If $8 trillion can vanish within 48 hours, was it ever real wealth or just an illusion?

Over the last few days, many people have been vocal in their opinions on the state of our economy. While many valid points have been made, the opposite is also true. Unfortunately, many arguments are based on emotions and hyperbole rather than economic data and fundamentals.

So what’s the truth?

The last 15 years were an anomaly. Easy money, cheap credit, rampant speculation — leverage everywhere.

Financialization felt like prosperity, but it wasn’t sustainable. And now, we’re seeing the consequences.

It’s complicated.

Imagine standing on a beach, looking at a huge sandcastle you built. It seems strong, impressive, and the tallest one around.

People walk by and admire it. You feel proud, but you know the truth — if the tide comes in, that sandcastle can disappear in minutes.

That’s how the financial markets work.

This week, something big happened. The U.S. stock market lost about $8 trillion in value in just two days. That means people who looked at their 401ks on Monday saw much less money than they did on Friday. Their “wealth” was shrinking fast.

I’m not averse to traditional investments on Wall Street. The problem is that they have become the default retirement model for most Americans, and that’s where the danger lies.

So, here’s the big question:

If something can disappear that quickly, was it ever really there? That’s what we call the “wealth illusion.”

Most people think of wealth as a number they see on a screen—their investment account, stock portfolio, or home equity. When the number is high, they feel wealthy. When it drops, they feel poor, or at least nervous.

But here’s the truth: Wealth isn’t what you see on a screen. It’s what gives you freedom.

True wealth is about options. It’s about having the freedom to choose how you live, who you spend time with, and whether you work or not. That kind of wealth doesn’t vanish overnight.

That’s the difference between real wealth and paper wealth. Markets are run by people, and people are emotional.

Prices go up when people are excited or feel confident about the future. They go down when people get scared or uncertain. Many of today’s financial systems are built on feelings, not facts.

There’s too much borrowing, too much guessing, and too much “hope” built into the numbers. We call this financialization. It’s like building skyscrapers out of Jell-O and then being surprised when they wobble.

If a sandcastle can wash away, what should you build instead? You build on bedrock. Solid ground.

Real wealth, in my opinion, comes from hard assets:

• Real estate you control
• Commodities including oil, gas, and minerals
• Precious metals like gold and silver
• Private investments that produce income, not just paper gains

These things can still go up or down in value, but they don’t vanish in two days because someone got scared. They’re real, tangible, and often produce steady income you can count on.

So where did the $8 trillion go?

It’s not like someone grabbed it and ran. That “wealth” was never money sitting in a bank vault. It was a temporary belief — a price on paper based on what people thought something was worth at that moment.

When opinions changed, the numbers changed—that’s all. The people who had real cash flow from real investments still got paid. Their wealth didn’t disappear; it kept working for them.

You must build wealth differently if you want security and freedom in an uncertain world.

That means:

• Stop confusing big account balances with true stability.
• Invest in things that produce income, not just “paper gains.”
• Choose assets that don’t depend on emotion or hype.
• Focus on freedom, not just retirement.

In other words, don’t build your future on a sandcastle. Build it on solid ground with assets that last, income you can trust, and the kind of wealth that doesn’t vanish when the tide turns.

So how did we get here in the first place? By ignoring that and chasing flash over substance.

Over the last several decades, our economy slowly transitioned from one based on solid economic principles and assets with intrinsic value to a more emotion-based economy driven by peoples’ sentiments at any given moment. Emotions are real, but they often betray us.

Numerous factors are at play here.

Quantitative easing, or QE, occurs when the Federal Reserve prints more money and injects it into the economy. The stated goal is to increase economic activity to stave off a recession, and while it can have that effect in the short term, the long-term effects are more insidious.

Essentially, the increase in the supply of money reduces its value, leading to inflation. For context, this has resulted in a 25% loss in purchasing power over just the last 10 years and over 96% since 1913.

To make matters worse, a majority of the additional money injected into the economy is typically used for increased government spending, which is extremely wasteful and non-productive.

Sometimes, a much smaller, almost meaningless percentage is sent to citizens in the form of a stimulus check, like we saw under the pandemic relief program. All of this further increases inflation, eroding the value of the U.S. dollar. It also adds to our deficit, which piles even more on top of our already monumental notational debt.

To put this all into perspective, we need about $7 trillion per year to run our country, but we only take in about $4 trillion per year, piling onto our already staggering 36 trillion dollars of national debt—and the House just recently put forth a bill to raise the debt ceiling by another $4 trillion.

We’re borrowing money to spend it at an insane pace, and spiraling deeper into debt in the process. The worst part is that the interest on that debt now exceeds our entire military budget and it’s growing every day.

To make matters worse, our housing market has been artificially inflated throughout the Biden administration by not only hiding delinquencies, but also paying the mortgages using taxpayer dollars to keep those delinquencies off the books.

The problems here are twofold. First, this keeps home prices artificially inflated by not allowing the free market to adjust naturally. Part of that is also due to too much easy credit sloshing around in the economy, but that’s a topic for another day. And second, this increased government spending further increases inflation. Not to mention that this is outright fraud that was perpetrated to save face for the administration and tenured politicians.

As I’ve been saying for years in my column here at Newsmax, the underlying economic data shows that the economy has been crumbling for a long time if anyone had bothered to look. Unfortunately, many in the media were all too happy to play along with politicians to perpetuate the lies that the economy was strong when it was actually the complete opposite.

Jobs are another part of the equation, and over the last several years, we’ve seen a troubling trend where a rosy jobs report would be released, and then a few weeks later, a “correction” would quietly be released with significantly lower numbers. The initial report often claims significant job growth, while the subsequent “correction” would show substantial job losses. Of course, the media would cover the initial report but never the actual data that would later be released.

When we look at GDP, which is supposed to be the key indicator of America’s economic strength, it is misrepresented because a shocking 23% is government spending. Again, non-productive.

That equation creates a vicious spiral because cuts to government spending will always result in a subsequent drop in GDP.

It may sound cynical, but that was the plan all along. Think about it like this: When cuts are made to reduce our deficit and fight inflation, our GDP will decrease, sparking fear among citizens. That gives politicians all the ammunition they need to get voter support for more government spending, and a willing media is standing by to carry their message far and wide.

This is why getting meaningful spending cuts’s been so challenging, and I believe it’s all by design.

So, what is the answer if “paper wealth” is suspect and can vanish overnight?

Focus on what you can control. You can’t stop market crashes, geopolitical shifts, or tariff shocks. But you can build resilience:

• Invest in yourself — Skills are recession-proof.

• Hard or tangible assets for diversification.  “Things you can touch.”  Land, minerals, precious metals, real estate, commodities, or energy (oil and gas).

• Build your network — Real opportunities live in relationships.

• Guard your attention — Discernment is a superpower.

• Leverage wisdom over hustle – Insight > effort when the tide turns.

Go against the grain. If there’s one thing I’ve learned, it’s this: The crowd is rarely right at the turning points.

This is the time to think independently. To seek alignment with people who live intentionally and

reject the hype-driven, leveraged-up, speculator’s mindset.

It’s not about more money. It’s about clarity. A plan that reflects what actually matters to you and your family.

The reset is here. Not in theory. Not "someday."

Now.

Build something real. Not flashy. Not fragile. Just fundamentally sound.

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Dr. David Phelps created Freedom Founders to help its members achieve the freedom they wanted in their lives by building the necessary financial foundation. He is a noted financial expert who is regularly cited by the media, and recently helped the FL Dept. of Education develop its new financial literacy curriculum.