The Beginning Of The End
The Beginning Of The End By Michael T. Snyder - Kindle Version

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Show This To Anyone That Believes That “Things Are Getting Better” In America

Show This To Anyone That Believes That Things Are Getting Better In AmericaHow can anyone not see that the U.S. economy is collapsing all around us?  It just astounds me when people try to tell me that “everything is just fine” and that “things are getting better” in America.  Are there people out there that are really that blind?  If you want to see the economic collapse, just open up your eyes and look around you.  By almost every economic and financial measure, the U.S. economy has been steadily declining for many years.  But most Americans are so tied into “the matrix” that they can only understand the cheerful propaganda that is endlessly being spoon-fed to them by the mainstream media.  As I have said so many times, the economic collapse is not a single event.  The economic collapse has been happening, it is is happening right now, and it will continue to happen.  Yes, there will be times when our decline will be punctuated by moments of great crisis, but that will be the exception rather than the rule.  A lot of people that write about “the economic collapse” hype it up as if it will be some huge “event” that will happen very rapidly and then once it is all over we will rebuild.  Unfortunately, that is not how the real world works.  We are living in the greatest debt bubble in the history of the world, and once it completely bursts there will be no going back to how things were before.  Right now, we are living in a “credit card economy”.  As long as we can keep borrowing more money, most people think that things are just fine.  But anyone that has lived on credit cards knows that eventually there comes a point when the game is over, and we are rapidly approaching that point as a nation.

Have you ever been there?  Have you ever desperately hoped that you could just get one more credit card or one more loan so that you could keep things going?

At first, living on credit can be a lot of fun.  You can live a much higher standard of living than you otherwise would be able to.

But inevitably a day of reckoning comes.

If the federal government and the American people were forced at this moment to live within their means, the U.S. economy would immediately plunge into a depression.

That is a 100% rock solid guarantee.

But our politicians and the mainstream media continue to perpetuate the fiction that we can live in this credit card economic fantasy land indefinitely.

And most Americans could not care less about the future.  As long as “things are good” today, they don’t really think much about what the future will hold.

As a result of our very foolish short-term thinking, we have now run up a national debt of 16.4 trillion dollars.  It is the largest debt in the history of the world, and it has gotten more than 23 times larger since Jimmy Carter first entered the White House.

The chart that you see below is a recipe for national financial suicide…

U.S. National Debt

Of course things have accelerated over the past four years.  Since Barack Obama entered the White House, the U.S. government has run a budget deficit of well over a trillion dollars every single year, and we have stolen more than 100 million dollars from our children and our grandchildren every single hour of every single day.

It is the biggest theft of all time.  What we are doing to our children and our grandchildren is beyond criminal.

And now our debt is at a level that most economists would consider terminal.  When Barack Obama first entered the White House, the U.S. debt to GDP ratio was under 70 percent.  Today, it is up to 103 percent.

We are officially in “the danger zone”.

If things really were “getting better” in America, we would not need to borrow so much money.

Our politicians are stealing from the future in order to make the present look better.  During Obama’s first term, the federal government accumulated more debt than it did under the first 42 U.S presidents combined.

That is utter insanity!

If you started paying off just the new debt that the U.S. has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.

So what is the solution?

Get ready to laugh.

The most prominent economic journalist in the entire country, Paul Krugman of the New York Times, recently suggested the following in an article that he wrote entitled “Kick That Can“…

Realistically, we’re not going to resolve our long-run fiscal issues any time soon, which is O.K. — not ideal, but nothing terrible will happen if we don’t fix everything this year. Meanwhile, we face the imminent threat of severe economic damage from short-term spending cuts.

So we should avoid that damage by kicking the can down the road. It’s the responsible thing to do.

You mean that we might actually do damage to the debt-fueled economic fantasy world that we are living in if we stopped stealing so much money from future generations?

Oh the humanity!

It is horrifying to think that all that one of the “top economic minds” in America can come up with is to “kick the can” down the road some more.

