The Death Of Cash? All Over The World Governments Are Banning Large Cash Transactions

Are we witnessing the slow but certain death of cash in this generation?  Is a truly cashless society on the horizon?  Legislation currently pending in the Mexican legislature would ban a vast array of large cash transactions, but the truth is that Mexico is far from alone in trying to restrict cash. All over the world, governments are either placing stringent reporting requirements on large cash transactions or they are banning them altogether. We are being told that such measures are needed to battle illegal drug traffic, to catch tax evaders and to fight the war on terror. But are we rapidly getting to the point where we will have no financial privacy left whatsoever? Should we just accept that we have entered a time when the government will watch, track and trace all financial transactions? Is it inevitable that at some point in the near future ALL transactions will go through the banking system in one form or another (check, credit card, debit card, etc.)?

The truth is that we now live at a time when people who use large amounts of cash are looked upon with suspicion. In fact, authorities in many countries are taught that anyone involved in a large expenditure of cash is trying to hide something and is probably a criminal.

And yes, a lot of criminals do use cash, but millions upon millions of normal, law-abiding citizens simply prefer to use cash as well.  Should we take the freedom to use cash away from the rest of us just because a small minority abuses it?

Unfortunately, the freedom to use cash is being slowly stripped away from us in an increasingly large number of countries.

In fact, as countries like Mexico “tighten the noose” around big-ticket cash purchases, our freedom to use cash is going to erode rather rapidly.

The following is a summary of some of the very tight restrictions being placed on large cash transactions around the globe right now….

Mexico

In Mexico, a bill before the legislature would completely ban the purchase of real estate in cash.  In addition, the new law would ban anyone from spending more than MXN 100,000 (about $7,700) in cash on vehicles, boats, airplanes and luxury goods.

$7,700 is not a very high limit, and this legislation has some real teeth to it.  Anyone violating this law would face up to 15 years in prison.

Greece

In Europe, some of the “austerity packages” being introduced in various European nations include very severe restrictions on the use of cash.

In Greece, all cash transactions above 1,500 euros are being banned starting next year.  The following is a comment by Greek Finance Minister George Papaconstantinou at a press conference discussing the new austerity measures as reported by Reuters….

“From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards”

Italy

Even Italy has gotten into the act.  As part of Italy’s new “austerity measures”, all cash transactions over 5,000 euros will be banned.  It is said this is being done to crack down on tax evasion, but even if this is being done to take down the mafia this is still quite severe.

The United States

The U.S. government has not banned any large cash transactions, and hopefully it will not do so any time soon, but it sure has burdened large cash transactions with some heavy-duty reporting requirements.

For example, your bank is required to file a currency transaction report with the government for every deposit, withdrawal or exchange over $10,000 in cash.

Not only that, but if a bank “knows, suspects, or has reason to suspect” that a transaction involving at least $5,000 is “suspicious”, then another report must be filled out.   This second type of report is known as a suspicious activity report, and it is also filed with the government.

But the reporting does not stop there.  As Jeff Schnepper explained in an article for MSN Money, if you are in business and you receive over $10,000 in cash in a single transaction you must report it to the IRS or you will go to prison…..

If you’re in a business and receive more than $10,000 in cash from a single transaction, or from related transactions within a 12-month period, you have to file Form 8300 and report the buyer to the IRS. Don’t file, and you go to jail.

The IRS isnt kidding. I had a client who was a dealer in Corvette sports cars. He told me he didnt have time to file the forms. I told him several times to file. He thought he knew better. He went to jail. So did his children who were involved in the business.

This is very, very serious.

Just because someone forgets to file a certain form with the IRS, that person can go do serious jail time?

Yes.

According to Schnepper, quite a few Americans have already received very substantial sentences for this kind of thing….

In fiscal 2004, the Internal Revenue Service initiated 1,789 criminal investigations. There were 1,304 indictments and 687 convictions — and an 89.1% incarceration rate. The average sentence: 63 months.

In fiscal 2005, the IRS started 4,269 investigations, winning 2,406 indictments and 2,151 convictions and an 83% incarceration rate. Average sentence: 42 months.

The reality is that governments around the world are getting very, very sensitive about large amounts of cash and they are not messing around.

They don’t want all of us running around with big piles of cash.  They want our money in the banks where they can track it, trace it and keep a close eye on it.

On the one hand, it is a good thing to catch criminals and terrorists, but on the other hand how much privacy and freedom are we willing to lose just so that we can feel a little safer?

And as cash becomes criminalized, are all of us going to be forced into the banking system whether we like it or not?  If we cannot pay for things in cash, what other choices are we going to have?

The truth is that the more you think about this issue, the more disturbing it becomes. 

So what do you think about all of this?  Feel free to leave a comment below.

