If you have ever wondered why our leaders in Washington D.C. seem to act so strangely, the truth is that it almost always comes down to just one thing. It has been said that “money makes the world go round”, and that is definitely true in Washington. This year the federal government will spend more than 4 trillion dollars, and that represents well over one-fifth of our national GDP. With so much money coming in and so much money going out, the stakes are incredibly high, and that is why so much money is poured into political campaigns on the national level.
And it shouldn’t surprise anyone that those that live the closest to this gigantic money machine have benefited greatly. Forbes just released their brand new rankings for 2017, and they found that five out of the top 10 wealthiest counties in the entire country are suburbs of Washington D.C.…
Virginia’s Loudoun County holds the title of the nation’s richest county with a median household income of $125,900. While nearly 10,000 residents commute to the District, according to Forbes, about 11,700 businesses employ 161,000 county residents, with Dulles International Airport, Loudoun County Public Schools and the Department of Homeland Security leading that charge.
The nearby city of Falls Church, Fairfax and Arlington counties in Virginia and Howard County in Maryland also lead the nation based on wealth.
In general, salaries for federal workers are significantly higher than in the private sector, and benefit packages are usually much better.
But in addition to having a very high concentration of federal workers, the D.C. area is also home to hordes of lawyers, lobbyists, defense contractors and other government vendors. Big government means big business for those guys, and business has been very good in recent years…
The federal government has a lot to do with this: The Capitol and the economy orbiting around it (including lawyers, defense contractors, computer engineers along the Dulles Corridor, and doctors near NIH) attract college graduates who reliably contribute to six-figure households. Crucially, there was a $1.7 billion increase in lobbying between 1998 and 2010, as Dylan Matthews explained. With each $1 million of lobbying “associated with a $3.70 increase in the D.C. wage premium,” the money pouring into Washington wound up in the pockets of its residents.
This certainly isn’t the limited government that our founders intended.
So where did we go wrong?
One of the big turning points came in 1913. That is the year when the Federal Reserve and the modern version of the income tax were established. The Federal Reserve was designed by the elite to get the federal government very deeply into debt, and an income tax was needed to help service that debt and to help pay for the much larger government that the progressives were wanting.
Back then, D.C. was nothing like it is today. In fact, even in the 1970s there were still large farms inside the Beltway. But the federal government just kept getting bigger and bigger and bigger, and now it is a four trillion dollar monstrosity.
What I believe we should do is to dismantle as much of that monstrosity as we possibly can. Instead of asking which government agencies we should close, I believe that we should be asking which government agencies we really need to leave open.
A great place to start would be by abolishing the Federal Reserve, the IRS and the income tax. Those institutions are at the very core of the Washington money machine, and so it would essentially be like tearing the heart out of big government.
And don’t worry, the federal government would still have plenty of money coming in. The individual income tax only accounts for about 46 percent of all federal revenue, and theoretically we could still have an absolutely enormous federal government without an income tax. I once wrote an article that listed 97 different ways that various levels of government get money out of us each year, and so getting rid of the federal income tax would still leave 96 ways for the politicians to extract money from us.
Unfortunately, it would actually be a very tough transition to a much more limited federal government because so much of our society is geared around the enormous money machine in Washington. In 2018, more than a billion dollars will be spent on the mid-term elections, and most of that money will be going to incumbents that are committed to maintaining the status quo.
If we ever want things to really start changing in Washington, we have got to start sending people there that haven’t been bought off by the big money interests.
In my congressional district there is no incumbent running in 2018, and nobody else in the race is nearly as conservative as I am. But since I can’t be bought by the special interests, I am going to have to rely on grassroots support.
Donald Trump showed us that anything is possible in American politics. When Jeb Bush decided to run for president, he had an extremely long list of endorsements and a hundred million dollars behind him, and he still got trounced by Trump because Trump had a much stronger message.
If we stand united, we can take our government back and there won’t be anything that the establishment will be able to do about it.
But if we sit back and do nothing, the cesspool of corruption in Washington D.C. will just continue to get deeper and deeper.
If we really are plunging into a deflationary global financial crisis, we would expect to see commodity prices crash hard. That happened just before the great stock market crash of 2008, and that is precisely what is happening once again right now. On Thursday, the Bloomberg Commodity Index closed at 79.1544. The last time that it closed this low was 16 years ago. Not even during the worst moments of the last recession did it ever get so low. Overall, the Bloomberg Commodity Index is down more than 28 percent over the past 12 months, and it has plummeted by more than half since mid-2011. As a result of this stunning commodity collapse, extremely large mining companies such as Anglo American are imploding, giant commodity trading firms such as Glencore and Trafigura are in full-blown crisis mode, and huge portions of the global financial system are in danger of utterly collapsing.
In recent days, I have been trying to stress that many of the exact same patterns that we witnessed just prior to the great stock market crash of 2008 are happening once again. This includes the staggering crash of commodity prices that we are currently witnessing, and even CNN acknowledges that there are parallels to what we experienced seven years ago…
The last time raw materials like copper and oil were this cheap, an economic depression loomed just around the corner.
It’s no secret that commodities in general have had a horrendous 2015. A nasty combination of overflowing supply and soft demand has wreaked havoc on the industry.
But prices for everything from crude oil to industrial metals like aluminum, steel, copper, platinum, and palladium have collapsed even further in recent days.
As I mentioned above, this crash in prices is hitting mining companies really hard. Just this week, the fifth largest mining company in the entire world announced a massive restructuring and will be laying off tens of thousands of workers…
In the latest example of just how bad things have gotten, Anglo American–the world’s fifth largest miner–just kitchen sink-ed it, announcing a sweeping restructuring, a massive round of layoffs, and a dividend cut. The company will reduce its assets by some 60% while headcount will be cut by a whopping 85,000 or, nearly two-thirds.
Overall, the U.S. has lost approximately 123,000 good paying jobs from the mining sector since the end of 2014. And if commodity prices stay low, this sector is going to continue to bleed good paying jobs.
Meanwhile, investors have been dumping the debt of any companies that have anything to do with commodities. This has significantly contributed to the emerging junk bond crisis that I discussed in my last article. As I write this, a high yield bond ETF known as JNK has fallen all the way down to 34.31, which is the lowest that it has been since the last recession. For much more on the junk bond implosion, I would encourage you to read an article that Wolf Richter just put out entitled “Bond King Gets Antsy as Junk Bonds, Which Lead Stocks, Spiral to Heck“.
So why are commodity prices falling so rapidly?
