The pinnacle of the global financial system is warning that conditions are right for a “full-blown banking crisis” in China. Since the last financial crisis, there has been a credit boom in China that is really unprecedented in world history. At this point the total value of all outstanding loans in China has hit a grand total of more than 28 trillion dollars. That is essentially equivalent to the commercial banking systems of the United States and Japan combined. While it is true that government debt is under control in China, corporate debt is now 171 percent of GDP, and it is only a matter of time before that debt bubble horribly bursts. The situation in China has already grown so dire that the Bank for International Settlements is sounding the alarm…
A key gauge of credit vulnerability is now three times over the danger threshold and has continued to deteriorate, despite pledges by Chinese premier Li Keqiang to wean the economy off debt-driven growth before it is too late.
The Bank for International Settlements warned in its quarterly report that China’s “credit to GDP gap” has reached 30.1, the highest to date and in a different league altogether from any other major country tracked by the institution. It is also significantly higher than the scores in East Asia’s speculative boom on 1997 or in the US subprime bubble before the Lehman crisis.
Studies of earlier banking crises around the world over the last sixty years suggest that any score above ten requires careful monitoring.
If you are not familiar with the Bank for International Settlements, just think of it as the capstone of the worldwide financial pyramid. It wields enormous global power, and yet it is accountable to nobody. The following is a summary of how the Bank for International Settlements works that comes from one of my previous articles entitled “Who Controls The Money? An Unelected, Unaccountable Central Bank Of The World Secretly Does“…
An immensely powerful international organization that most people have never even heard of secretly controls the money supply of the entire globe. It is called the Bank for International Settlements, and it is the central bank of central banks. It is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City. It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws. Even Wikipedia admits that “it is not accountable to any single national government.” The Bank for International Settlements was used to launder money for the Nazis during World War II, but these days the main purpose of the BIS is to guide and direct the centrally-planned global financial system. Today, 58 global central banks belong to the BIS, and it has far more power over how the U.S. economy (or any other economy for that matter) will perform over the course of the next year than any politician does. Every two months, the central bankers of the world gather in Basel for another “Global Economy Meeting”. During those meetings, decisions are made which affect every man, woman and child on the planet, and yet none of us have any say in what goes on. The Bank for International Settlements is an organization that was founded by the global elite and it operates for the benefit of the global elite, and it is intended to be one of the key cornerstones of the emerging one world economic system.
Normally the Bank for International Settlements is not prone to making extremely bold pronouncements, and so this warning about China seems a bit out of character.
Is something going on behind the scenes that we don’t know about?
Without a doubt, the global financial system is shakier and more vulnerable than most people would dare to imagine. Global central banks have been on the greatest money creation spree in recorded history, and interest rates have been pushed to ridiculously low levels.
If you can believe it, approximately 10 trillion dollars worth of bonds are trading at negative interest rates right now. This is completely and utterly irrational, and when this giant bond bubble finally explodes it is going to create a crisis unlike anything the world has ever seen before.
Just recently, Michael Pento of Pento Portfolio Strategies commented on this bubble…
He said the current financial conditions are “the most dangerous markets i have ever witnessed in my entire life – and i’ve been investing for over 25 years… The membrane has been stretched so wide and so tight that its about to burst.”
Pento believes that once the bond crash happens, it will trigger a cataclysmic wave of crashes throughout the entire global financial system…
Mr Pento has now warned that when policymakers signal they are set to stop buying, which will stop bond prices rising, there is going to be a devastating crash – not just in bond markets but across all investment assets.
He said: “When the bond market breaks, when that bubble bursts, it will wipe out every asset, everything will collapse together… I mean diamonds, sports cars, mutual funds, municipal bonds, fixed income, reits, collateralised loan obligations, stocks, bonds – even commodities – will collapse in tandem along with the bond bubble burst.”
Many had been anticipating that we would have already seen a major financial crash in 2016, but so far things have been pretty stable, and this has lulled many into a false sense of complacency.
But it is important to remember that we have seen corporate earnings fall for five quarters in a row, and it is expected to be six when the final numbers for the third quarter come in.
Never before in history have we had a stretch like this without major economic and financial consequences. The following comes from a recent Fortune article which referred to an earlier piece authored by Jim Bianco…
None of this, however, is apparent from how stock market indexes have been moving lately, which unlike the charts above have been going up and to the right. “Since 1947, every time profits fell this much, or for this long, a recession was either underway or about to begin,” writes Bianco. “The only exception was the middle of 1986 to early 1987.”
If you remember, there was a pretty important event that happened in 1987: A massive stock market crash that sapped close to 30% of the S&P 500’s value in just five days.
It is only a matter of time before this earnings recession takes a major bite out of Wall Street.
Stock prices can stay at irrationally high levels for quite a while, but history has shown that every bubble bursts eventually.
And when this bubble bursts, it is going to make 2008 look like a walk in the park.
Can Donald Trump turn the U.S. economy around? This week Trump unveiled details of his new economic plan, and the mainstream media is having a field day criticizing it. But the truth is that we simply cannot afford to stay on the same path that Barack Obama, Hillary Clinton and the Democrats have us on right now. Millions of jobs are being shipped out of the country, the middle class is dying, poverty is exploding, millions of children in America don’t have enough food, and our reckless spending has created the biggest debt bubble in the history of the planet. Something must be done or else we will continue to steamroll toward economic oblivion. So is Donald Trump the man for the hour?
If you would like to read his full economic plan, you can find it on his official campaign website. His plan starts off by pointing out that this has been the weakest “economic recovery” since the Great Depression…
Last week’s GDP report showed that the economy grew a mere 1.2% in the second quarter and 1.2% over the last year. It’s the weakest recovery since the Great Depression – the predictable consequence of massive taxation, regulation, one-side trade deals and onerous energy restrictions.
And Trump is exactly right about how weak this economic recovery has been.
So how would he fix things?
The following are 10 things that every American should know about Donald Trump’s plan to save the U.S. economy…
#1 Donald Trump would lower taxes on the middle class
The tax savings under Trump’s plan would actually be quite substantial for middle class families. The following numbers come from a recent Charisma article…
• A married couple earning $50,000 per year with two children and $8,000 in child care expenses will save 35% from their current tax bill.
• A married couple earning $75,000 per year with two children and $10,000 in child care expenses will receive a 30% reduction in their tax bill.