Helicopter Ben Bernanke Says Everything Is Going To Be Okay

Don’t worry everybody. Federal Reserve Chairman “Helicopter Ben” Bernanke says that the U.S. economy is going to be just fine, and that if it does slip up somehow the Federal Reserve is ready to rush in to the rescue. That was essentially Bernanke’s message to an annual gathering of central bankers in Jackson Hole, Wyoming on Friday. Bernanke insisted that even though the Federal Reserve has already cut interest rates to historic lows it still has plenty of tools that could be used to stimulate the U.S. economy if necessary. Well, considering Bernanke’s track record, the “don’t worry, be happy” mantra is just not going to cut it this time. After all, if Bernanke and his team were such intellectual powerhouses the “surprise” financial crisis of 2007 and 2008 would not have caught them with their pants down. The truth is that just before the “greatest financial crisis since the Great Depression” Bernanke was telling everyone that the economy was just fine. So are we going to let him fool us again?

But Bernanke insists that this time is different.  This time the Federal Reserve really has got a handle on things.  During his remarks at Jackson Hole, Bernanke said that the Fed will adopt “unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.”

Unconventional measures?

Could that be a thinly veiled way of saying that Helicopter Ben and his pals will do as much “quantitative easing” as they feel is necessary to keep the economy moving forward?

Unfortunately, most Americans have absolutely no idea what quantitative easing is.

Basically, when quantitative easing takes place the Federal Reserve creates money “ex nihilo” (out of thin air) and uses that money to buy stuff like U.S. government bonds and mortgage-backed securities.  By pumping money into the economy like this, the hope is that banks will start lending more and people and businesses will have more money to spend. 

As far back as 2002, Bernanke has been openly advocating “easy money” policies as a way to stimulate the U.S. economy out of troubled times….

“The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost.”

Now, before we go on and discuss some of the problems with quantitative easing, it must be noted that the statement by Bernanke above is absolutely rife with errors. 

It is absolutely frightening that someone like Bernanke has more power over the U.S. economy than any member of Congress or even the president of the United States.

First of all, the U.S. government does not issue our dollars.  They are issued by the Federal Reserve.

Just pull out a dollar bill right now.  It says “Federal Reserve Note” on it right at the top.

Secondly, the U.S. government cannot produce as many dollars as it wants.  Whenever it wants more U.S. dollars it has to give U.S. Treasuries to the Federal Reserve in exchange.

If the U.S. government could produce as many dollars as it wants, it could just print up $13 trillion and pay off the national debt tomorrow. 

But under the current system, it cannot do that.  The Federal Reserve controls the currency, and the truth is that the Federal Reserve is a private central bank that is about as “federal” as Federal Express is.

Thirdly, there is always a cost for producing more dollars.  We’ll talk about inflation in a moment, but first it must be noted that any time “the printing presses are fired up” the U.S. government goes into more debt, and every time the U.S. government goes into more debt, more interest must be paid on that new debt.

So there is a very high cost involved in the creation of more dollars.

In addition, every time a new U.S. dollar is created, every other U.S. dollar becomes a little bit less valuable.  Essentially, the more dollars there are in existence, the less purchasing power each dollar is going to have.  This phenomenon can be masked or delayed for a while, but inflation will always triumph in the end when the money supply is constantly expanded.

The U.S. dollar has lost over 95 percent of its value since the Federal Reserve was created in 1913.  This has not been a mistake.  The Federal Reserve system is designed to slowly but surely inflate the U.S. dollar.  What they do want to avoid, however, is doing it too quickly.

And this is exactly what is in danger of happening in the years ahead.  As the U.S. money supply dramatically expands in response to the exploding U.S. national debt we are eventually going to be dealing with some very, very serious inflation.

Right now, the Bush and Obama administrations have been getting the United States into so much debt that there aren’t enough buyers in the world to absorb it all (at least at the current super low interest rates on U.S. government debt).  So, instead of raising interest rates to a point where U.S. debt would be suitably attractive to investors, the Federal Reserve is stepping in and is “buying” (once again with money created out of thin air) all the excess U.S. Treasuries that don’t sell.  This is essentially a Ponzi scheme and it keeps interest rates on U.S. Treasuries artificially low.

In addition, the Federal Reserve has been handing gigantic sacks of cash to very large banks and financial institutions such as Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup at almost zero percent interest and those big banks and financial institutions have been turning around and investing a large percentage of that cash in U.S. Treasuries.  This has created a gigantic U.S. Treasury carry trade bubble, and it has enabled many of these giant financial monsters to make massive piles of essentially risk-free cash.  This is another Ponzi scheme.

But these Ponzi schemes are not sustainable and they cannot last forever.  Right now Bernanke and his cohorts have been able to finance trillions in U.S. government debt and still keep interest rates on U.S. Treasuries and inflation very, very low.  At some point, their juggling act will come to an end and we will have a gigantic mess on our hands.

But for right now, Bernanke seems quite please with himself.  The following is how Bernanke concluded his speech at Jackson Hole….

As I said at the beginning, we have come a long way, but there is still some way to travel. Together with other economic policymakers and the private sector, the Federal Reserve remains committed to playing its part to help the U.S. economy return to sustained, noninflationary growth.

In Bernanke’s fantasy world, the U.S. economy is going to roar back to life and will soon be stronger than it ever has been.

But don’t you believe him.

The truth is that every single month the U.S. economy is seeing large numbers of jobs leave the country.

The truth is that thanks to our exploding trade deficit, the U.S. economy is poorer at the end of every single month than it was at the beginning.