Many analysts are pointing to the economic slowdown in China as the primary reason. For years, the Chinese economy voraciously gobbled up commodities from sources all over the planet, but now things are changing. The Chinese economy is really, really slowing down, and some recently released numbers give us some clues as to the true extent of that slowdown…
-Chinese exports fell 6.8 percent in November on a year over year basis after being down 6.9 percent on a year over year basis in October.
-Chinese imports were down 8.7 percent in November on a year over year basis.
-Chinese manufacturing activity has been contracting for nine months in a row.
-Last week, the China Containerized Freight Index plummeted to 718.58 – the lowest level ever recorded.
And of course it isn’t just China. Goldman Sachs says that the seventh largest economy on the entire planet, Brazil, has plunged into a “depression“. And as I pointed out the other day, of the 93 largest stock market indexes in the entire world, an astonishing 47 of them (more than half) are down at least 10 percent year to date.
Even though stocks slid in the U.S. this week, the major indexes still seem somewhat stable. But this is a bit of an illusion. Yes, the biggest names on Wall Street are still flying high for the moment, but shares of a multitude of smaller and mid-size firms have been plummeting. At this point, nearly 70 percent of all U.S. stocks are already below their 200 day moving averages. This is yet another thing that we would expect to see just before the bottom falls out for stocks.
Everything that I have been writing about this week (see here and here) is perfectly consistent with all of my warnings from earlier this year.
We are plunging into a deflationary financial crisis in textbook fashion. And if the Federal Reserve actually does decide to go ahead with an interest rate hike next week that is just going to make things even worse.
But most people are not patient enough to watch a process play out. Most people that write about “the coming economic collapse” hype it up like it is going to be some sort of big Hollywood blockbuster that is going to happen over a week or a month and then be over. That is definitely not the way that I see things.
To me, “the economic collapse” is something that has been happening for decades, that is still in the process of happening right now, and that will continue to happen as we move forward into the future. The long-term trends that are ripping our economy to shreds continue to intensify, and our leaders are not doing anything to fix our underlying fundamental problems.
And the financial crisis that I warned would start during 2015 and accelerate in 2016 has already begun. More than half of all major global stock market indexes are down by at least 10 percent year to date, and some of them have plummeted by more than 30 or 40 percent. Trillions of dollars of wealth has been wiped out around the globe, and this is just the beginning.
All of the numbers tell us the same thing.
Big trouble is ahead.
My job is to inform you of these things. What you choose to do with this information is up to you.
When the global economy is doing well, the amount of stuff that is imported and exported around the world goes up, and when the global economy is in recession, the amount of stuff that is imported and exported around the world goes down. It is just basic economics. Governments around the world have become very adept at manipulating other measures of economic activity such as GDP, but the trade numbers are more difficult to fudge. Today, China accounts for more global trade than anyone else on the entire planet, and we have just learned that Chinese exports and Chinese imports are both collapsing right now. But this is just part of a larger trend. As I discussed the other day, British banking giant HSBC has reported that total global trade is down 8.4 percent so far in 2015, and global GDP expressed in U.S. dollars is down 3.4 percent. The only other times global trade has plummeted this much has been during other global recessions, and it appears that this new downturn is only just beginning.
For many years, China has been leading the revolution in global trade. But now we are witnessing something that is almost unprecedented. Chinese exports are falling, and Chinese imports are absolutely imploding…
Growth of exports from China has been dropping relentlessly, for years. Now this “growth” has actually turned negative. In September, exports were down 3.7% from a year earlier, the “inevitable fallout from China’s unsustainable and poorly executed credit splurge,” as Thomson Reuters’ Alpha Now puts it. Most of these exports are manufactured goods that are shipped by container to the rest of the world.
And imports into China – a mix of bulk and containerized freight – have been plunging: down 20.4% in September from a year earlier, after at a 13.8% drop in August.
This week it was announced that Chinese GDP growth had fallen to the lowest level since the last recession, and that makes sense. Global economic activity is really slowing down, and this is deeply affecting China.
So what about the United States?
Well, based on the amount of stuff that is being shipped around in our country it appears that our economy is really slowing down too. The following comes from Wolf Richter, and I shared some of it in a previous article, but I think that it bears repeating…
September is in the early phase of the make-or-break holiday shipping season. Shipments usually increase from August to September. They did this year too. The number of shipments in September inched up 1.7% from August, according to the Cass Freight Index.
But the index was down 1.5% from an already lousy September last year, when shipments had fallen from the prior month, instead of rising. And so, in terms of the number of shipments, it was the worst September since 2010.
It has been crummy all year: With the exception of January and February, the shipping volume has been lower year-over-year every month!
The index is broad. It tracks data from shippers, no matter what carrier they choose, whether truck, rail, or air, and includes carriers like FedEx and UPS.
What major retailers such as Wal-Mart are reporting also confirms that we are in a major economic slowdown. Wal-Mart recently announced that its earnings would fall by as much as 12 percent during the next fiscal year, and that caused Wal-Mart stock to drop by the most in 27 years.
And of course this is going to have a huge ripple effect. There are thousands of other companies that do business with Wal-Mart, and Reuters is reporting that they are starting to get squeezed…
Suppliers of everything from groceries to sports equipment are already being squeezed for price cuts and cost sharing by Wal-Mart Stores. Now they are bracing for the pressure to ratchet up even more after a shock earnings warning from the retailer last week.
The discount store behemoth has always had a reputation for demanding lower prices from vendors but Reuters has learned from interviews with suppliers and consultants, as well as reviewing some contracts, that even by its standards Wal-Mart has been turning up the heat on them this year.
“The ground is shaking here,” said Cameron Smith, head of Cameron Smith & Associates, a major recruiting firm for suppliers located close to Wal-Mart’s headquarters in Bentonville, Arkansas. “Suppliers are going to have to help Wal-Mart get back on track.”
Similar things are going on at some of the other biggest companies in America as well.
For instance, things have gotten so bad for McDonald’s that one franchise owner recently stated that the restaurant chain is “facing its final days”…
“McDonald’s announced in April that it would be closing 700 ‘underperforming’ locations, but because of the company’s sheer size — it has 14,300 locations in the United States alone — this was not necessarily a reduction in the size of the company, especially because it continues to open locations around the world. It still has more than double the locations of Burger King, its closest competitor.”
However, for the franchisees, the picture looks much worse than simply 700 stores closing down.
“We are in the throes of a deep depression, and nothing is changing,” a franchise owner wrote in response to a financial survey by Nomura Group. “Probably 30% of operators are insolvent.” One owner went as far as to speculate that McDonald’s is literally “facing its final days.”