• Married couple earning $5 million per year with two children and $12,000 in child care expenses will get only a 3% reduction in their tax bill.
#2 Donald Trump would lower taxes on businesses
Under his plan, no business in America would be taxed more than 15 percent. Alternatively, Hillary Clinton’s plan would tax some small businesses at a rate of close to 50 percent. So Trump’s plan would undoubtedly be good for businesses, and it would encourage many that have left the country to return.
But where would the lost tax revenue be made up?
#3 Childcare expenses would be exempt from taxation
For working families with children this would be a great blessing. Without a doubt this is an effort to win over more working women, and this is a demographic that Trump has been struggling with.
It is definitely an idea that I support, but once again where will the money come from to pay for this?
#4 U.S. manufacturers will be allowed to immediately fully expense new plants and equipment
This would undoubtedly lead to a boom in capital investment, but it would also reduce tax revenue. As an emergency measure this would be very good for encouraging manufacturers to stay in America, but it would also likely increase the budget deficit.
#5 A temporary freeze on new regulations
Red tape is one of my big pet peeves, and so I greatly applaud Trump for this proposal. I think that Bob Eschliman put it very well when he wrote the following about Trump’s planned freeze on new regulations…
In 2015 alone, federal agencies issued over 3,300 final rules and regulations, up from 2,400 the prior year. Studies show that small manufacturers face more than three times the burden of the average U.S. business, and the hidden tax from ineffective regulations amounts to “nearly $15,000 per U.S. household” annually. Excessive regulation is costing our country as much as $2 trillion dollars per year, and Trump will end it.
#6 All existing regulations would be reviewed and unnecessary regulations would be eliminated
In particular, Trump’s plan would focus on getting rid of regulations that inhibit hiring. The following are some of the specific areas that he identifies on his official campaign website…
- The Environmental Protection Agency’s Clean Power Plan, which forces investment in renewable energy at the expense of coal and natural gas, raising electricity rates;
- The EPA’s Waters of the United States rule, which gives the EPA the ability to regulate the smallest streams on private land, limiting land use; and
- The Department of Interior’s moratorium on coal mining permits, which put tens of thousands of coal miners out of work.
#7 Donald Trump would fundamentally alter our trade relationships with the rest of the globe
Donald Trump is the first major party nominee in decades to recognize that our trade deficit is absolutely killing our economy. I write about this all the time, and it is a hot button issue for me. So I definitely applaud Trump for proposing the following…
- Appoint trade negotiators whose goal will be to win for America: narrowing our trade deficit, increasing domestic production, and getting a fair deal for our workers.
- Renegotiate NAFTA.
- Withdraw from the TPP.
- Bring trade relief cases to the world trade organization.
- Label China a currency manipulator.
- Apply tariffs and duties to countries that cheat.
- Direct the Commerce Department to use all legal tools to respond to trade violations.
#8 Donald Trump’s plan would be a tremendous boost for the U.S. energy industry
Barack Obama promised to kill the coal industry, and that is one of the few promises that he has actually kept. Obama also killed the Keystone Pipeline, and right now the energy industry as a whole is enduring their worst stretch since the last recession. To turn things around, Trump would do the following…
- Rescind all the job-destroying Obama executive actions including the Climate Action Plan and the Waters of the U.S. rule.
- Save the coal industry and other industries threatened by Hillary Clinton’s extremist agenda.
- Ask Trans Canada to renew its permit application for the Keystone Pipeline.
- Make land in the Outer Continental Shelf available to produce oil and natural gas.
- Cancel the Paris Climate Agreement (limit global warming to 2 degrees Celsius) and stop all payments of U.S. tax dollars to U.N. global warming programs.
#9 Trump would repeal Obamacare
Trump claims that Obamacare would cost our economy two million jobs over the next ten years. And without a doubt, it has already cost the U.S. economy a lot of jobs.
Not only that, but Obamacare has also sent health insurance premiums soaring, and this is putting a tremendous amount of financial pressure on many families.
Trump says that he would “replace” Obamacare, but that is a rather vague statement.
What exactly would he replace it with?
#10 Trump’s plan says nothing about the Federal Reserve
This is a great concern, because the Federal Reserve has far more power over the economy than anyone else does. It is at the very heart of our debt-based system, and unless something is done about the Fed our debt bubble will continue to get even larger.
Since the Federal Reserve was created in 1913, the value of the U.S. dollar has fallen by more than 96 percent and our national debt has gotten more than 5000 times larger. For Trump to not even mention the Federal Reserve in his economic plan is a tremendous oversight.
We are in the midst of a long-term economic decline, and things have not gotten better during the Obama years. If you can believe it, a study that was just released by Harvard even acknowledges this…
America’s economic performance peaked in the late 1990s, and erosion in crucial economic indicators such as the rate of economic growth, productivity growth, job growth, and investment began well before the Great Recession.
Workforce participation, the proportion of Americans in the productive workforce, peaked in 1997. With fewer working-age men and women in the workforce, per-capita income for the U.S. is reduced.
Median real household income has declined since 1999, with incomes stagnating across virtually all income levels. Despite a welcome jump in 2015, median household income remains below the peak attained in 1999, 17 years ago. Moreover, stagnating income and limited job prospects have disproportionately affected lower-income and lower-skilled Americans, leading inequality to rise.
That same study found that the percentage of Americans participating in the labor force peaked back in 1997 and has been steadily declining since that time…
If we continue to do the same things, we will continue to get the same results.
Donald Trump is promising change, and many of his proposals sound good, but there are also some areas to be concerned about.
Ultimately, just tinkering with the tax code and reducing regulations is not going to be enough to turn the U.S. economy around. We need a fundamental overhaul of our economic and financial systems, and Trump’s plan stops well short of that. But without a doubt what he is proposing is vastly superior to Hillary Clinton’s plan, and so he should definitely be applauded for at least moving in the right direction.
The world didn’t completely fall apart in 2015, but it is undeniable that an immense amount of damage was done to the U.S. economy. This year the middle class continued to deteriorate, more Americans than ever found themselves living in poverty, and the debt bubble that we are living in expanded to absolutely ridiculous proportions. Toward the end of the year, a new global financial crisis erupted, and it threatens to completely spiral out of control as we enter 2016. Over the past six months, I have been repeatedly stressing to my readers that so many of the exact same patterns that immediately preceded the financial crisis of 2008 are happening once again, and trillions of dollars of stock market wealth has already been wiped out globally. Some of the largest economies on the entire planet such as Brazil and Canada have already plunged into deep recessions, and just about every leading indicator that you can think of is screaming that the U.S. is heading into one. So don’t be fooled by all the happy talk coming from Barack Obama and the mainstream media. When you look at the cold, hard numbers, they tell a completely different story. The following are 58 facts about the U.S. economy from 2015 that are almost too crazy to believe…
#1 These days, most Americans are living paycheck to paycheck. At this point 62 percent of all Americans have less than 1,000 dollars in their savings accounts, and 21 percent of all Americans do not have a savings account at all.
