're listening to this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people, because I truly believe that financial freedom is your birthright, and I want to help each and every one of you claim it. Thanks so much.