Why would things be so bad at Wal-Mart and McDonald’s if the economy was “recovering”?
Come on now – let’s use some common sense here.
All of the numbers are screaming at us that we have entered a major economic downturn and that it is accelerating.
CNBC is reporting that the number of job openings in the U.S. is falling and that the number of layoffs is rising…
Job openings fell 5.3 percent in August, while a 2.6 percent rise in layoffs and discharges offset a 0.3 percent gain in hires. Finally, the amount of quits — or what Convergex calls its “take this job and shove it” indicator because it shows the percentage of workers who left positions voluntarily — fell to 56.6 percent from 57.1 percent, indicating less confidence in mobility.
And as I discussed the other day, Challenger Gray is reporting that we are seeing layoffs at major firms at a level that we have not witnessed since 2009.
We already have 102.6 million working age Americans that do not have a job right now. As this emerging worldwide recession deepens, a lot more Americans are going to lose their jobs. That is going to cause the poverty and suffering in this country to spike even more, if you can imagine that.
Just consider what authorities discovered on the streets of Philadelphia just this week…
Support is flooding in for a homeless Philadelphia family whose two-year-old son was found wandering alone in a park in the middle of the night.
Angelique Roland, 27, and Michael Jones, 24, were sleeping with their children behind cardboard boxes underneath the Fairmount Park Welcome Center in Love Park when the toddler slipped away.
The boy was found just before midnight and handed over to a nearby Southeastern Pennsylvania Transportation Authority police officer, who took him to the Children’s Hospital of Philadelphia.
He was wearing a green, long sleeve shirt, black running pants and had a diaper on, but did not have shoes or socks.
Could you imagine sleeping on the streets and not even being able to provide your two-year-old child with shoes and socks?
These numbers that I write about every day are not a game. They affect all of us on a very personal level.
Just like in 2008 and 2009, millions of Americans that are living a very comfortable middle class lifestyle today will soon lose their jobs and will end up out in the streets.
In fact, there will be people that will read this article that this will happen to.
So no, none of us should be excited that the global economy is collapsing. There is already so much pain all around us, and what is to come is beyond what most of us would even dare to imagine.
The list of nations around the globe that have collapsing economies just continues to grow. In recent weeks I have written about the ongoing saga in Greece, the stock market crash in China, the debt crisis in Puerto Rico and the economic meltdown in South America. But there are more economic flashpoints that I have not even addressed yet. For example, did you know that a full-blown economic collapse is happening in Iraq right now? And did you know that the economy of Ukraine is contracting rapidly and that it cannot pay its debts? Back in 2008, the financial crisis was primarily centered on the United States, but this time around it is turning out to be a truly global phenomenon.
When the U.S. “liberated” Iraq, the future for that nation was supposed to be incredibly bright. But instead, things have just gone from bad to worse. This has especially been true since we pulled our troops out and allowed ISIS to run buck wild. At this point unemployment in Iraq is at Great Depression levels, the economy is steadily contracting and government debt is spiraling wildly out of control…
But Iraq’s oil industry, and the government’s budget, is being squeezed by low oil prices. As a result, the nation’s finances are being hit hard: the market price is now half that needed to break even, expanding the budget deficit, forecast to return to balance until the rise of IS, to a projected 9% of GDP.
In the past, Iraq’s leaders approved budgets without seriously taking into account a drop in the price of oil. Now the severe revenue shortfall is forcing leaders to cut back on new investments. Russia’s Lukoil, Royal Dutch Shell, and Italy’s ENI are also cutting back, eyeing neighbouring Iran’s pending economic opening as a safer investment.
Despite improving its finances after the US troop withdrawal, the drop in oil prices and the rising costs of battling IS have pushed Iraq’s economy into a state of near-crisis. According to the IMF, the nation’s GDP shrankby 2.7% in 2014 and unemployment is estimated to be over 25%.
Things are even worse in another nation that was recently “liberated”. The new U.S.-friendly government in Ukraine was supposed to make things much better for average Ukrainians, but instead the economy is absolutely imploding…
The country’s GDP contracted by 6.8 percent last year, and is forecast to shrink by another 9 percent this year — a total loss of roughly 16 percent over two years.
Just like in much of southern Europe, the banks are absolutely overloaded with bad loans and the entire banking system is on the verge of total collapse. The following comes from a CNN article that was posted earlier this year…
Ukraine’s banking sector is one of the weakest parts of the economy. The key interest rates are the highest in 15 years, and experts estimate bad loans make up between one third and one half of all banking assets.
Over 40 banks have been declared bankrupt since the war began, with the country’s fourth largest lender, Delta Bank, going under earlier this week.
Just recently, the government of Ukraine declared that it could not pay its debts. We didn’t hear much about this in the United States, because the Obama administration wants us to believe that their policies over there are a success. But the truth is that Ukraine now needs a “debt restructuring deal” similar to what Greece has received in the past…
Progress between Ukraine and its creditors on a $19 billion restructuring may be losing momentum as a proposed high-level meeting was canceled amid further disagreements over terms.
Ukraine’s $2.6 billion of 2017 notes fell the most in a month after a person familiar with negotiations said a new offer put forward by Ukraine this week would be unacceptable to bondholders. Later on Wednesday, Ukraine’s Finance Ministry said that a Franklin Templeton-led creditor group should prepare an improved offer for meetings next week.
Speaking of Greece, things just continue to unravel over there. Earlier this week we witnessed the greatest one day stock market crash in Greek history, and there was more financial carnage on Wednesday. The following comes from the Economic Policy Journal…
For a second straight day, following the reopening of the Greek stock market, there were heavy losses in Greek banking stocks, with shares across the sector once again falling by about 30 percent, the bottom of their daily limit.
Bank of Piraeus and National Bank of Greece fell the most, falling by the daily limit of 30 percent t. Alpha Bank was 29.7 percent lower and Eurobank Ergasias lost 29.6 percent.
At this point you would have to be blind to not see what is happening.
A financial crisis is not just imminent – one is already starting to erupt all over the planet.
And none of us can say that we weren’t warned. In a recent piece, Bill Holter included a long list of ominous financial warnings that were issued over the past two years by either the IMF or the Bank for International Settlements…
Overall, there are currently 24 nations that are dealing with a major financial crisis right now, and there are another 14 nations that are right on the verge of one.
But even though a global financial crisis is already unfolding right in front of our eyes, there are people that come to my website every day and leave comments telling me that everything is going to be just fine.
So what do you think?
What do you believe the rest of this year will bring?