#2 The lack of saving is especially dramatic when you look at Americans under the age of 55. Incredibly, fewer than 10 percent of all Millennials and only about 16 percent of those that belong to Generation X have 10,000 dollars or more saved up.
#3 It has been estimated that 43 percent of all American households spend more money than they make each month.
#4 For the first time ever, middle class Americans now make up a minority of the population. But back in 1971, 61 percent of all Americans lived in middle class households.
#5 According to the Pew Research Center, the median income of middle class households declined by 4 percent from 2000 to 2014.
#6 The Pew Research Center has also found that median wealth for middle class households dropped by an astounding 28 percent between 2001 and 2013.
#7 In 1970, the middle class took home approximately 62 percent of all income. Today, that number has plummeted to just 43 percent.
#8 There are still 900,000 fewer middle class jobs in America than there were when the last recession began, but our population has gotten significantly larger since that time.
#9 According to the Social Security Administration, 51 percent of all American workers make less than $30,000 a year.
#10 For the poorest 20 percent of all Americans, median household wealth declined from negative 905 dollars in 2000 to negative 6,029 dollars in 2011.
#11 A recent nationwide survey discovered that 48 percent of all U.S. adults under the age of 30 believe that “the American Dream is dead”.
#12 Since hitting a peak of 69.2 percent in 2004, the rate of homeownership in the United States has been steadily declining every single year.
#13 At this point, the U.S. only ranks 19th in the world when it comes to median wealth per adult.
#14 Traditionally, entrepreneurship has been one of the primary engines that has fueled the growth of the middle class in the United States, but today the level of entrepreneurship in this country is sitting at an all-time low.
#15 For each of the past six years, more businesses have closed in the United States than have opened. Prior to 2008, this had never happened before in all of U.S. history.
#16 If you can believe it, the 20 wealthiest people in this country now have more money than the poorest 152 million Americans combined.
#17 The top 0.1 percent of all American families have about as much wealth as the bottom 90 percent of all American families combined.
#18 If you have no debt and you also have ten dollars in your pocket, that gives you a greater net worth than about 25 percent of all Americans.
#19 The number of Americans that are living in concentrated areas of high poverty has doubled since the year 2000.
#20 An astounding 48.8 percent of all 25-year-old Americans still live at home with their parents.
#21 According to the U.S. Census Bureau, 49 percent of all Americans now live in a home that receives money from the government each month, and nearly 47 million Americans are living in poverty right now.
#22 In 2007, about one out of every eight children in America was on food stamps. Today, that number is one out of every five.
#23 According to Kathryn J. Edin and H. Luke Shaefer, the authors of a new book entitled “$2.00 a Day: Living on Almost Nothing in America“, there are 1.5 million “ultrapoor” households in the United States that live on less than two dollars a day. That number has doubled since 1996.
#24 46 million Americans use food banks each year, and lines start forming at some U.S. food banks as early as 6:30 in the morning because people want to get something before the food supplies run out.
#25 The number of homeless children in the U.S. has increased by 60 percent over the past six years.
#26 According to Poverty USA, 1.6 million American children slept in a homeless shelter or some other form of emergency housing last year.
#27 Police in New York City have identified 80 separate homeless encampments in the city, and the homeless crisis there has gotten so bad that it is being described as an “epidemic”.
#28 If you can believe it, more than half of all students in our public schools are poor enough to qualify for school lunch subsidies.
#29 According to a Census Bureau report that was released a while back, 65 percent of all children in the U.S. are living in a home that receives some form of aid from the federal government.
#30 According to a report that was published by UNICEF, almost one-third of all children in this country “live in households with an income below 60 percent of the national median income”.
#31 When it comes to child poverty, the United States ranks 36th out of the 41 “wealthy nations” that UNICEF looked at.
#32 An astounding 45 percent of all African-American children in the United States live in areas of “concentrated poverty”.
#33 40.9 percent of all children in the United States that are being raised by a single parent are living in poverty.
#34 There are 7.9 million working age Americans that are “officially unemployed” right now and another 94.4 million working age Americans that are considered to be “not in the labor force”. When you add those two numbers together, you get a grand total of 102.3 million working age Americans that do not have a job right now.
#35 According to a recent Pew survey, approximately 70 percent of all Americans believe that “debt is a necessity in their lives”.
#36 53 percent of all Americans do not even have a minimum three-day supply of nonperishable food and water at home.
#37 According to John Williams of shadowstats.com, if the U.S. government was actually using honest numbers the unemployment rate in this nation would be 22.9 percent.
#38 Back in 1950, more than 80 percent of all men in the United States had jobs. Today, only about 65 percent of all men in the United States have jobs.
#39 The labor force participation rate for men has plunged to the lowest level ever recorded.
#40 Wholesale sales in the U.S. have fallen to the lowest level since the last recession.
#41 The inventory to sales ratio has risen to the highest level since the last recession. This means that there is a whole lot of unsold inventory that is just sitting around out there and not selling.
#42 The ISM manufacturing index has fallen for five months in a row.
#43 Orders for “core” durable goods have fallen for ten months in a row.
#44 Since March, the amount of stuff being shipped by truck, rail and air inside the United States has been falling every single month on a year over year basis.
#45 Wal-Mart is projecting that its earnings may fall by as much as 12 percent during the next fiscal year.
#46 The Business Roundtable’s forecast for business investment in 2016 has dropped to the lowest level that we have seen since the last recession.
#47 Corporate debt defaults have risen to the highest level that we have seen since the last recession. This is a huge problem because corporate debt in the U.S. has approximately doubled since just before the last financial crisis.
#48 Holiday sales have gone negative for the first time since the last recession.
#49 The velocity of money in the United States has dropped to the lowest level ever recorded. Not even during the depths of the last recession was it ever this low.