The truth is that every single month the U.S. government (along with the vast majority of state and local governments) gets even deeper into debt.

The United States economy is not on the road to prosperity.

The United States economy gets poorer and deeper in debt every single month and is slowing bleeding to death.

Ben Bernanke can run around all he wants and try to convince us that “the sky isn’t falling”, but at some point the American people are going to wake up and simply not believe him anymore.

A Two-Tier Internet?

The Internet as you know it is in serious, serious danger. Some of the most powerful communications companies in the world have been involved in negotiations and have been making agreements that would throw net neutrality out the window and would move us toward a two-tier Internet.  So exactly what would that mean?  It would mean that the big corporate giants that have a virtual monopoly on other forms of media and entertainment would be able to buy access to the blazing fast “next generation” Internet that communications companies are developing and the rest of us (like this site for example) would be stuck on the decaying “gravel roads” of the old Internet.  The threat that this poses to freedom, liberty, Internet commerce and the free flow of information should not be underestimated.   

I want you to take a few moments and imagine with me what the future of the Internet could look like if something is not done.  Imagine a world in which your Internet service provider gives you more “choices” regarding your level of Internet access.  For a “budget” price, you can get email and access to several hundred of the hottest and most popular websites (controlled by the big media conglomerates of course) on the incredibly fast “next generation” Internet.  For a bit more, you can get access to thousands of websites (once again, controlled by the big media conglomerates) on the new blazing fast version of the Internet that has been developed.  Or lastly, you can get the “premium package” which will give you access to the entire Internet, including the millions of websites that are still chugging along on the “old Internet”. 

Wouldn’t that be great?

Of course not.

Isn’t it obvious what would happen?

The millions of websites that are unwilling or unable to pay the exorbitant “tolls” to get on the new blazing fast version of the Internet would rapidly start losing traffic and would eventually fizzle out almost altogether. 

After all, in this day and age who is going to stick with technology that is slow and outdated? 

For example, how many people still use “dial-up” anymore?  There are a few, but it is just not that many.

For years, the big Internet companies have been dreaming of getting permission to sell access to an Internet “fast lane” to the highest bidder.  The potential profits to be had are staggering.

But right now there is one thing that stands in the way of those profits and that must be eliminated according to them.

Net neutrality.

Up until now, any information sent over the Internet has been treated more or less equally.  When a data packet enters the Internet, it is directed to its destination regardless of the identity of the customer or the importance of the information.

But now some very powerful interests want to change all that.  The idea is to have the Internet much more closely resemble cable television.

In particular, a recent agreement regarding net neutrality between Google and Verizon is causing alarm among Internet users.

The following is how The Daily Mail described the recent agreement between Google and Verizon….

Technology giants Google and Verizon have today paved the way for a future ‘two-tier’ internet in which companies can pay extra to make sure their services get through.

Whenever anyone starts using phrases like “pay extra” when it comes to access to the Internet, alarm bells should start going off in your head.

Once we start going down that road, the big media companies with the deep pockets will do all they can to gain a “competitive” advantage.

The future of the Internet is at stake.  Are we going to continue to have a free and open Internet with millions of choices, or are we going to have an Internet dominated by “toll roads” where there are only a few thousand choices which are all tightly controlled by the giant media conglomerates?

Already, there is a lot of talk about the new “high bandwidth” Internet that is coming.

According to The Daily Mail, even Verizon’s CEO admits that the agreement between his firm and Google would create a “separate” high bandwidth Internet…. 

The new high bandwidth internet would remain separate from the normal public internet and would probably include services such as healthcare and 3D video and gaming, according to Verizon’s chief executive, Ivan Seidenberg.

So what do you think is eventually going to happen if a new “high bandwith Internet” is set up?

Well, everyone will want to move over to it of course.

And that is exactly the idea.

Over the past several years, the big media conglomerates that dominate television, newspapers, radio, movies and even video games have come to realize that they have completely and totally lost control over the Internet.

The Internet has given the common man a voice in the world, and it is probably the greatest breakthrough for the free flow of information since the printing press was invented.

But to the big media conglomerates there is a big problem.

They have lost their monopoly.

People are not forced to come to them for their news and entertainment anymore.

The rise of the alternative media has been one of the most incredible stories of this past decade, and today information flows more freely around the globe than ever before.

But now there are some very powerful corporate interests that would like to force alternative websites, radio programs and television shows to shut down for good.

They realize that they need to make their move quickly, because we are rapidly approaching a critical turning point for the Internet.

You see, the truth is that virtually all communications will eventually go through the Internet.  Phone service, television service and Internet access are rapidly merging into one.

The battle for control over this media pipeline we call the Internet is only going to heat up even more.  Literally trillions of dollars will be made or lost depending on the direction that the Internet takes in the years ahead.

So will we allow the Internet to become a network of private toll roads where the big media conglomerates control what we see and hear and think?

Or will we stand up and demand that the Internet remain a free and neutral platform where information flows freely and where we can all have our say?

As for me, I choose to stand on the side of Internet freedom.

What say you?