Please feel free to share your thoughts by posting a comment below…
Did you see what just happened in Japan? The stock market of the 3rd largest economy on the planet is imploding. On Tuesday, the Nikkei fell by more than 610 points. If that sounds like a lot, that is because it is. The largest one day stock market decline in U.S. history is only 777 points. So far, the Dow is only down about 1000 points during this “correction”, but the Nikkei is down more than 2,300 points. The Nikkei has dropped more than 14 percent since the peak of the market, and many analysts believe that this is only just the beginning. Those that have been waiting for a full-blown stock market collapse may be about to get their wish. Japan is absolutely drowning in debt, their central bank is printing money like crazy and the Japanese population is aging rapidly. As far as economic fundamentals go, there is very little good news as far as Japan is concerned. So will an Asian financial collapse precede the next great financial crisis in the United States? That is what some have been predicting, and it starting to look increasingly likely.
What happened to the Nikkei early on Tuesday was absolutely breathtaking. The following is how Bloomberg described the carnage…
At the end of January 2013, Japanese stocks trailed only Portugal for the biggest rally among developed markets. Now the Nikkei 225 Stock Average is leading declines, slumping 8.5 percent last month and today capping a 14 percent drop from its Dec. 30 peak.
Losses snowballed in Tokyo during a global retreat that has erased $2.9 trillion from equity values worldwide this year amid signs of slower growth in China and stimulus cuts by the U.S. Federal Reserve.
As Bloomberg noted, much of the blame for the financial problems that we are seeing all over the planet right now is being placed on the Federal Reserve.
The Fed created this bubble by pumping trillions of fresh dollars into the global financial system, and now they are bursting this bubble by starting to cut off the flow of easy money.
Most Americans simply do not realize that our financial markets no longer resemble a free market system. Instead, they are highly manipulated and distorted by the central banks, and the trillions of dollars of “hot money” that the Fed has poured into the global financial system has infected virtually every financial market on Earth…
On Wall Street they call it “hot money”—that seemingly endless flow of cash that goes to the most profitable country du jour—but in the real economy it’s gone cold.
That hot money has come mostly in the form of a low-yielding U.S. dollar, which investors have borrowed en masse to fund investments in other higher-yielding currencies across the globe. The so-called carry trade has helped fuel an investment bonanza across the world that has boosted risk assets thanks primarily to the U.S. Federal Reserve‘s easy-money policy.
But with the Fed tiptoeing away from what initially was an $85 billion-a-month infusion of liquidity, investors are beginning to prepare themselves for a world of rising rates in which the endless cash flow to emerging market economies begins to ebb, then cease.
We never fixed any of the fundamental problems that caused the last financial crisis. Instead, the Fed seemed to think that the solution to any problem was just to create more money.
“Total credit as a percent of the global economy is now 30 percent higher than it was at the start of the economic crisis in 2007, we have had rapidly escalating household debt especially in emerging economies and resource economies like Canada and Australia and we have come to a point where household debt has become burdensome on the system—that is, where an economic slowdown follows.”
So what comes next?
Well, unless the Fed or other central banks intervene, we are probably going to have even more carnage.
At least that is what Dennis Gartman, the editor and publisher of “The Gartman Letter”, told CNBC on Tuesday…
“I just think you’re going to have a very severe, very substantive and really quite ugly correction that will probably make a lot of people wail and gnash their teeth before it’s done.”
Other analysts share his pessimism. According to Doug Short, the vice president of research at Advisor Perspectives, the U.S. stock market “still looks 67% overvalued“.
I’d be lying if I said that I wasn’t worried about the way things are going. Frankly, I’m truly scared for myself, my family and the nation. I have the sinking feeling that the stock market is on the edge of a crash. If that happens, investor sentiment will turn quickly bearish. And the bear market will start feeding on itself. Ironically, the recent action occurred in the face of almost insane bullishness on the part of the crowd and on the part of investors.
Obviously smart heads and institutional money managers know that the US is semi dead in the water. And all the talk about an improving economy is just wishes and hopes. Bernanke’s dream of a flourishing new economy, improving without the need of the Fed’s help, is an idle dream.
I’ve been writing about the stock market for over 60 years and I can’t remember a time when I was so filled with foreboding regarding what lies ahead. The primary trend of the market, like the tide of the ocean, is irresistible, and waits for no man. What scares me the most in this current situation is that I see no clear island of safety.
You can read the rest of his very disturbing remarks right here.
U.S. stocks may not totally crash this week, this month or even this year, but without a doubt a day of reckoning is coming. As a society, our total consumer, business and government debt is now equivalent to approximately 345 percent of GDP.
The only way that the game can continue is to keep pumping up the debt bubble even more.
Once the debt bubble stops expanding, it will start collapsing very rapidly.
Those that foolishly still have lots of money in the stock market better hope that the Federal Reserve decides to intervene in a major way very soon.
Because if they don’t, there is a very good chance that we could indeed have a “market bloodbath” on our hands.
How would America ever survive without the central planners in the Obama administration and at the Federal Reserve? What in the world would we do if there was no income tax and no IRS? Could the U.S. economy possibly keep from collapsing under such circumstances? The mainstream media would have us believe that unless we have someone “to pull the levers” our economy would descend into utter chaos, but the truth is that the best period of economic growth in U.S. history occurred during a time when there was no income tax and no Federal Reserve. Between the Civil War and 1913, the U.S. economy experienced absolutely explosive growth. The free market system thrived and the rest of the world looked at us with envy. The federal government was very limited in size, there was no income tax for most of that time and there was no central bank. To many Americans, it would be absolutely unthinkable to have such a society today, but it actually worked very, very well. Without the inventions and innovations that came out of that period, the world would be a far different place today.
It is amazing what can happen when the government just gets out of the way. Check out all of the wonderful things that Wikipedia says happened for the U.S. economy during those years…
The rapid economic development following the Civil War laid the groundwork for the modern U.S. industrial economy. By 1890, the USA leaped ahead of Britain for first place in manufacturing output.
An explosion of new discoveries and inventions took place, a process called the “Second Industrial Revolution.” Railroads greatly expanded the mileage and built stronger tracks and bridges that handled heavier cars and locomotives, carrying far more goods and people at lower rates. Refrigeration railroad cars came into use. The telephone, phonograph, typewriter and electric light were invented. By the dawn of the 20th century, cars had begun to replace horse-drawn carriages.