Unfortunately, neither Paul Krugman nor most of the American people understand that our financial system is actually designed to create government debt.

The bankers that helped create the Federal Reserve intended to permanently enslave the U.S. government to a perpetually expanding spiral of debt, and their plans worked.

At this point, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

So why don’t the American people understand what the Federal Reserve system is doing to us?

It is because most of them are still plugged into the matrix.  A Zero Hedge article that I came across today put it beautifully…

US society in a nutshell: Chris Dorner has been around for a week and has 222 million results on Google; the Federal Reserve has been around for one hundred years and has 187 million results.

If nothing is done about our exploding debt, it is only a matter of time before we reach financial oblivion.

According to Boston University economist Laurence Kotlikoff, the U.S. government is facing a “present value difference between projected future spending and revenue” of 222 trillion dollars in the years ahead.

So how in the world are we going to come up with an extra 222 trillion dollars?

But it is not just the U.S. government that is drowning in debt.

Just check out this chart which shows the astounding growth of state and local government debt in recent years…

State And Local Government Debt

All over the United States there are state and local governments that are on the verge of bankruptcy.  Just check out what is going on in Detroit.  The only way that most of our state and local governments can keep going at this point is to also “kick the can” down the road some more.

And of course most of the rest of us are drowning in debt as well.

40 years ago, the total amount of debt in the U.S. economic system (government + business + consumer) was less than 2 trillion dollars.

Today, the total amount of debt in the U.S. economic system has grown to more than 55 trillion dollars.

Can anyone say bubble?

The good news is that U.S. GDP is now more than 12 times larger than it was 40 years ago.

The bad news is that the total amount of debt in our financial system is now more than 30 times larger than it was 40 years ago…

Total Credit Market Debt Owed

At the same time that we are going into so much debt, our ability to produce wealth continues to decline.

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.  That is not just a decline – that is a nightmarish freefall.  Just check out the chart in this article.

We are becoming less competitive as a nation with each passing year.  In fact, the U.S. has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.

Most Americans don’t understand this, but the United States buys far more from the rest of the world than they buy from us each year.  In 2012, we had a trade deficit of more than 500 billion dollars with the rest of the world.

That means that more than 500 billion dollars that could have gone to U.S. workers and U.S. businesses went out of the country instead.

So how does our country survive if hundreds of billions of dollars more is flowing out of the country than is flowing into it?

Well, to make up the shortfall we go to the countries that we sent our money to and we beg them to lend it back to us.  If that doesn’t work, we just print and borrow even more money.

Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the world since 1975.

That is 8 trillion dollars that could have saved U.S. businesses, paid the salaries of U.S. workers and that would have helped fund government.

But instead, our foolish policies have greatly enriched China and the oil barons of the Middle East.

Sadly, politicians from both political parties continue to boldly support the one world economic agenda of the global elite.

Just consider how destructive many of these “free trade” deals have been to our economy…

When NAFTA was pushed through Congress in 1993, the United States had a trade surplus with Mexico of 1.6 billion dollars.

By 2010, we had a trade deficit with Mexico of 61.6 billion dollars.

Back in 1985, our trade deficit with China was approximately 6 million dollars (million with a little “m”) for the entire year.

In 2012, our trade deficit with China was 315 billion dollars.  That was the largest trade deficit that one nation has had with another nation in the history of the world.

In particular, our trade with China is extremely unbalanced.  Today, U.S. consumers spend approximately 4 dollars on goods and services from China for every one dollar that Chinese consumers spend on goods and services from the United States.

But isn’t getting cheap stuff from China good?

No, because it costs us good paying jobs.

According to the Economic Policy Institute, the United States is losing half a million jobs to China every single year.

Overall, more than 56,000 manufacturing facilities in the United States have been shut down since 2001.  During 2010, manufacturing facilities in the United States were shutting down at a rate of 23 per day.  How can anyone say that “things are getting better” when our economic infrastructure is being absolutely gutted?