#50 Barack Obama promised that his program would result in a decline in health insurance premiums by as much as $2,500 per family, but in reality average family premiums have increased by a total of $4,865 since 2008.
#51 Today, the average U.S. household that has at least one credit card has approximately $15,950 in credit card debt.
#52 The number of auto loans that exceed 72 months has hit at an all-time high of 29.5 percent.
#53 According to Dr. Housing Bubble, there have been “nearly 8 million homes lost to foreclosure since the homeownership rate peaked in 2004″.
#54 One very disturbing study found that approximately 41 percent of all working age Americans either currently have medical bill problems or are paying off medical debt. And collection agencies seek to collect unpaid medical bills from about 30 million of us each and every year.
#55 The total amount of student loan debt in the United States has risen to a whopping 1.2 trillion dollars. If you can believe it, that total has more than doubled over the past decade.
#56 Right now, there are approximately 40 million Americans that are paying off student loan debt. For many of them, they will keep making payments on this debt until they are senior citizens.
#57 When you do the math, the federal government is stealing more than 100 million dollars from future generations of Americans every single hour of every single day.
#58 An astounding 8.16 trillion dollars has already been added to the U.S. national debt while Barack Obama has been in the White House. That means that it is already guaranteed that we will add an average of more than a trillion dollars a year to the debt during his presidency, and we still have more than a year left to go.
What we have seen so far is just the very small tip of a very large iceberg. About six months ago, I stated that “our problems will only be just beginning as we enter 2016″, and I stand by that prediction.
We are in the midst of a long-term economic collapse that is beginning to accelerate once again. Our economic infrastructure has been gutted, our middle class is being destroyed, Wall Street has been transformed into the biggest casino in the history of the planet, and our reckless politicians have piled up the biggest mountain of debt the world has ever seen.
Anyone that believes that everything is “perfectly fine” and that we are going to come out of this “stronger than ever” is just being delusional. This generation was handed the keys to the finest economic machine of all time, and we wrecked it. Decades of incredibly foolish decisions have culminated in a crisis that is now reaching a crescendo, and this nation is in for a shaking unlike anything that it has ever seen before.
So enjoy the rest of 2015 while you still can.
2016 is almost here, and it is going to be quite a year…
Is there any doubt that we are living in a bubble economy? At this moment in the United States we are simultaneously experiencing a stock market bubble, a government debt bubble, a corporate bond bubble, a bubble in San Francisco real estate, a farmland bubble, a derivatives bubble and a student loan debt bubble. And of course similar things could be said about most of the rest of the planet as well. In fact, the total amount of government debt around the world has risen by about 40 percent just since the last recession. But it is never sustainable when asset prices and debt levels increase much faster than the overall level of economic growth. History has shown us that all financial bubbles eventually burst. And when these current financial bubbles in America burst, the pain is going to be absolutely enormous.
You know that things are getting perilous when even the New York Times starts pointing out financial bubbles everywhere. The following is a short excerpt from a recent NotQuant article…
The New York Times points out that just about everything on Earth is expensive by historical standards. And then asks the seemingly obvious question: Does that make it a bubble?
Welcome to the Everything Boom — and, quite possibly, the Everything Bubble. Around the world, nearly every asset class is expensive by historical standards. Stocks and bonds; emerging markets and advanced economies; urban office towers and Iowa farmland; you name it, and it is trading at prices that are high by historical standards relative to fundamentals. The inverse of that is relatively low returns for investors.
“Quite possibly?” We’re not sure what definition of the word “bubble” they’re using. But in our book when the price of literally everything blasts upwards, obliterating the previous ceilings of historical benchmarks, it’s a pretty good indication that you’re in a bubble.
Of course when most people think of financial bubbles the very first thing they think of is the stock market. And without a doubt we are in a stock market bubble right now. The Dow has risen more than 10,000 points since the depths of the last recession. And it is nearly 3,000 points higher than it was at the peak of the last stock market bubble in 2007 when our economy was far stronger than it is now…
But of course these stock prices do not reflect economic reality in any way whatsoever. Our economy has not even come close to recovering to the level it was at prior to the last financial crisis, and yet thanks to massive Federal Reserve money printing stock prices have soared to unprecedented heights.
At some point a massive correction is coming. No stock market bubble lasts forever. For a whole bunch of technical reasons why serious market turmoil is on the horizon, please see a recent Forbes article entitled “These 23 Charts Prove That Stocks Are Heading For A Devastating Crash“.
The bubbles in the financial markets have become so glaring that even the central bankers are starting to warn us about them. For example, just consider what the Bank for International Settlements is saying…
The Bank for International Settlements has warned that “euphoric” financial markets have become detached from the reality of a lingering post-crisis malaise, as it called for governments to ditch policies that risk stoking unsustainable asset booms.
While the global economy is struggling to escape the shadow of the crisis of 2007-09, capital markets are “extraordinarily buoyant”, the Basel-based bank said, in part because of the ultra-low monetary policy being pursued around the world. Leading central banks should not fall into the trap of raising rates “too slowly and too late”, the BIS said, calling for policy makers to halt the steady rise in debt burdens around the world and embark on reforms to boost productivity.
In its annual report, the BIS also warned of the risks brewing in emerging markets, setting out early warning indicators of possible banking crises in a number of jurisdictions, including most notably China.
“Particularly for countries in the late stages of financial booms, the trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on,” it said.
Sadly, just like in 2007, most people are choosing not to listen to these warnings.
Another very troubling bubble that is brewing is the massive bubble of consumer credit in the United States. According to the Wall Street Journal, consumer credit in the United States increased at a 7.4 percent annual rate in May…
The Federal Reserve reported Tuesday that consumer credit—consumer loans excluding real estate debt—in May increased at an annual rate of 7.4% to a record $3.195 trillion. Most of that gain came from a 9.3% increase in nonrevolving credit, the bulk of which is accounted for by auto and student loans. Revolving credit, which is primarily credit-card debt, expanded at a more muted 2.5% rate after jumping 12.3% in May.
That might be okay if our paychecks were increasing at a 7.4% annual rate, but that is not the case at all. In fact, median household income in America has gone down for five years in a row. As the quality of our jobs goes down the drain, our paychecks are shrinking even as our bills go up. This is putting an incredible amount of stress on tens of millions of American families.
And when you look at the overall debt bubble in this country, things become even more frightening.