Parallel to these achievements was the development of the nation’s industrial infrastructure. Coal was found in abundance in the Appalachian Mountains from Pennsylvania south to Kentucky. Oil was discovered in western Pennsylvania; it was mainly used for lubricants and for kerosene for lamps. Large iron ore mines opened in the Lake Superior region of the upper Midwest. Steel mills thrived in places where these coal and iron ore could be brought together to produce steel. Large copper and silver mines opened, followed by lead mines and cement factories.
In 1913 Henry Ford introduced the assembly line, a step in the process that became known as mass-production.
When hard working, industrious people are given freedom to pursue their dreams, great things tend to happen. The truth is that we were all designed to create, to invent, to build, and to trade with one another. We all have something that we can contribute to society, and when families are strong and the invisible hand of the free market is allowed to work, societies tend to prosper.
It is not a coincidence that the greatest period of economic growth in U.S. history was between the Civil War and 1913. The following information comes from Wikipedia…
The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873. The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled.
Wouldn’t you like U.S. GDP to double over the course of a decade now?
So why don’t we go back to a system like that?
In 1913, the Federal Reserve and a permanent national income tax were introduced. Today, the unelected central planners at the Federal Reserve totally run our financial system and the U.S. tax code is about 13 miles long. The value of our currency has declined by more than 96 percent since 1913, and the size of our national debt has gotten more than 5000 times larger.
Meanwhile, control freak bureaucrats seemingly run everything. Almost every business decision is heavily influenced either by taxes or by the millions of laws, rules and regulations that are sucking the life out of our economic system.
My favorite example of how suffocating red tape in America has become is the magician out in Missouri that was forced by the Obama administration to submit a 32 page “disaster plan” for the rabbit that he uses during his magic shows for kids.
It is no wonder why we don’t have any economic growth. The central planners in the federal government are killing our economy.
And the central planners over at the Federal Reserve are killing our financial system. In school we are taught that the Fed was created to bring stability to our financial system, but the truth is that they have been responsible for financial bubble after financial bubble, and now Federal Reserve Chairman Ben Bernanke has created the largest bond bubble in the history of the world. When that thing bursts, and it will, we are going to see financial carnage on an unprecedented scale.
Unfortunately, the truth is that the Federal Reserve never has been looking out for the interests of the American people. It was created by the big banks and it has always worked very hard to benefit the big banks. During the Fed era, the big banks have become the most powerful economic entities on the entire planet. Our entire economy is now based on debt, and the big banks are at the very center of this debt spiral. The following is an excerpt from a recent article by Paul B. Farrell…
Today’s world includes four Wall Street banks each with assets over $1 trillion, each more than Goldman. Plus eight other big global banks each have over $2 trillion total assets, including, among the 100 largest, Barclays, HSBC, Deutsche, ICB-China and Japan’s Mitsubishi.
Yes, this new world is changing fast. Back in 2008 the world’s financial banks were in ruins. Wall Street sunk into virtually bankruptcy. Goldman and its Wall Street too-big-to-fail co-conspirators had trashed the global economy, triggered a virtual depression, and Wall Street’s casinos lost over $10 trillion of Main Street retirement funds.
And as we saw back in 2008, the Federal Reserve is going to do whatever is necessary to prop up Wall Street. Most Americans never even heard about this, but during the last financial crisis the Fed secretly loaned 16 trillion dollars to the big banks. Those loans were nearly interest-free and those banks knew that they could get basically as much nearly interest-free money as they wanted from the Fed.
So how much nearly interest-free money did the Fed loan to normal Americans?
Not a single penny.
That would be bad enough, but it is also important to remember that since 2008 the Fed has actually been paying banksNOT to lend money to the rest of us.
What is it going to take for the American people to start demanding that the Fed be abolished? They are absolutely destroying our financial system.
Meanwhile, the central planners in the Obama administration have been doing their part as well. During the second quarter of this year, the number of Americans working between 30 and 34 hours per week fell by 146,500. During that same time period, the number of Americans working between 25 and 29 hours rose by 119,000.
Why is this happening?
Well, the Obamacare employer mandate will apply to workers that work at least 30 hours each week, so employers are starting to cut back on the hours their employees are getting in order to comply with the law.
In fact, things have gotten so bad that even 53 percent of all Democrats believe that the American Dream is dead even though Barack Obama is residing in the White House.
But this is just the beginning. Things are going to get much, much worse. We are going down the same path that Greece has gone, and the unemployment rate in Greece has just hit a new all-time record high of 27.6 percent.
That is where the U.S. is headed eventually. Decades of very foolish decisions are catching up with us.
When government debt gets too large, it has a profoundly negative effect on an economy. The following is an excerpt from an outstanding article by Lacy H. Hunt, a Ph.D. economist…
Here are the studies, starting with the one with the broadest implications:
“Government Size and Growth: A Survey and Interpretation of the Evidence,” from Journal of Economic Surveys. Published in April 2011, Swedish economists Andreas Bergh and Magnus Henrekson (both of the Research Institute of Industrial Economics at Lund University) found a “significant negative correlation” between size of government and economic growth. Specifically, “an increase in government size by 10 percentage points is associated with a 0.5% to 1% lower annual growth rate.”
“The Impact of High and Growing Government Debt on Economic Growth: An Empirical Investigation for the Euro Area,” in European Central Bank working paper, Number 1237, August 2010. Cristina Checherita and Philipp Rother found that a government-debt-to-GDP ratio above the threshold of 90-100% has a “deleterious” impact on long-term growth. Additionally, the impact of debt on growth is nonlinear – as the government debt rises to higher and higher levels, the adverse growth consequences accelerate.
The Real Effects of Debt, published by the Bank for International Settlements (BIS) in Basel, Switzerland in August 2011. Stephen G. Cecchetti, M. S.Mohanty, and Fabrizio Zampolli determined that “beyond a certain level, debt is bad for growth. For government debt, the number is about 85% of GDP.”
“Public Debt Overhangs: Advanced-Economy Episodes Since 1800,”by Carmen M. Reinhart, Vincent R. Reinhart, Kenneth S. Rogoff, Journal of Economic Perspectives, Volume 26, Number 3, Summer 2012, pages 69-86. The authors identified 26 cases of “debt overhangs,” which they define as public-debt-to-GDP levels exceeding 90% for at least five years. In spite of the many idiosyncratic differences in these situations, economic growth fell in all but three of the 26 cases. All of the instances, which lasted an average of 23 years, are included in the paper. They found that average annual growth is 1.2% lower for countries with a debt overhang than for countries without. The long duration of such episodes means that cumulative shortfall from the debt excess—i.e., several years in a row of subpar economic growth—is potentially massive.