10 Practical Steps That You Can Take To Insulate Yourself (At Least Somewhat) From The Coming Economic Collapse

Most Americans are still operating under the delusion that this “recession” will end and that the “good times” will return soon, but a growing minority of Americans are starting to realize that things are fundamentally changing and that they better start preparing for what is ahead. These “preppers” come from all over the political spectrum and from every age group.  More than at any other time in modern history, the American people lack faith in the U.S. economic system.  In dozens of previous columns, I have detailed the horrific economic problems that we are now facing in excruciating detail.  Many readers have started to complain that all I do is “scare” people and that I don’t provide any practical solutions.  Well, not everyone can move to Montana and start a llama farm, but hopefully this article will give people some practical steps that they can take to insulate themselves (at least to an extent) from the coming economic collapse.

But before I get into what people need to do, let’s take a minute to understand just how bad things are getting out there.  The economic numbers in the headlines go up and down and it can all be very confusing to most Americans.

However, there are two long-term trends that are very clear and that anyone can understand….

#1) The United States is getting poorer and is bleeding jobs every single month.

#2) The United States is getting into more debt every single month.

When you mention the trade deficit, most Americans roll their eyes and stop listening.  But that is a huge mistake, because the trade deficit is absolutely central to our problems.

Every single month, Americans buy far, far more from the rest of the world than they buy from us.  Every single month tens of billions of dollars more goes out of the country than comes into it.

That means that every single month the United States is getting poorer.

The excess goods and services that we buy from the rest of the world get “consumed” and the rest of the world ends up with more money than when they started.

Each year, hundreds of billions of dollars leave the United States and don’t return.  The transfer of wealth that this represents is astounding.

But not only are we bleeding wealth, we are also bleeding jobs every single month.

The millions of jobs that the U.S. economy is losing to China, India and dozens of third world nations are not going to come back.  Middle class Americans have been placed in direct competition for jobs with workers on the other side of the world who are more than happy to work for little more than slave labor wages.  Until this changes the U.S. economy is going to continue to hemorrhage jobs.

The U.S. government has helped to mask much of this economic bleeding by unprecedented amounts of government spending and debt, but now the U.S. national debt exceeds 13 trillion dollars and is getting worse every single month.  Not only that, but state and local governments all over America are getting into ridiculous amounts of debt.

So, what we have got is a country that gets poorer every single month and loses jobs to other countries every single month and that has accumulated the biggest mountain of debt in the history of the world which also gets worse every single month.

Needless to say, this cannot last indefinitely.  Eventually the whole thing is just going to collapse like a house of cards.

So what can we each individually do to somewhat insulate ourselves from the economic problems that are coming?….

1 – Get Out Of Debt: The old saying, “the borrower is the servant of the lender”, is so incredibly true.  The key to insulating yourself from an economic meltdown is to become as independent as possible, and as long as you are in debt, you simply are not independent.  You don’t want a horde of creditors chasing after you when things really start to get bad out there.

2 – Find New Sources Of Income: In 2010, there simply is not such a thing as job security.  If you are dependent on a job (“just over broke”) for 100% of your income, you are in a very bad position.  There are thousands of different ways to make extra money.  What you don’t want to do is to have all of your eggs in one basket.  One day when the economy melts down and you are out of a job are you going to be destitute or are you going to be okay?

3 – Reduce Your Expenses: Many Americans have left the rat race and have found ways to live on half or even on a quarter of what they were making previously.  It is possible – if you are willing to reduce your expenses.  In the future times are going to be tougher, so learn to start living with less today.

4 – Learn To Grow Your Own Food: Today the vast majority of Americans are completely dependent on being able to run down to the supermarket or to the local Wal-Mart to buy food.  But what happens when the U.S. dollar declines dramatically in value and it costs ten bucks to buy a loaf of bread?  If you learn to grow your own food (even if is just a small garden) you will be insulating yourself against rising food prices.  Storing up freeze dried food can also be a great way to prepare for what is coming.

5 – Make Sure You Have A Reliable Water Supply: Water shortages are popping up all over the globe.  Water is quickly becoming one of the “hottest” commodities out there.  Even in the United States, water shortages have been making headline news recently.  As we move into the future, it will be imperative for you and your family to have a reliable source of water.  Some Americans have learned to collect rainwater and many others are using advanced technology such as atmospheric water generators to provide water for their families.  But whatever you do, make sure that you are not caught without a decent source of water in the years ahead.

6 – Buy Land: This is a tough one, because prices are still quite high.  However, as we have written previously, home prices are going to be declining over the coming months, and eventually there are going to be some really great deals out there.  The truth is that you don’t want to wait too long either, because once Helicopter Ben Bernanke’s inflationary policies totally tank the value of the U.S. dollar, the price of everything (including land) is going to go sky high.  If you are able to buy land when prices are low, that is going to insulate you a great deal from the rising housing costs that will occur when the U.S dollar does totally go into the tank.

7 – Get Off The Grid: An increasing number of Americans are going “off the grid”.  Essentially what that means is that they are attempting to operate independently of the utility companies.  In particular, going “off the grid” will enable you to insulate yourself from the rapidly rising energy prices that we are going to see in the future.  If you are able to produce energy for your own home, you won’t be freaking out like your neighbors are when electricity prices triple someday.

