Report: Great Depression on our Doorstep

By Wayne Mulligan, on Thursday, January 29, 2015

“Let’s get one thing clear: The economy is never truly coming back.”

What misguided “expert” uttered these words?

Jim Clifton.

Clifton’s the CEO of the research company Gallup, famous for its public opinion polls.

Jim, not surprisingly, is basing his argument on data from a recent Gallup study.

The study concluded that, since 2008, American entrepreneurship has been dying:

Since 2008, 400,000 new businesses got started...

But 470,000 existing businesses shut their doors.

Yes, these are frightening, unfortunate statistics.

But they don’t lead to the conclusion that the U.S. economy is “never coming back.”

I’ve got a bone to pick with you, Mr. Clifton...

And it’s my belief that a recent move by the SEC will make you eat your words.

The Link Between Entrepreneurship & The Economy

70% of GDP growth comes from consumer spending.

If consumers don’t have jobs, they don’t spend.

According to the SBA, 55% of all jobs (and 66% of all new jobs) are created by small businesses.

In short, less small businesses means less jobs, less spending...

And a weakened economy.

Dead Wrong

Clifton’s right to sound the alarm...

But he’s dead wrong about the economy not coming back – and surprisingly, we’ve got our government to thank.

Look – I don’t praise our current administration very often...

But as soon as Congress recognized the drop-off in entrepreneurship and job growth, they sprang into action:

In 2012, with bipartisan support, they passed a set of laws called The JOBS Act.

In brief, the JOBS Act helps new businesses get off the ground.

The JOBS Act for Entrepreneurs

Since 1933, thanks to a set overzealous securities laws, it’s been illegal for entrepreneurs to “publicly” raise funds for their company...

They could only raise capital from people they knew.

Furthermore, those people needed to be “accredited investors” – which, under 2014 guidelines, means earning $200,000 per year or having a net worth of $1 million.

The JOBS Act changing everything.

First, it allows entrepreneurs to publicly advertise that they’re raising capital.

And second, when the final piece of legislation passes later this year, it will allow them to raise money from anyone – accredited or non-accredited.

What The JOBS Act Means For You...

So, you see, the JOBS Act brings exciting change for investors like you, too:

Now you’ll be able to invest in early-stage, private companies...

Companies that might turn into the next Microsoft or Google.

This is exactly how folks like our friend Howard (who Matt wrote about yesterday) have been able to turn small investments of $5,000 into $2 million.

Is it “easy” to get homerun returns like this?

No, but it’s certainly quite possible.

And if you look at the statistics from non-profits like the Kauffman Foundation, you’ll see that regular investors like you are making 27% annual returns...

That’s three or four times higher than the average returns of the stock market – and it’s enough to double your money every few years.

And What It Means for Our Economy...

But the JOBS Act is bigger than any one of us individually...

This set of laws has the power to reverse the start-up “death rate.”

You see, professional investors already invest $60 billion a year into new start-ups.

If individuals like you shifted just 1% of their investable assets into start-ups, an additional $300 billion would be invested.

That would mean five times the number of new companies getting started...

Five times the number of new jobs.

And a reinvigorated America.

I’m Long America

And that’s why I disagree so strongly with Jim Clifton’s conclusion.

Sure, one could argue that we’re due for a stock market correction...

Or that our currency will fail once our government stops propping up the economy.

But the lifeblood of our country is small businesses and innovation.

Thanks to the JOBS Act, nearly $700 million was invested into start-ups in 2014.

Thousands of new businesses were able to get off the ground.

And once the final piece of the JOBS Act passes, those millions could turn into billions.

So while I’m avoiding the stock market and the dollar at the moment, I’m actively looking for promising start-up opportunities to invest in.

I’m going long America.

Help Me Fix America

To see the same early-stage deal flow that we do, check your inbox every Monday morning at 11 AM Eastern...

That’s when we send a weekly digest of start-ups from around the web that are raising capital.

If you’re not accredited, you won’t be able to participate quite yet.

But remember: that’s about to change very, very soon.

And then we can all help fix America.

Expect more information from us on the JOBS Act in the coming weeks.

Happy investing.

Best Regards,
Wayne Mulligan
Wayne Mulligan


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