In a previous article, I shared a chart which shows the incredible growth of total debt in the United States. Over the past 40 years, it has gone from about 2.2 trillion dollars to nearly 60 trillion dollars…
Is this sustainable?
Of course not.
None of these financial bubbles are.
It is not a question of “if” they will burst. It is only a question of “when”.
And some believe that we are rapidly approaching that point. In fact, Marc Faber believes that we are seeing signs that it may be starting to happen already…
It’s the question investors everywhere are wrestling with: Are asset prices in a bubble, or do they simply reflect the fact that the global economy is growing once again?
For Marc Faber, editor of the Gloom, Boom & Doom Report, the answer is clear. In fact, he says the bubble may already be bursting.
“I think it’s a colossal bubble in all asset prices, and eventually it will burst, and maybe it has begun to burst already,” Faber said Tuesday on CNBC’s ‘Futures Now‘ as the S&P 500 lost ground for the second-straight session.
So what do you think?
How much time do you believe that we have before these bubbles start to burst?
Please feel free to share your thoughts by posting a comment below…
What would you say if I told you that Americans are nearly 60 TRILLION dollars in debt? Well, it is true. When you total up all forms of debt including government debt, business debt, mortgage debt and consumer debt, we are 59.4 trillion dollars in debt. That is an amount of money so large that it is difficult to describe it with words. For example, if you were alive when Jesus Christ was born and you had spent 80 million dollars every single day since then, you still would not have spent 59.4 trillion dollars by now. And most of this debt has been accumulated in recent decades. If you go back 40 years ago, total debt in America was sitting at about 2.2 trillion dollars. Somehow over the past four decades we have allowed the total amount of debt in the United States to get approximately 27 times larger. This is utter insanity, and anyone that thinks this is sustainable is completely deluded. We are living in the greatest debt bubble of all time, and there is no way that this is going to end well. Just check out the chart…
When the last recession hit, total debt in America actually started going down for a short period of time.
But then the Federal Reserve and our politicians in Washington worked feverishly to reinflate the bubble and they assured everyone that everything was going to be just fine. So Americans once again resorted to their free spending ways, and now total debt in the United States is rising at almost the same trajectory as before and has hit a new all-time record high.
We see a similar thing when we look at a chart for consumer debt in America…
For a while after the recession it was trendy to cut up your credit cards and get out of debt.
But that fad wore off rather quickly, didn’t it?
It is almost as if 2008 never happened. We are making the same mistakes with debt that we did before.
As I noted recently, total consumer credit in the U.S. has risen by 22 percent over the past three years alone, and at this point 56 percent of all Americans have a subprime credit rating.
And have you noticed that a lot of people are not afraid to extend themselves in order to buy shiny new vehicles these days?
During the first quarter 0f this year, the size of the average vehicle loan soared to a new all-time record high of $27,612.
Five years ago, that number was just $24,174.
And as I noted in one recent article, the size of the average monthly car payment in this country is now up to $474.
That is practically a mortgage payment.
Speaking of mortgage payments, even though home sales have been falling and the rate of homeownership in the United States is the lowest that it has been in 19 years, a very large percentage of those who own homes are still overextended.
In fact, one recent survey discovered that a whopping 52 percent of Americans cannot even afford the house that they are living in right now.
At the same time, an increasing number of Americans are acting as if the last financial crisis never happened and are treating their homes like piggy banks. Home equity loans are soaring again, and when the next great crisis strikes a lot of those people are going to end up getting into a lot of financial trouble.
There has been much written about what is wrong with the housing industry, but the truth is that home prices are still way too high and young adults cannot afford to purchase homes because they are already loaded down by huge amounts of debt even before they get to the point where they are ready to buy.
In fact, a newly released survey found that 47 percent of millennials are spending at least half of their paychecks on paying off debt…
Four in 10 millennials say they are “overwhelmed” by their debt — nearly double the number of baby boomers who feel that way, according to a Wells Fargo survey of more than 1,600 millennials between 22 and 33 years old, and 1,500 baby boomers between 49 and 59 years old.
To try to get out from underneath it, 47% said they spend at least half of their monthly paychecks on paying off their debts.
When I read that I was absolutely astounded.
Of course the biggest debt that many young adults are facing is student loan debt. According to the Federal Reserve, there is now more than 1.2 trillion dollars of student loan debt in this country, and about 124 billion dollars of that total is more than 90 days delinquent.
What we have done to our young people is shameful. We have encouraged them to sign up for a lifetime of debt slavery before they even understand what life is all about. The following is an excerpt from my previous article entitled “Is College A Waste Of Time And Money?“…
In America today, approximately two-thirds of all college students graduate with student loan debt, and the average debt level has been steadily rising. In fact, one study found that “70 percent of the class of 2013 is graduating with college-related debt – averaging $35,200 – including federal, state and private loans, as well as debt owed to family and accumulated through credit cards.”
That would be bad enough if most of these students were getting decent jobs that enabled them to service that debt.
But unfortunately, that is often not the case. It has been estimated that about half of all recent college graduates are working jobs that do not even require a college degree.
Considering what you just read, is it a surprise that half of all college graduates in America are still financially dependent on their parents when they are two years out of college?
According to the U.S. Census Bureau, only 36 percent of all Americans under the age of 35 own a home at this point. That is the lowest level that has ever been recorded.
And we are passing on to our young people the largest single debt in all of human history. Weighing in at 17.5 trillion dollars, the U.S. national debt is a colossal behemoth. And almost all of that debt has been accumulated over the past 40 years. In fact, 40 years ago the U.S. national debt was less than half a trillion dollars.
But this is just the beginning. As the Baby Boomer “demographic tsunami” washes through our economy, we are going to be facing a wave of red ink unlike anything we have ever contemplated before.
Meanwhile, the rest of the planet is drowning in debt as well.
As I wrote about the other day, the total amount of debt in the world has risen to a new all-time record high of $223,300,000,000,000.
Our “leaders” keep acting as if these debt levels can keep growing much faster than the overall level of economic growth indefinitely.
But anyone with even a shred of common sense knows that you can’t spend more money that you bring in forever.
At some point, a day of reckoning arrives.
2008 should have been a major wake up call that resulted in massive changes. But instead, our leaders just patched up the old system and reinflated the old bubbles so that they are now even larger than they were before.
They assure us that they know exactly what they are doing and that everything will be just fine.
Unfortunately, they are dead wrong.