8 – Store Non-Perishable Supplies: Non-perishable supplies are one investment that is sure to go up in value.  Not that you would resell them.  You store up non-perishable supplies because you are going to need them someday.  So why not stock up on the things that you are going to need now before they double or triple in price in the future?  Your money is not ever going to stretch any farther than it does right now.

9 – Develop Stronger Relationships: Americans have become very insular creatures.  We act like we don’t need anyone or anything.  But the truth is that as the economy melts down we are going to need each other.  It is those that are developing strong relationships with family and friends right now that will be able to depend on them when times get hard.

10 – Get Educated And Stay Flexible: When times are stable, it is not that important to be informed because things pretty much stay the same.  However, when things are rapidly changing it is imperative to get educated and to stay informed so that you will know what to do.  The times ahead are going to require us all to be very flexible, and it is those who are willing to adapt that will do the best when things get tough.

Do you have any additional tips that you would like to share with us?  If so, please feel free to share them in the comments below….


Home Sales Drop 27 Percent In July And Things Are Only Going To Get Worse For The U.S. Housing Industry

On Tuesday the National Association of Realtors announced that existing home sales in the United States dropped a whopping 27.2% in the month of July.  The consensus among analysts was that we would see a drop of around 13 percent, so when the 27 percent figure was announced it sent a shock through world financial markets.  To say that the real estate industry is alarmed by these numbers would be a tremendous understatement. What we are seeing unfold is essentially “Armageddon” for those involved in the housing and real estate industries.  The real estate market is grinding to a standstill and a shockingly low number of people are actually in the market to buy a home right now.  In the months ahead home sales may pick up a little bit, but only if housing prices start to fall.  Why?  Because right now there are tons of houses on the market and there are very few qualified buyers available to purchase them and potential buyers are starting to realize this.  Buyers are beginning to understand that they have all the leverage now and they are waiting for prices to fall.

Anyone who has taken Economics 101 in college knows that when supply is high and demand is low prices will fall, and that is exactly the situation we have in the U.S. housing market right now.

At the moment, most home sellers in the United States are very hesitant to lower the prices on their homes too much.  Many have no intention of selling their homes below what they originally paid for them, and many others truly believe that the housing market will eventually rebound.

But the truth is that housing prices are simply not going to rebound to 2006 levels.  If anything, they are going to continue to fall.

The following are the three basic points that every American needs to understand about the U.S. housing market right now….    

1) There Is A Gigantic Mountain Of Unsold Homes On The Market

There are a staggering number of unsold homes on the market right now.  As you can see from the chart from the Calculated Risk blog below, there is now over a year’s worth of unsold homes flooding the marketplace….

So who is going to buy all of those unsold homes with so few qualified purchasers in the marketplace?

That is a very good question.

Unfortunately, all the signs indicate that the glut of unsold homes is going to get even worse.

As of this March, U.S. banks had an inventory of 1.1 million foreclosed homes, which was a new all-time record and which was up 20 percent from one year ago.

And the tsunami of foreclosures and repossessions just keeps growing….

*One out of every seven mortgages were either delinquent or in foreclosure during the first quarter of 2010.

*According to RealtyTrac, a total of 1.65 million U.S. properties received foreclosure filings during the first half of 2010.

*U.S. Banks repossessed 269,962 U.S. homes during the second quarter of 2010, which was a new all-time record.

The supply of unsold homes is already incredibly massive and it is growing at a staggering rate. 

With such a flood of homes on the market, why in the world would anyone in their right mind pay a premium price for a home in 2010?

2) There Are Not Nearly Enough Qualified Buyers Seeking To Buy Homes

The banks and lending institutions that survived the subprime mortgage crisis of 2007 and 2008 learned some very valuable lessons.  The days when even the family dog could get approved for a home loan are long gone.  Now the pendulum has swung to the other end of the spectrum.  Fearful of making more bad loans, banks and lending institutions have really, really tightened up lending standards.  So a lot fewer people are getting approved for home loans these days.

That makes a lot of business sense for banks and lending institutions, but it also means that there are a lot fewer qualified buyers out there looking for homes.

Not only that, but millions of Americans who could potentially buy homes are waiting for the market to go down even further.

When you add that all together, you get the kind of home sales numbers discussed at the beginning of the article.

The Mortgage Bankers Association recently announced that demand for loans to purchase U.S. homes has sunk to a 13-year low.  Unless the number of Americans getting approved for home loans starts increasing, you simply are not going to see housing numbers recover much.

And the truth is that Americans are not even doing much browsing for homes right now.  Even Internet searches for homes are way down.  Internet searches on real estate websites are down about 20 percent compared to this same time period in 2009.

So with a massive flood of houses on the market and with very few qualified buyers to purchase them, how in the world are housing prices supposed to go up?

3) The Housing Industry Will Never Fully Recover Without A Jobs Recovery First

In order to get qualified for home loans, Americans have to have good jobs first.  But in this economy that is a huge problem.

Robert Dye, a senior economist with PNC Financial Services Group, recently told USA Today what he believes the bottom line problem of this housing crisis is…. 

“Jobs, jobs, jobs”

Today, 14 million Americans are unemployed and millions more are underemployed.  Unfortunately, there are not nearly enough good jobs for all of them.