But it isn’t just federal government debt that is the problem. The rest of us have way too much debt as well.
If you can believe it, the ratio of private debt to GDP was 273.3% for the twelve months ending in the first quarter of 2013.
In Too Much Finance, published by the United Nations Conference on Trade and Development (UNCTAD) in March 2011, Jean Louis Arcand, Enrico Berkes, and Ugo Panizza found a negative effect on output growth when credit to the private sector reaches 104-110% of GDP. The strongest adverse effects are for credit over 160% of GDP.
The second is the 2011 BIS study authored by Cecchetti, Mohanty, and Zampolli. They found that private debt levels become “cancerous” (in BIS economic advisor Cecchetti’s own words) at 175% (90% for corporations and 85% for households)—just slightly more than the UNCTAD study.
When you add our private debt to GDP ratio of 273 percent to our federal debt to GDP ratio of 101 percent, you get a grand total of 384 percent.
This is how we have funded the false prosperity of the past couple of decades. Essentially, we have been putting our good times on a credit card.
And as anyone that has ever tried to live on credit knows, the good times eventually run out.
But this is what the Federal Reserve was designed to do. It was designed to get the U.S. government trapped in a debt spiral from which there would never be any escape.
It is not an accident that our national debt has gotten more than 5000 times larger than it was when the Fed was originally created. This is what the bankers wanted the system to do.
They wanted a system that would extract wealth from all of us through taxes, transfer it to the government, and then transfer it to them through interest payments.
We never needed a central bank, we never needed the IRS and we never needed an income tax. America would be doing just fine without any of them.
But instead, America chose to go down the path of collectivization and central planning, and now we are heading toward the biggest economic disaster in the history of mankind.
The “coming economic collapse” has already been happening. You see, the truth is that the economic collapse is not a single event. It has already started, it is happening right now, and it will accelerate during the years ahead. The statistics in this article show very clearly that the U.S. economy has fallen dramatically over the past ten years or so. Unfortunately, there are lots of mockers out there that love to mock the idea of an economic collapse even though one is happening right in front of our eyes. They love to say stuff like this (and I am paraphrasing): “An economic collapse is never going to happen. We can consume far more wealth than we produce forever. We can pile up gigantic mountains of debt forever. There is no way that the party is over. In fact, the party is just getting started. Woo-hoo!” That sounds absolutely ridiculous, but “economists” and “journalists” actually write things that reflect these kinds of sentiments every single day. They do not seem alarmed about the fact that our national debt is nearly 17 times larger than it was 30 years ago. They do not seem alarmed about the fact that the total amount of debt in our country is more than 28 times larger than it was 40 years ago. They do not seem alarmed about the fact that our economic infrastructure is being absolutely gutted and we are steadily becoming poorer as a nation. They just think that the magic formula of print, borrow, spend and consume can go on indefinitely. Unfortunately, the truth is that a massive economic disaster has already started to unfold. We inherited the greatest economic machine in the history of the world, but we totally wrecked it. We have been able to live far, far beyond our means for the last couple of decades thanks to the greatest debt bubble in the history of the planet, but now that debt bubble is getting ready to burst. Anyone with half a brain should be able to see what is coming. Just open your eyes and look at the facts. The following are 40 stats that prove the U.S. economy has already been collapsing over the past decade…
#1 According to the World Bank, U.S. GDP accounted for 31.8 percent of all global economic activity in 2001. That number dropped to 21.6 percent in 2011.
#2 The United States was once ranked #1 in the world in GDP per capita. Today we have slipped to #14.
#3 The United States has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.
#9 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.
#10 Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Today, China’s high-tech exports are more than twice the size of U.S. high-tech exports.
#11 In 2002, the United States had a trade deficit in “advanced technology products” of $16 billion with the rest of the world. In 2010, that number skyrocketed to $82 billion.
#12 The United States has lost more than a quarter of all of its high-tech manufacturing jobs since the year 2000.
#13 The number of full-time workers in the United States is nearly 6 million below the old record that was set back in 2007.
#14 The average duration of unemployment in the United States is nearly three times as long as it was back in the year 2000.
#16 The official unemployment rate has been at 7.5 percent or higher for 54 months in a row. That is the longest stretch in U.S. history.
#17 The U.S. government says that the number of Americans “not in the labor force” rose by 17.9 million between 2000 and 2011. During the entire decade of the 1980s, the number of Americans “not in the labor force” rose by only 1.7 million.
#18 The average number of hours worked per employed person per year has fallen by about 100 since the year 2000.
#19 The U.S. economy continues to trade good paying jobs for low paying jobs. 60 percent of the jobs lost during the last recession were mid-wage jobs, but 58 percent of the jobs created since then have been low wage jobs.
#23 In the year 2000, there were only 17 million Americans on food stamps. Today, there are more than 47 million Americans on food stamps.
#24 In the year 2000, the ratio of social welfare benefits to salaries and wages was approximately 21 percent. Today, the ratio of social welfare benefits to salaries and wages is approximately 35 percent.
#25 Since Barack Obama entered the White House, the average price of a gallon of gasoline in the United States has risen from $1.85 to $3.64.
#26 More than twice as many new homes were sold in the United States in 2005 as will be sold in 2013.
#27 Right now there are 20.2 million Americans that spend more than half of their incomes on housing. That represents a 46 percent increase from 2001.
#28 The price of ground beef increased by 61 percent between 2002 and 2012.
#29 According to USA Today, water bills have actually tripled over the past 12 years in some areas of the country.
#30 In 1999, 64.1 percent of all Americans were covered by employment-based health insurance. Today, only 55.1 percent are covered by employment-based health insurance.
#34 Median household income for families with children dropped by a whopping $6,300 between 2001 and 2011.
#35 Back in 2007, about 28 percent of all working families were considered to be among “the working poor”. Today, that number is up to 32 percent even though our politicians tell us that the economy is supposedly recovering.
#40 Today, more than a million public school students in the United States are homeless. This is the first time that has ever happened in our history. That number has risen by 57 percent since the 2006-2007 school year.