The next great economic crisis is rapidly approaching, and most people are going to be totally blindsided by it. Even though the warning signs are glaringly obvious, most Americans continue to believe that our “leaders” know what they are doing and that everything will be just fine. But what will happen when the next great financial crash happens and trillions of dollars of “paper wealth” disappear into thin air? What will happen when the coming credit crunch causes economic activity to dramatically slow down and millions upon millions of people lose their jobs? This shouldn’t sound far-fetched to you. Remember, this is exactly the kind of thing that we saw back in 2008, and the next great financial crisis is likely going to be significantly worse. Our economy is in far worse shape than it was back in 2008, and government dependence is now at an all-time high even though most Americans are still enjoying debt-fueled false prosperity. We are living in the largest debt bubble in the history of the planet, and when it bursts we are going to experience a crippling “adjustment” to our standard of loving. Some people understand this and are busy preparing for what is ahead. It has been estimated that there are approximately 3 million “preppers” in the United States, and that number is growing all the time. Unfortunately, most Americans are not preparing for the coming economic depression and they are going to bitterly regret it.
So what does preparing for the coming economic depression look like?
Well, it doesn’t have to be complicated. Most of the things that you should do are just common sense.
But there are some people that take things to extremes. For example, a new National Geographic series is featuring a family that is actually constructing a “Doomsday Castle“. The former U.S. Army officer that is building this unusual home is trying to prepare for virtually every type of disaster that he can imagine…
Meet Brent Sr., the leader of the six-person family. Brent is a former Army Infantry Training Officer who is heading up the project to build an “EMP (electromagnetic pulse)-proof medieval castle in the woods of the Carolinas.”
According to National Geographic, Brent is teaching five of his 10 children survival skills.
The unfinished, fortified castle that Brent Sr. is building — an idea he got during the Y2K prep craze — will be able to sustain an EMP-event that could wipe out a power grid, but will also survive natural disasters like hurricanes.
He even plans to train his family members to use crossbows and a catapult to defend against potential home invaders.
Not many people out there are going to take “prepping” to such extremes.
But even if you don’t plan to build a “Doomsday Castle”, that doesn’t mean that you should be doing nothing.
Sadly, most Americans are quite ill-prepared for a major economic downturn at this point. In fact, most Americans seem to be doing almost nothing to prepare.
Just consider the following statistics. Most of these numbers come from one of my previous articles…
-According to a survey that was recently released, 76 percent of all Americans are living paycheck to paycheck.
–46 percent of all Americans have less than $800 in savings.
–27 percent of all Americans do not have even a single penny saved up.
-Less than one out of every four Americans has enough money stored away to cover six months of expenses.
-Each year, 12 million Americans take out high interest payday loans.
-In 1989, the debt to income ratio of the average American family was about 58 percent. Today it is up to 154 percent.
-It is estimated that less than 10 percent of the U.S. population owns any gold or silver for investment purposes.
–44 percent of all Americans do not have first-aid kits in their homes.
–48 percent of all Americans do not have any emergency supplies stored up.
–53 percent of all Americans do not have a 3 day supply of nonperishable food and water in their homes.
–One survey asked Americans how long they thought they would survive if the electrical grid went down for an extended period of time. Incredibly, 21 percent said that they would survive for less than a week, an additional 28 percent said that they would survive for less than two weeks, and nearly 75 percent said that they would be dead before the two month mark.
Those numbers are absolutely appalling.
When the system fails, most people are going to be completely blindsided by it and millions upon millions of people are going to absolutely freak out.
Don’t let that happen to you.
So what are some basic things that you can do to get prepared for the great economic storm that is coming?
The following are a few of the things that Nicole Foss suggests…
1) Hold no debt (for most people this means renting)
2) Hold cash and cash equivalents (short term treasuries) under your own control
3) Don’t trust the banking system, deposit insurance or no deposit insurance
4) Sell equities, real estate, most bonds, commodities, collectibles (or short if you can afford to gamble)
5) Gain some control over the necessities of your own existence if you can afford it
6) Be prepared to work with others as that will give you far greater scope for resilience and security
7) If you have done all that and still have spare resources, consider precious metals as an insurance policy
8) Be worth more to your employer than he is paying you
9) Look after your health!
I think all of those are great pieces of advice.
In addition, below I have posted some of the things that I personally recommend. The following is an excerpt from one of my previous articles entitled “25 Things That You Should Do To Get Prepared For The Coming Economic Collapse“…
#1 An Emergency Fund
Do you remember what happened when the financial system almost collapsed back in 2008? Millions of Americans suddenly lost their jobs, and because many of them were living paycheck to paycheck, many of them also got behind on their mortgages and lost their homes. You don’t want to lose everything that you have worked for during this next major economic downturn. It is imperative that you have an emergency fund. It should be enough to cover all of your expenses for at least six months, but I would encourage you to have an emergency fund that is even larger than that.
#2 Don’t Put All Of Your Eggs Into One Basket
If the wealth confiscation in Cyprus has taught us anything, it is that we should not put all of our eggs in one basket. If all of your money is in one single bank account, it would be easy to wipe out. But if you have your money scattered around a number of different places it will give you a little bit more security.
#3 Keep Some Cash At Home
This goes along with the previous point. While it is not wise to keep all of your money at home, you do want to keep some cash on hand. If there is an extended bank holiday or if a giant burst from the sun causes the ATM machines to go down, you want to be able to have enough cash to buy the things that your family needs. Just ask the people of Cyprus how crippling a bank holiday can be. One way to keep your cash secure at home is by storing it in a concealed safe.
#4 Get Out Of Debt
A lot of people seem to assume that an economic collapse would wipe out all debts, but that will probably not be the case. In fact, if you are in a tremendous amount of debt you will be very vulnerable if the economy collapses and you are not able to find a job. Just ask the people who were overextended and lost their jobs during the last recession. So please get out of debt. Many debt collectors are becoming increasingly ruthless. In many areas of the country they are now routinely putting debtors into prison. You do not want to be a slave to debt when the next wave of the economic collapse strikes.
#5 Gold And Silver
In the long-term, the U.S. dollar is going to lose a tremendous amount of value and inflation is going to absolutely skyrocket. That is one reason why so many people are investing very heavily in gold, silver and other precious metals. All over the globe, the central banks of the world are recklessly printing money. Everyone knows that this is going to end very badly. In fact, there is already a push in more than a dozen U.S. states to allow gold and silver coins to be used as legal tender. Someday you will be glad that you invested in gold and silver now while their prices were still low.