Today it takes the average unemployed American over 8 months to find a job.  The number of Americans receiving long-term unemployment benefits has risen a staggering 60 percent in the past year alone.

Things have gotten so bad that according to one recent survey 28% of all U.S. households have at least one person that is searching for a full-time job.

To get an understanding of how horrific the unemployment situation has become in the United States, take 38 seconds to watch the incredible video posted below….

The truth is that without jobs, Americans simply cannot buy homes.

So is there any hope that we will see a robust jobs recovery any time soon?

Well, as I have written about previously, unfortunately there is every indication that the employment market is going to get even worse.

So the bottom line is that the housing market is going to continue to suffer.

There is going to continue to be a massive glut of unsold homes on the market.

There are going to continue to be very few qualified buyers in the marketplace.

Large numbers of Americans are going to continue to be unemployed.

Yes, that is a lot of bad news, but you aren’t reading this column to get the same kind of mindless optimism that you get from the mainstream media news.

Bancor: The Name Of The Global Currency That A Shocking IMF Report Is Proposing

Sometimes there are things that are so shocking that you just do not want to report them unless they can be completely and totally documented.  Over the past few years, there have been many rumors about a coming global currency, but at times it has been difficult to pin down evidence that plans for such a currency are actually in the works.  Not anymore.  A paper entitled “Reserve Accumulation and International Monetary Stability” by the Strategy, Policy and Review Department of the IMF recommends that the world adopt a global currency called the “Bancor” and that a global central bank be established to administer that currency.  The report is dated April 13, 2010 and a full copy can be read here.  Unfortunately this is not hype and it is not a rumor.  This is a very serious proposal in an official document from one of the mega-powerful institutions that is actually running the world economy.  Anyone who follows the IMF knows that what the IMF wants, the IMF usually gets.  So could a global currency known as the “Bancor” be on the horizon?  That is now a legitimate question.

So where in the world did the name “Bancor” come from?  Well, it turns out that “Bancor” is the name of a hypothetical world currency unit once suggested by John Maynard Keynes.  Keynes was a world famous British economist who headed the World Banking Commission that created the IMF during the Breton Woods negotiations.

The Wikipedia entry for “Bancor” puts it this way….

The bancor was a World Currency Unit of clearing that was proposed by John Maynard Keynes, as leader of the British delegation and chairman of the World Bank commission, in the negotiations that established the Bretton Woods system, but has not been implemented.

The IMF report referenced above proposed naming the coming world currency unit the “Bancor” in honor of Keynes.

So what about Special Drawing Rights (SDRs)?  Over the past couple of years, SDRs have been touted as the coming global currency.  Well, the report does envision making SDRs “the principal reserve asset” as we move towards a global currency unit….

“As a complement to a multi-polar system, or even—more ambitiously—its logical end point, a greater role could be considered for the SDR.”

However, the report also acknowledges that SDRs do have some serious limitations.  Since the value of SDRs are closely tied to national currencies, anything affecting those currencies will affect SDRs as well.

Right now, SDRs are made up of a basket of currencies.  The following is a breakdown of the components of an SDR….

*U.S. Dollar (44 percent)

*Euro (34 percent)

*Yen (11 percent)

*Pound (11 percent)

The IMF report recognizes that moving to SDRs is only a partial move away from the U.S. dollar as the world reserve currency and urges the adoption of a currency unit that would be truly international.  The truth is that SDRs are clumsy and cumbersome.  For now, SDRs must still be reconverted back into a national currency before they can be used, and that really limits their usefulness according to the report….

“A limitation of the SDR as discussed previously is that it is not a currency. Both the SDR and SDR-denominated instruments need to be converted eventually to a national currency for most payments or interventions in foreign exchange markets, which adds to cumbersome use in transactions. And though an SDR-based system would move away from a dominant national currency, the SDR’s value remains heavily linked to the conditions and performance of the major component countries.”

So what is the answer?

Well, the IMF report believes that the adoption of a true global currency administered by a global central bank is the answer.

The authors of the report believe that it would be ideal if the “Bancor” would immediately be used as currency by many nations throughout the world, but they also acknowledge that a more “realistic” approach would be for the “Bancor” to circulate alongside national currencies at first….

“One option is for bancor to be adopted by fiat as a common currency (like the euro was), an approach that would result immediately in widespread use and eliminate exchange rate volatility among adopters (comparable, for instance, to Cooper 1984, 2006 and the Economist, 1988). A somewhat less ambitious (and more realistic) option would be for bancor to circulate alongside national currencies, though it would need to be adopted by fiat by at least some (not necessarily systemic) countries in order for an exchange market to develop.”

So who would print and administer the “Bancor”?

Well, a global central bank of course.  It would be something like the Federal Reserve, only completely outside the control of any particular national government….

“A global currency, bancor, issued by a global central bank (see Supplement 1, section V) would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy. As trade and finance continue to grow rapidly and global integration increases, the importance of this broader perspective is expected to continue growing.”

In fact, at one point the IMF report specifically compares the proposed global central bank to the Federal Reserve….