Are there any other items that you would add to this list? Please feel free to join the discussion by posting a comment below…
European officials are openly admitting that the two largest banks in Cyprus are “insolvent“, and it is now being reported that Cyprus Popular Bank only has “enough liquidity to cover the next few hours“. Of course all banks in Cyprus are officially closed until Tuesday at the earliest, but there have been long lines at ATMs all over Cyprus as people scramble to get whatever money they can out of the banks. Unfortunately, some ATMs appear to be “malfunctioning” and others appear to have already run out of cash. You can see some photos of huge lines at one ATM in Cyprus right here. Some businesses are now even refusing to take credit card payments. This is creating an atmosphere of panic on the streets of Cyprus. Meanwhile, the EU is holding a gun to the head of the Cyprus financial system. Either Cyprus meets EU demands by Monday, or liquidity for the banks will be totally cut off and Cyprus will be forced out of the euro. It is being reported that European officials believe that the “economy is going to tank in Cyprus no matter what“, and that it would be okay to let the financial system of Cyprus crash and burn if politicians in Cyprus are not willing to do what they have been ordered to do. Apparently European officials are very confident that the situation in Cyprus can be contained and that it will not spread to other European nations.
Unfortunately, European officials are losing sight of the bigger picture. If the largest banks in Cyprus are allowed to fail, it will be another “Lehman Brothers moment“. The faith that people have in banks all over Europe will be called into question, and everyone will be wondering what major European banks will be allowed to fail next.
Meanwhile, European officials have already completely shattered confidence in deposit insurance at this point. Everyone now knows that when there is a major bank failure that depositors will be expected to share in the pain. Expect to see “bank jogs” all over southern Europe over the coming weeks.
The banks in Cyprus had been scheduled to reopen on Tuesday, but very few people expect that to actually happen at this point. In fact, Bloomberg is reporting that EU officials are actually thinking about shutting down the two biggest banks in Cyprus and freezing their assets…
Finance ministers for the 17 euro countries are considering a plan to shutter the two biggest banks in Cyprus and freeze the assets of uninsured depositors, said the four officials, who asked not to be named because the talks are ongoing. The ministers are holding a teleconference tonight.
Cyprus Popular Bank Pcl (CPB) and the Bank of Cyprus Plc would be split to create a so-called bad bank, one of the officials said. Insured deposits — below the European Union ceiling of 100,000 euros ($129,000) — would go into a so-called good bank and not sustain any losses, while uninsured deposits would go into the bad bank and be frozen until assets could be sold, said the four officials.
Losses to unsecured creditors, including uninsured depositors, could reach 40 percent under the plan, which has support from the International Monetary Fund and the European Central Bank. The proposal, a version of which was rejected last week, is considered a better option than taxing insured deposits or allowing Cypriot banks to collapse in a disorderly fashion if they lose access to ECB aid, the officials said.
Such a scenario would be an utter disaster.
How would you feel if you woke up someday and 40 percent of your life savings was suddenly gone?
According to Greek newspaper Kathimerini, European officials are also openly discussing the possibility of a Cyprus exit from the eurozone if a suitable bailout agreement is not worked out…
The possibility of Cyprus exiting the eurozone was discussed during teleconference involving technocrats from the Euro Working Group on Wednesday, Kathimerini understands.
A reliable source told Kathimerini that the technical implications of a euro exit, as well as the adoption of capital controls were debated by the Euro Working Group officials during the teleconference.
As I mentioned above, European officials seemed resigned to the fact that there will be an economic collapse in Cyprus “no matter what”, and so letting Cyprus leave the euro would not make that much of a difference. Either way, the banks are going to have to be “reorganized” and capital controls will be imposed…
In detailed notes of the call seen by Reuters, the group’s chair Austria’s Thomas Wieser said: “The economy is going to tank in Cyprus no matter what. Restrictions on capital will probably be imposed.”
Never before have we seen European officials impose such a harsh ultimatum with such a short deadline. It is almost as if they want to boot Cyprus out of the euro. The following comes from a recent CNBC report…
In stark twin warnings on Thursday, the European Central Bank said it would cut off liquidity to Cypriot banks and a senior EU official made clear to Reuters that the bloc was ready to see the bankrupt island banished from the euro in the belief it could then contain damage to the wider European economy.
And European officials are even publicly talking about the possibility that Cyprus will soon need to start using “their own currency”…
In Brussels, a senior European Union official told Reuters that an ECB withdrawal would mean Cyprus’s biggest banks being wound up, wiping out the large deposits it has sought to protect, and probably forcing the country to abandon the euro.
“If the financial sector collapses, then they simply have to face a very significant devaluation and faced with that situation, they would have no other way but to start having their own currency,” the EU official said.
This is absolutely shocking. Everyone always thought that Greece would be the first to leave the euro, but now it looks like it might be Cyprus.
However, there is still a chance that Cyprus may find a way to comply with EU demands. Politicians in Cyprus are frantically searching for a way to raise the needed cash without raiding private bank accounts. The following is what CNN is saying about the latest efforts…
Leaders of Cyprus’ political parties agreed Thursday to create an “investment solidarity fund,” which would issue bonds backed by state and church assets.
The plan was due to be discussed by the Cypriot government and parliament on Thursday evening, but few details were available and it was not clear how much the fund would be worth.
According to Reuters, other proposals have been under consideration as well…
The government said a “Plan B” was in the works.
Officials said it could include: an option to nationalize pension funds of semi-government corporations, which hold between 2 billion and 3 billion euros; issuing an emergency bond linked to future natural gas revenues; and possibly reviving the levy on bank deposits, though at a lower level than originally planned and maybe excluding savers with less than 100,000 euros.
At this point it is unclear whether any of those proposals will turn out to be acceptable to European officials.
In fact, the tone of European officials has noticeably changed from previous bailout efforts. They now seem much more willing to play hardball. For example, just check out what German Finance Minister Wolfgang Schaeuble is saying about the situation in Cyprus…
German finance minister Wolfgang Schaeuble told the ZDF public broadcaster on Tuesday night (19 March) he “took note with regret” of the Cypriot parliament’s rejection of the bailout deal, but insisted that the terms will stay the same.
Asked if the eurozone was willing to let Cyprus go bust, he answered: “Well, we are much more stable in the eurozone – we took measures to protect ourselves from the risks of contagion … but I don’t want to have any of this.”
He added: “It is a serious situation, but this cannot lead to a decision that makes absolutely no sense, to rescue a business model that has failed. Cyprus has a banking sector that is totally oversized and this made Cyprus insolvent. And nobody outside Cyprus is to blame for it.”
Schaeuble knows that the EU is holding all of the cards and that Cyprus is doomed without their help…
“The Cypriot state cannot fund itself on the markets. Its two largest banks are insolvent and are being kept afloat with emergency funding from the ECB, but only on the condition that there will be a long-term rescue programme. If this condition is no longer met, Cyprus will no longer be solvent and this is something Cypriot decision makers must know”
But the truth is that the EU can’t really afford to allow major banks to fail or for a single member to leave the eurozone. If either of those things happen, the confidence game that has been holding the European financial system together will begin to rapidly evaporate.