The truth is that there are never going to be enough jobs in America ever again, because millions of our jobs are being sent overseas and millions of our jobs are being lost to technology.

You won’t hear this on the news, but the percentage of the civilian labor force in the United States that is employed has been steadily declining every single year since 2006.

Younger workers have been hit particularly hard.  In 2007, the unemployment rate for the 20 to 29 age bracket was about 6.5 percent.  Today, the unemployment rate for that same age group is about 13 percent.

If you are under the age of 30 and you aren’t living with your parents, there is a really good chance that you are living in poverty.  If you can believe it, U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.

Our economy has been steadily bleeding huge numbers of middle class jobs, and many of those jobs have been replaced by low paying jobs in recent years.

According to one study, 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.

And at this point, an astounding 53 percent of all American workers make less than $30,000 a year.

Oh, but “things are getting better”, right?

Maybe if you live on Wall Street or if you are an employee of the federal government.

But for most families this economic decline has been a total nightmare.  Median household income in America has fallen for four consecutive years.  Overall, it has declined by over $4000 during that time span.

Sometimes people forget how good things were about a decade ago.  About three times as many new homes were sold in the United States in 2005 as were sold in 2012.

But we like to live in denial.

In fact, a lot of families are trying to keep up their standards of living by going into tremendous amounts of debt.

Back in 1983, the bottom 95 percent of all income earners in the United States had 62 cents of debt for every dollar that they earned.  By 2007, that figure had soared to $1.48.

Fake it until you make it, right?

But how much debt can our system possibly handle?

Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.

Total credit card debt in the United States is now more than 8 times larger than it was just 30 years ago.

We are a nation that is completely addicted to debt, but as the financial crisis of 2008 demonstrated, all of that debt can have horrific consequences.

As the economy has slowed in recent years, the Federal Reserve has decided that “the solution” is to recklessly print money in an attempt to get the debt spiral cranked up again.

Have they gone overboard?  You be the judge…

Monetary Base 2013

And of course this won’t have any affect on the value of the money that you have been saving up all these years right?

Wrong.

Every single dollar that you own is continually losing value…

Purchasing Power Of The Dollar

Overall, the value of the U.S. dollar has declined by more than 96 percent since the Federal Reserve was first created.

As the cost of living continues to go up and wages continue to go down, millions of American families have fallen out of the middle class and into poverty.

If you can believe it, the number of Americans on food stamps has grown from about 17 million in the year 2000 to more than 47 million today.

But “things are getting better”, right?

Incredibly, 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.

But “things are getting better”, right?

There are now 20.2 million Americans that spend more than half of their incomes on housing.  That represents a 46 percent increase from 2001.

But “things are getting better”, right?

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.

But “things are getting better”, right?

Today, more Americans than ever have found themselves forced to turn to the federal government for help.

Overall, the federal government runs nearly 80 different “means-tested welfare programs”, and at this point more than 100 million Americans are enrolled in at least one of them.

According to the U.S. Census Bureau, 49 percent of all Americans live in a home that receives direct monetary benefits from the federal government.  Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.

So is it a good sign or a bad sign that the percentage of Americans that are financially dependent on the federal government is at an all-time high?

And in future years the number of Americans that are receiving benefits from the federal government is projected to absolutely skyrocket.

Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, one out of every 6 Americans is on Medicaid, and things are about to get a whole lot worse.  It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

If you take a look at Medicare, things are very more sobering.

As I wrote recently, it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for every single household in the United States.

Are you ready to contribute your share?

Social Security is a complete and total nightmare as well.

Right now, there are approximately 56 million Americans collecting Social Security benefits.

By 2035, that number is projected to soar to an astounding 91 million.

Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

Oh, but don’t worry because “things are getting better”, right?

I honestly do not know how anyone can look at the numbers above and come to the conclusion that the economy is in good shape.

We have accumulated the largest mountain of debt in the history of the world, our economic infrastructure is being gutted, we are bleeding good jobs, government dependence is at an all-time high and we are getting poorer as a nation with each passing day.