“The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present. Such liquidity was provided in the most recent crisis mainly by the U.S. Federal Reserve, which however may not always provide such liquidity.”

So is that what we really need? 

A world currency administered by an international central bank modeled after the Federal Reserve?

Not at all.

As I have written about previously, the Federal Reserve has devalued the U.S. dollar by over 95 percent since it was created and the U.S. government has accumulated the largest debt in the history of the world under this system.

So now we want to impose such a system on the entire globe?

The truth is that a global currency (whether it be called the “Bancor” or given a different name entirely) would be a major blow to national sovereignty and would represent a major move towards global government. 

Considering how disastrous the Federal Reserve system and other central banking systems around the world have been, why would anyone suggest that we go to a global central banking system modeled after the Federal Reserve?

Let us hope that the “Bancor” never sees the light of day.

However, the truth is that there are some very powerful interests that are absolutely determined to create a global currency and a global central bank for the global economy that we now live in. 

It would be a major mistake to think that it can’t happen.

This Economy Is Ripping The Dignity Of Millions Of Unemployed Americans To Shreds

If you can still put a roof over your head and food on the table for your family, you should consider yourself to be very fortunate.  There are millions of Americans out there right now that are really, really suffering.  The cold, hard reality of it is that there aren’t even close to enough jobs out there for everyone right now.  It is almost as if we are all caught in a really bizarre game of musical chairs where the losers get stripped of their tickets to the middle class.  What this horrible economy is doing to the dignity of millions of middle class Americans is incredibly saddening.  There are a lot of very highly educated and very hard working Americans who cannot seem to get jobs no matter what they do and now find themselves doing whatever they can just to survive.  It can be really hard to keep your dignity when you played by all the rules and you worked as hard as you could all your life and now you find yourself a half step away from being homeless.  Those of us who are still doing okay should never look down on those who are struggling in this economy, because the truth is that any of us could be next.   

If you really want to read some horror stories about what long-term unemployment is doing to some people in America, you should go spend an hour or two over at Unemployed-Friends some time.  It is a great forum with a lot of great resources for the unemployed, but it also contains dozens and dozens and dozens of heartbreaking stories from middle class Americans who have had their lives shattered by this economic downturn.      

The following is a typical story on Unemployed-Friends.  It is from a 48 year old Air Force veteran who has lost everything and is now sleeping in his vehicle.  It turns out that Scott48’s job was shipped off to India and now he has been out of work for over two years….

“I am a 48 year old USAF Vet. I got my house in 1996 with the help of the VA. In 2009 the company I worked for went out of buisness(gone to India) I then became a 99er. I notified Wells Fargo that I lost my job and they said they would work with me, the next mortgage statement I got they conveniently increased my mortgage! With what I got from UE was enough for the house but I had to cut out the luxury of food, gas, utillities, insurance, entertainment and alcohol. That was it for me, so the forecloser ball was in motion. I had to give my dog to my cousin so he would get fed, I took everything I owened to the auction( execpt tools, clothes, pictures, tech manuals and my Saxophone) and sold it. I went to a half-way house the VA recomended for a week and it was joke, so my cousin said I could stay with her. After 4 months she diecided that I wasnt looking hard enough and kicked me out, and Ive applied for everything except selling myself. This summer I was staying in an abandoned house due to forecloser and the real estate company has now put it on the market, and I am now on the street sleeping in my vehicle or a friend here and there. Keeping clean is going to be a challenge cuz the Flying J truck stops charge $10 for a shower, rip-off. What a country!”

The truth is that this economy is driving many Americans to the brink of desperation.  Even recent college graduates are becoming desperate enough to actually consider suicide.  The following story is from an Unemployed-Friends user known as 08pacollegegrad….

“I could just take any job like working at fast food places, but I hear people who try can’t even get hired there. I went to Wendy’s for lunch the other day and I thought of picking up an application…but the slot where they keep the applications was completely empty. That should say it all. Plus, I feel like if I take just any job…I will be set back further and never be able to gain experience in my chosen fields.

I follow up on job applications, but employers ignore me for the most part when I try to contact them. I sent five follow up e-mails last week and got no responses. I contacted an employer expressing my interest in working for them, but all they gave me is the link to their online application system that I have never gotten a job from.

I am thinking of applying for more internships (I have already done two), but I don’t want employers to think why I am applying for an internship when I should have had a full fledged job by now.

I have almost killed myself over my situaion and am taking anti-depressants right now. I see a psychiatrist every 4-6 weeks, but I still have days where I feel so empty. I am sick of sitting at home searching for jobs and praying for a response that never comes.”

Many Americans spend day after day after day looking for a job that never comes.  The sense of hopelessness that can build after doing this for a few years is almost indescribable.  The following is another incredibly sad story from an Unemployed-Friends user known as feuxdejoie….

“I lost my job in June 2008, my husband was working but sentenced to prison for 4 years, for DUI, no accidents or injuries. I had been using my unemployment to pay bills but my last check came June 12, 2010. I’m alone and scared. The city that I live in has the highest unemployment in the State, Illinois. Our children are grown and I sit alone all day searching for jobs. My husband can only call once a month because of the outrageous rates for telephone calls. I’m at the end of my rope and don’t know where to turn if they don’t pass a tier V for unemployment or open up some jobs.
I turned 50 in April and had worked all of my life, starting at age 14 with a work permit! My employer stated to me that they needed someone bilingual and terminated me even after I told them that I would take classes to learn.  I signed up for college and began classes in January then unemployment told me that I wasn’t elgible for unemployment while attending school.”