#6 Reduce Your Expenses
A lot of people claim that they can’t put any money toward prepping, but the truth is that we all have room to reduce our expenses. We all spend money on things that we do not really need. Those that are “lean and mean” will tend to do much better during the times that are coming.
#7 Start A Side Business
If you do not have much money, a great way to increase your income is by starting a side business. And it does not take a lot of money – there are many side businesses that you can start for next to nothing. And starting a side business will allow you to become less dependent on your job. In this economic environment, a job could disappear at literally any time.
#8 Move Away From The Big Cities If Possible
For many people, this is simply not possible. Many Americans are still completely and totally dependent on their jobs. But if you are able, now is a good time to move away from the big cities. When the next major economic downturn strikes, there will be rioting and a dramatic rise in crime in the major cities. If you are able to move to a more rural area you will probably be in much better shape.
#9 Store Food
Global food reserves have reached their lowest level in nearly 40 years. As the economy gets even worse and global weather patterns become even more unstable, the price of food will go much higher and global food supplies will become much tighter. In the long run, you will be glad for the money that you put into long-term food storage now.
#10 Learn To Grow Your Own Food
This is a skill that most Americans possessed in the past, but that most Americans today have forgotten. Growing your own food is a way to become more independent of the system, and it is a way to get prepared for what is ahead.
#11 Nobody Can Survive Without Water
Without water, you would not even make it a few days in an emergency situation. It is imperative that you have a plan to provide clean drinking water for your family when disaster strikes.
#12 Have A Plan For When The Grid Goes Down
What would you do if the grid went down and you suddenly did not have power for an extended period of time? Anyone that has spent more than a few hours without power knows how frustrating this can be. You need to have a plan for how you are going to provide power to your home that is independent of the power company.
#13 Have Blankets And Warm Clothing On Hand
This is more for emergency situations or for a complete meltdown of society. During any major crisis, blankets and warm clothing are in great demand. They also could potentially make great barter items.
#14 Store Personal Hygiene Supplies
A lot of preppers store up huge amounts of food, but they forget all about personal hygiene supplies. During a long crisis, these are items that you would greatly miss if you do not have them stored up. These types of supplies would also be great for barter.
#15 Store Medicine And Medical Supplies
You will also want to store up medical supplies and any medicine that you may need. In an emergency situation, you definitely would not want to be without bandages and a first-aid kit. Over the course of a long crisis, you do not want to run out of any medicines that are critical for your health.
#16 Stock Up On Vitamins
A lot of preppers do not think about this either, but it is very important. These days, it is becoming increasingly difficult to get adequate nutrition from the foods that we eat. That is why it is very important to have an adequate store of vitamins and other supplements.
#17 Make A List Of Other Supplies That You Will Need
During any crisis, there will be a lot of other things that you will need in addition to food and water. The following are just a few basic things that it would be wise to have on hand…
– an axe
– a can opener
– battery-powered radio
– extra batteries
– lighters or matches
– fire extinguisher
– sewing kit
This list could be much, much longer, but hopefully this will get you started.
#18 Don’t Forget The Special Needs Of Your Babies And Your Pets
Young children and pets have special needs. As you store supplies, don’t forget about the things that they will need as well.
This may sound trivial, but the truth is that our entertainment-addicted society would become very bored and very frustrated if the grid suddenly went down for an extended period of time. Card games and other basic forms of entertainment can make enduring a crisis much easier.
In the years ahead, being able to defend your home and your family is going to become increasingly important. When the economy crashes, people are going to start to become very desperate. And desperate people do desperate things.
#21 Get Your Ammunition While You Still Can
Your firearms will not do you much good if you do not have ammunition for them. Already there are widespread reports of huge ammunition shortages. The following is from a recent CNS News article…
“The run on ammunition has manufacturers scrambling to accommodate demand and reassure customers, as many new and seasoned gun owners stock up over fears of new firearms regulations at both the state and federal levels.”
Don’t just assume that you will always be able to purchase large amounts of ammunition whenever you want. Get it now while you still can.
#22 If You Have To Go…
Have a plan for what you and your family will do if you are forced to leave your home. If you do have to go, the following are some items that you will want to have on hand…
– a map of the area
– a compass
– backpacks for every member of the family
– sleeping bags
– warm clothing
– comfortable shoes or hiking boots
One of the most important assets in any crisis situation is community. If you have friends or neighbors that you can depend upon, that is invaluable. The time spent building those bonds now will pay off greatly during a major crisis.
#24 Have A Back-Up Plan And Be Flexible
Mike Tyson once said the following…
“Everyone has a plan until they get punched in the mouth.”
No plan ever unfolds perfectly. When your plan is disrupted, what will you do?
It will be imperative for all of us to have a back-up plan and to be flexible during the years ahead.
#25 Keep Your Prepping To Yourself
Do not go around and tell everyone in the area where you live about your prepping. If you do, then you may find yourself overwhelmed with “visitors” when everything falls apart.
And please do not go on television and brag about your prepping to a national audience.
Prepping is something that you want to keep to yourself, unless you want hordes of desperate people banging on your door in the future.
For much more on prepping, I would encourage you to check out the dozens of excellent websites out there that teach people advanced prepping techniques for free.
So what do you think about all of this?
Are you getting prepared for the coming economic depression?
Please feel free to share your perspective on prepping by posting a comment below…
There is one vitally important number that everyone needs to be watching right now, and it doesn’t have anything to do with unemployment, inflation or housing. If this number gets too high, it will collapse the entire U.S. financial system. The number that I am talking about is the yield on 10 year U.S. Treasuries. When that number goes up, long-term interest rates all across the financial system start increasing. When long-term interest rates rise, it becomes more expensive for the federal government to borrow money, it becomes more expensive for state and local governments to borrow money, existing bonds lose value and bond investors lose a lot of money, mortgage rates go up and monthly payments on new mortgages rise, and interest rates throughout the entire economy go up and this causes economic activity to slow down. On top of everything else, there are more than 440 trillion dollars worth of interest rate derivatives sitting out there, and rapidly rising interest rates could cause that gigantic time bomb to go off and implode our entire financial system. We are living in the midst of the greatest debt bubble in the history of the world, and the only way that the game can continue is for interest rates to stay super low. Unfortunately, the yield on 10 year U.S. Treasuries has started to rise, and many experts are projecting that it is going to continue to rise.