But other than that, everything is rainbows and lollipops, right?

If you want to see the economic collapse, just open up your eyes.

And if dramatic changes are not made quickly, things are going to get much, much worse from here.

Please share this article with as many people as possible.  Time is quickly running out and there are a whole lot of people out there that we need to wake up while we still can.

The Economic Collapse Is Happening

 

 

15 Signs That You Better Get Prepared For The Obama Recession Of 2013

15 Signs That You Better Get Prepared For The Obama Recession Of 2013 - Photo by DjembayzYou better get ready, because there are a whole host of signs that economic trouble is on the horizon.  U.S. economic growth slipped into negative territory during the fourth quarter of 2012.  That was the first time that has happened in more than three years.  Several important measures of manufacturing activity have also contracted in recent weeks, and consumer confidence is way down.  There is a tremendous amount of economic pessimism in the air right now, and Americans are pulling enormous amounts of money out of our banks and they are buying up precious metals at unprecedented rates.  Meanwhile, our “leaders” seem very confused about what is happening.  For example, Senate Majority Leader Harry Reid continues to insist that we are “in a recovery“, and some other Democrats are calling the latest GDP numbers “the best-looking contraction in U.S. GDP you’ll ever see“.  On the other hand, the Federal Reserve says that economic growth has “paused” in recent months, and therefore a continuation of their latest quantitative easing scheme is necessary.  Well, no matter how hard any of them try to spin the numbers, there is no way that they are going to get them to look good.  Despite four years of outrageous “stimulus” spending by the federal government, despite four years of record low interest rates, and despite four years of unprecedented money printing by the Federal Reserve, the U.S. economy continues to perform miserably.  Later this year the federal government will probably finally acknowledge that we have entered another recession, even though the truth is that if the federal government used honest numbers they would indicate that we are already in one.  In any event, nobody should have ever expected that our debt-fueled prosperity would last forever.  When the debt bubble that we have been living in completely bursts, a “recession” will be the least of our worries.

Hopefully this little stretch of false economic hope that we have been living in will last for a little while longer.  I don’t think that too many people are very eager to repeat the horrible economic pain that we experienced back in 2008 and 2009.  Unfortunately, we never fully recovered from that last downturn and now the incredibly foolish decisions that our “leaders” continue to make have made another major economic downturn inevitable.

Personally, I would very much prefer for 2013 to be a year of peace and prosperity for America.  But at this point there appears to be a great deal of downward momentum for the economy.

The following are 15 signs that you better get prepared for the Obama recession of 2013…

#1 The mainstream media was absolutely shocked when it was announced that U.S. GDP actually contracted at an annual rate of 0.1 percent during the fourth quarter of 2012.  This was the first contraction that the official numbers have shown in more than three years.  But of course the truth is that the official numbers always make things appear better than they really are.  According to John Williams of shadowstats.com, U.S. GDP growth has actually been continuously negative all the way back to 2005 once you account “for distortions in government inflation usage and methodological changes that have resulted in a built-in upside bias to official reporting.”

#2 For the entire year of 2012, official U.S. GDP growth was only about 1.5%.  According to Art Cashin, every time economic growth has fallen that low (below 2 percent annually) the U.S. economy has always ended up going into a recession.

#3 According to the Conference Board, consumer confidence in the United States has hit its lowest level in more than a year.

#4 For the week ending January 26th, initial claims for unemployment rose to 368,000.  In future weeks, watch to see if it goes above 400,000.  If we hit that level, that will be a sign of real trouble for the economy.

#5 During the first full week of January, an astounding $114 billion was pulled out of U.S. banks.  That is the largest amount that we have seen moved out of U.S. banks in one week since 2001.

#6 The U.S. Mint was on pace to sell more silver eagles during the first month of 2013 than it did during the entire year of 2007.  Why is so much silver being sold all of a sudden?

#7 The payroll tax hike that went into effect in January has reduced the paychecks of average American workers by about $100 a month.