There are millions of Americans who believe that their lives are over because they can’t get decent jobs.  When you lose your job, your home, your car, your health insurance and then finally your unemployment insurance runs out, it is easy to lose all hope as an Unemployed-Friends user named Ember has done….

“so i feel pretty much hopeless. been unemployed since July 2008. in over two years i haven’t even been called for an interview. tired of looking and applying for jobs outside of my field that require experience i don’t have. it’s all for naught. i have two bachelor of science degrees. my BS degrees, cuz that’s what they’re worth. since losing my job i’ve gotten divorced. lost my house. lost my health insurance. totalled my car and sustained chronic back pain. and moved in with my mom. and did i mention, when all this started i was a new mom, just back from maternity leave? so (now) i’m raising a toddler on my own, with no income. my unemployment insurance ran out a few weeks ago. i don’t even know what to do now. i just want to disappear. i’m tired of trying. i’m tired of being a burden on everyone. if i didn’t have the responsibility to take care of my child i wouldn’t be around anymore.”

This final example is from an Unemployed-Friends user identified as Faith1028.  Be warned that this one will shake you to your core if you have any sensitivity at all.  As you read this, keep in mind that this kind of thing is literally happening to millions of Americans these days…. 

“HI, y’all! This is my story. I’m from Chicago.

I lost my job 11.06.09 – I did my best to remain positive & confident that I would get a job by the end of November.

December 2009 – Still no job. I’m getting food stamps (LINK card) & Unemployment Benefits. Not much money at all, but I’m surviving. Thanks to all this stress, my stomach has been burning and/or been painful daily for all December. I puked my guts out on the 26th.

January 2010 – My stomach is still hurting every day. I had to close out my savings account. I haven’t told my slumlord or my fellow tenants that I lost my job; I go on pretending I’m still going to work everyday. Unfortunately on the 26th, I got my eviction notice. I called the office to ask why. The response was “I don’t know.” I became hysterical. I’ve no job, no money, no family/friends to help. (I have many *relatives*, but no *family*.) I truly believed my only alternative was suicide. I wanted to say good-bye to my brother (my only sibling), but we haven’t spoken to each other for over 4 years; I no longer have his address/phone number. I found him on Facebook. I didn’t bring up my situation because I felt he wouldn’t care. We exchanged a few messages and that was it. I haven’t heard from him since. Good riddance.

February 2010 – Someone found a family that I can stay with for only $250/month! My own room! They turned out to be aquaintances of mine. Vegetarian, too! At least I have a place to stay. I’d rather live alone, but, hey, I’m desperate! — And I’m not too crazy about the bedbugs. OW!

June/July 2010 – Thanks to daily/nightly use of citrine crystals since 30 May, I have no more stomach problems!
Thanks to weekly use of a natural (green!) pesticide from PlusNaturalEnzymes.com, I no longer have a problem with bedbugs! However…
Mid-June, my Unemployment Benefits ran out. Of course, I’m still looking for a job! What am I supposed to do – put a gun to someone’s head and force them to hire me? As of this date, I have $12 left to my name; $0 in my chequeing account. I recently reapplied for and am now receiving food stamps. Before I got my food stamps back, I’ve eaten whatever (Vegetarian!) food I can get, even stuff I’m allergic to. As a result, I’ve become sick: cold-like symptoms, pain in lower intestines…and a rash over my arms, legs, & neck. Oh, does it itch! At least my food allergies are not life-threatening.
Needless to say, my depression has gotten worse.

I am really trying hard to remain positive — and alive.
But why? Is it really all worth it?

I haven’t paid July’s rent, and the people I’m staying with are getting very *impatient*; I fear I’ll be evicted again! The money is coming! It’s not my bloody fault!

Someone on Twitter sent me a link to this site. I know I’m not the only one suffering; some folks have already committed suicide. I don’t want to die, but I don’t want to be homeless, either. I am so bloody scared.
Just give me money that my tax dollars paid for!
–Or better yet: GIVE ME A BLASTED JOB!!”

The really sad thing is that there are countless other stories just like these being posted all over the Internet all the time.

People are hurting.

People are losing hope.

So how did we get here?

Well, it turns out that the “haves” have figured out that they really don’t need the “have nots” after all.  Incredible advances in technology have increasingly enabled employers to replace humans with machines and computers.  In addition, as we have detailed previously, millions upon millions of middle class American jobs are being shipped off to China and to dozens of third world nations where workers are more than happy to work for less than a tenth of what an American worker would make.

All of those jobs that have been lost to technology and that have been sent overseas are not going to come back.  The hordes of long-term unemployed that we are seeing now is just the beginning.  It is going to get a lot worse.

So the next time you hear a hard luck story from an unemployed American, don’t look down on that person.

You might be next.

Do NOT follow this link or you will be banned from the site!