On August 2nd of last year, the yield on 10 year U.S. Treasuries was just 1.48%, and our entire debt-based economy was basking in the glow of ultra-low interest rates. But now things are rapidly changing. On Wednesday, the yield on 10 year U.S. Treasuries hit 2.70% before falling back to 2.58% on “good news” from the Federal Reserve.
Historically speaking, rates are still super low, but what is alarming is that it looks like we hit a “bottom” last year and that interest rates are only going to go up from here. In fact, according to CNBC many experts believe that we will soon be pushing up toward the 3 percent mark…
Round numbers like 1,700 on the S&P 500 are well and good, but savvy traders have their minds on another integer: 2.75 percent
That was the high for the 10-year yield this year, and traders say yields are bound to go back to that level. The one overhanging question is how stocks will react when they see that number.
“If we start to push up to new highs on the 10-year yield so that’s the 2.75 level—I think you’d probably see a bit of anxiety creep back into the marketplace,” Bank of America Merrill Lynch’s head of global technical strategy, MacNeil Curry, told “Futures Now” on Tuesday.
And Curry sees yields getting back to that level in the short term, and then some. “In the next couple of weeks to two months or so I think we’ve got a push coming up to the 2.85, 2.95 zone,” he said.
This rise in interest rates has been expected for a very long time – it is just that nobody knew exactly when it would happen. Now that it has begun, nobody is quite sure how high interest rates will eventually go. For some very interesting technical analysis, I encourage everyone to check out an article by Peter Brandt that you can find right here.
And all of this is very bad news for stocks. The chart below was created by Chartist Friend from Pittsburgh, and it shows that stock prices have generally risen as the yield on 10 year U.S. Treasuries has steadily declined over the past 30 years…
When interest rates go down, that spurs economic activity, and that is good for stock prices.
So when interest rates start going up rapidly, that is not a good thing for the stock market at all.
The Federal Reserve has tried to keep long-term interest rates down by wildly printing money and buying bonds, and even the suggestion that the Fed may eventually “taper” quantitative easing caused the yield on 10 year U.S. Treasuries to absolutely soar a few weeks ago.
So the Fed has backed off on the “taper” talk for now, but what happens if the yield on 10 year U.S. Treasuries continues to rise even with the wild money printing that the Fed has been doing?
At that point, the Fed would begin to totally lose control over the situation. And if that happens, Bill Fleckenstein told King World News the other day that he believes that we could see the stock market suddenly plunge by 25 percent…
Let’s say Ben (Bernanke) comes out tomorrow and says, ‘We are not going to taper.’ But let’s just say the bond market trades down anyway, and the next thing you know we go through the recent highs and a month from now the 10-Year is at 3%. And people start to realize they are not even tapering and the bond market is backed up….
They will say, ‘Why is this happening?’ Then they may realize the bond market is discounting the inflation we already have.
At some point the bond markets are going to say, ‘We are not comfortable with these policies.’ Obviously you can’t print money forever or no emerging country would ever have gone broke. So the bond market starts to back up and the economy gets worse than it is now because rates are rising. So the Fed says, ‘We can’t have this,’ and they decide to print more (money) and the bond market backs up (even more).
All of the sudden it becomes clear that money printing not only isn’t the solution, but it’s the problem. Well, with rates going from where they are to 3%+ on the 10-Year, one of these days the S&P futures are going to get destroyed. And if the computers ever get loose on the downside the market could break 25% in three days.
And as I have written about previously, we have seen a huge spike in margin debt in recent months, and this could make it even easier for a stock market collapse to happen. A recent note from Deutsche Bank explained precisely why margin debt is so dangerous…
Margin debt can be described as a tool used by stock speculators to borrow money from brokerages to buy more stock than they could otherwise afford on their own. These loans are collateralized by stock holdings, so when the market goes south, investors are either required to inject more cash/assets or become forced to sell immediately to pay off their loans – sometimes leading to mass pullouts or crashes.
But of much greater concern than a stock market crash is the 441 trillion dollar interest rate derivatives bubble that could implode if interest rates continue to rise rapidly.
Deutsche Bank is the largest bank in Europe, and at this point they have 55.6 trillion euros of total exposure to derivatives.
But the GDP of the entire nation of Germany is only about 2.7 trillion euros for a whole year.
We are facing a similar situation in the United States. Our GDP for 2013 will be somewhere between 15 and 16 trillion dollars, but many of our big banks have exposure to derivatives that absolutely dwarfs our GDP. The following numbers come from one of my previous articles entitled “The Coming Derivatives Panic That Will Destroy Global Financial Markets“…
Total Assets: $1,812,837,000,000 (just over 1.8 trillion dollars)
Total Exposure To Derivatives: $69,238,349,000,000 (more than 69 trillion dollars)
Total Assets: $1,347,841,000,000 (a bit more than 1.3 trillion dollars)
Total Exposure To Derivatives: $52,150,970,000,000 (more than 52 trillion dollars)
Bank Of America
Total Assets: $1,445,093,000,000 (a bit more than 1.4 trillion dollars)
Total Exposure To Derivatives: $44,405,372,000,000 (more than 44 trillion dollars)
Total Assets: $114,693,000,000 (a bit more than 114 billion dollars – yes, you read that correctly)
Total Exposure To Derivatives: $41,580,395,000,000 (more than 41 trillion dollars)
That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 362 times greater than their total assets.
And remember, the biggest chunk of those derivatives contracts is made up of interest rate derivatives.
Just imagine what would happen if a life insurance company wrote millions upon millions of life insurance contracts and then everyone suddenly died.
What would happen to that life insurance company?
It would go completely broke of course.
Well, that is what our major banks are facing today.
They have written trillions upon trillions of dollars worth of interest rate derivatives contracts, and they are betting that interest rates will not go up rapidly.
But what if they do?
And the truth is that interest rates have a whole lot of room to go up. The chart below shows how the yield on 10 year U.S. Treasuries has moved over the past couple of decades…
As you can see, the yield on 10 year U.S. Treasuries was hovering around the 6 percent mark back in the year 2000.
Back in 1990, the yield on 10 year U.S. Treasuries hovered between 8 and 9 percent.
If we return to “normal” levels, our financial system will implode. There is no way that our debt-addicted system would be able to handle it.
So watch the yield on 10 year U.S. Treasuries very carefully. It is the most important number in the entire U.S. economy.
If that number gets too high, the game is over.