If the EU thinks that they can abandon Cyprus without the crisis spreading to the rest of southern Europe they are just being delusional.
At least there are a few politicians in Europe that understand what is happening. Nigel Farage, a very outspoken member of the European Parliament, is telling people to get their money out of banks in southern Europe as quickly as they can. He is warning that a great collapse of the European financial system is coming and that people need to get prepared for it…
So what do you think?
Do you believe that we are on the verge of a major financial collapse in Europe?
Please feel free to post a comment with your thoughts below…
If the economy is improving, then why are many of the largest retail chains in America closing hundreds of stores? When I was growing up, Sears, J.C. Penney, Best Buy and RadioShack were all considered to be unstoppable retail powerhouses. But now it is being projected that all of them will close hundreds of stores before the end of 2013. Even Wal-Mart is running into problems. A recent internal Wal-Mart memo that was leaked to Bloomberg described February sales as a “total disaster”. So why is this happening? Why are major retail chains all over America collapsing? Is the “retail apocalypse” upon us? Well, the truth is that this is just another sign that the U.S. economy is falling apart right in front of our eyes. Incomes are declining, taxes are going up, government dependence is at an all-time high, and according to the Bureau of Labor Statistics the percentage of the U.S. labor force that is employed has been steadily falling since 2006. The top 10% of all income earners in the U.S. are still doing very well, but most U.S. consumers are either flat broke or are drowning in debt. The large disposable incomes that the big retail chains have depended upon in the past simply are not there anymore. So retail chains all over the United States are now closing up unprofitable stores. This is especially true in low income areas.
When you step back and take a look at the bigger picture, the rapid decline of some of our largest retail chains really is stunning.
It is happening already in some areas, but soon half empty malls and boarded up storefronts will litter the landscapes of cities all over America.
Just check out some of these store closing numbers for 2013. These numbers are from a recent Yahoo Finance article…
Forecast store closings: 200 to 250
Sears Holding Corp.
Forecast store closings: Kmart 175 to 225, Sears 100 to 125
Forecast store closings: 300 to 350
Forecast store closings: 125 to 150
Barnes & Noble
Forecast store closings: 190 to 240, per company comments
Forecast store closings: 500 to 600
Forecast store closings: 150 to 175
Forecast store closings: 450 to 550
The RadioShack in a nearby town just closed up where I live. This is all happening so fast that it is hard to believe.
But the truth is that those store closings are not the entire story. When you dig deeper you find a lot more retailers that are in trouble.
For example, Blockbuster recently announced that this year they will be closing about 300 stores and eliminating about 3,000 jobs.
Toy manufacturer Hasbro recently announced that they will be reducing the size of their workforce by about 10 percent.
Even Wal-Mart is going through a tough stretch right now. According to documents that were leaked to Bloomberg, Wal-Mart is having an absolutely disastrous February…
Wal-Mart Stores Inc. had the worst sales start to a month in seven years as payroll-tax increases hit shoppers already battling a slow economy, according to internal e-mails obtained by Bloomberg News.
“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal- Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.”
So what in the world is going on here?
The mainstream media continues to proclaim that we are experiencing a robust “economic recovery”, but at the same time there are a whole host of indications that things are continually getting worse.
Even global cell phone sales actually declined slightly in 2012. That was the first time that has happened since the last recession.
Perhaps it is time that we faced the truth. The middle class is shrinking, incomes are declining and there are not nearly as many jobs as there used to be.
The U.S. labor market, which peaked in November 2007 when there were 139,143,000 jobs, now encompasses only 132,705,000 workers, a drop of 6.4 million jobs from the peak. The only work that has increased is part-time, and that is because it allows employers to reduce costs through a diminished benefit package or none at all.
So how can the mainstream media be talking about how “good” things are if we still have 6.4 million fewer jobs than we had back in November 2007?
And sadly, things may soon be getting a lot worse. If Congress does not do anything about the “sequester”, millions of federal workers may shortly be facing some very painful furloughs according to CNN…
Federal workers could start facing furloughs as early as April, according to federal agencies trying to prepare for the worst.
Unless Congress steps in, some $85 billion in massive spending reductions will hit the federal government, doling out furloughs to much of the nation’s 2.1 million federal workforce, experts say.
If you still live in an area of the country where the stores and the restaurants are booming, you should be very thankful because that is not the reality for most of the country.
I often write about the stunning economic decline of major cities such as Detroit, but there are huge sections of rural America that are in even worse shape than Detroit in many ways.
For example, many Indian reservations all over America have been shamefully neglected by the federal government and have become hotbeds for crime, drugs and poverty.
Business Insider recently profiled the Wind River Indian reservation in western Wyoming. The following is a brief excerpt from that outstanding article…
The Wind River Indian Reservation is not an easy place to get to, but I had to see it for myself.
Thirty-five-hundred square miles of prairie and mountains in western Wyoming, the reservation is home to bitter ancestral enemies: the Eastern Shoshone and Northern Arapaho tribes.
Even among reservations, it’s renowned for brutal crime, widespread drug use, and legal dumping of toxic waste.
You can see some amazing photos of the Wind River Indian reservation right here.
It is hard to believe that there are places like that in America, but the truth is that conditions like that are spreading to more U.S. communities with each passing day.
We are a nation that is in an advanced state of decline. But as long as the financial markets are okay, our leaders don’t seem too concerned about the suffering that everyone else is going through.
In fact, former Federal Reserve Chairman Alan Greenspan essentially admitted as much during a recent interview with CNBC. The following is how a Zero Hedge article summarized that interview…
Starting at around 1:50, Greenspan states the odds of sequester occurring are very high – in fact, the playdough-faced ex-Chair-head notes, “I find it very difficult to find a scenario in which [the sequester] doesn’t happen” But when asked how this will affect the economy, Awkward Alan is unusually clearly spoken – “the issue is how does it affect the stock market.”
While not so many of our leaders have taken the path to direct truthiness, Greenspan somewhat shocks a Botox’d and babbling Bartiromo when he admits “the stock market is the key player in the game of economic growth.”
Bartiromo shifts uncomfortably in her seat, strokes her imaginary beard and stares blankly as Greenspan explains that while the sequester will have a real effect on the real economy, “if the stock market can hold up through this, then the effect will be rather minor.”
Do you see?
As long as the stock market is moving higher they think that everything is just fine and dandy.
And the Obama administration?
They continue to pursue the same policies that got us into this mess.