#8 Several important measures of manufacturing activity along the east coast missed expectations by a huge margin in January.  The following summary is from a recent Zero Hedge article

So much for the latest “recovery.” While everyone continued to forget that in the New Normal markets do not reflect the underlying economy in the least, and that the all time highs in the Russell 2000 should indicate that the US economy has never been better, things in reality took a deep dive for the worse, at least according to the Empire State Fed, the Philly Fed, and now the Richmond Fed, all of which missed expectations by a huge margin, and are now deep in contraction territory. Moments ago, the Richmond Fed reported that the Manufacturing Index imploded from a 9 in November, 5 in December and missed expectations of a 5 print at -12: this was the biggest miss to expectations since September 2009.

#9 An astounding 33 percent of all “subprime student loans” are at least 90 days past due.  Back in 2007, that number was only at 24 percent.  Could this be evidence that the student loan debt bubble is beginning to burst?

#10 Time Inc. has just announced that it will be eliminating hundreds of jobs.

#11 Blockbuster recently announced that they are closing hundreds of stores and eliminating about 3,000 jobs.

#12 Toy maker Hasbro has announced that the size of their workforce will be reduced by about 10 percent.

#13 According to a new Pew Research study that was just released, one out of every seven adults in the United States is financially supporting their kids and their parents at the same time.  Pew Research is calling it “the Sandwich Generation”.

#14 According to one recent Gallup poll, 65 percent of all Americans believe that 2013 will be a year of “economic difficulty“, and 50 percent of all Americans believe that the “best days” of America are now behind us.

#15 According to a different Gallup poll, Americans are now more pessimistic about where the U.S. economy will be five years from now than Gallup has ever recorded before.

So what is Barack Obama doing about all of this?

Not much.

Actually, he is shutting down his much ballyhooed “Council on Jobs and Competitiveness”.  It last convened more than a year ago on Jan. 17th, 2012, and apparently Obama does not feel that it is needed any longer.

Of course we all know that it was just a political stunt to begin with.

Sadly, the truth is that both parties have been leading us down a road toward economic oblivion.  The past four years under Obama have been absolutely nightmarish, and even though the Republicans have been in control of the House for the last couple of years they have done very little to even slow him down.

For much more on the decline of the economy over the past four years, please see this article: “37 Statistics Which Show How Four Years Of Obama Have Wrecked The U.S. Economy“.

Yes, I tend to criticize Obama’s economic policies a lot, and rightfully so, but neither political party is willing to tell the American people the truth.

40 years ago, the total amount of debt in the U.S. economic system was less than 2 trillion dollars.

Today, the total amount of debt in the U.S. economic system has grown to more than 55 trillion dollars.

It hasn’t mattered which party has occupied the White House or which party has been in control of Congress.  The debt bubble that we have been living in has just continued to grow.

And all bubbles eventually pop.

The mainstream media is endlessly obsessed with the little fights that the Republicans and the Democrats are having, but they never talk about the bigger picture.

The prosperity that we are enjoying today is the result of the biggest debt binge in the history of the world.

We have stolen a giant mountain of money from our children and our grandchildren and we have destroyed their futures.

People can debate about whether the next “recession” has already started or not, but the truth is that what we are experiencing now is nothing compared to what is coming.

In the end, we will pay a great price for our decades of foolishness.

The U.S. economy is going to completely collapse, and the last few years have only been the very beginning of that process.

United States Supreme Court Chief Justice John Roberts administers the oath of office to President Barack Obama in the Blue Room of the White House on Inauguration Day

The Sovereign Debt Bubble Will Continue To Expand Until – BANG – The System Implodes

The Sovereign Debt Bubble Will Continue To Expand Until - BANG - The System Implodes - Photo by Jeff KubinaWhy are so many politicians around the world declaring that the debt crisis is “over” when debt to GDP ratios all over the planet continue to skyrocket?  The global economy has never seen anything like the sovereign debt bubble that we are experiencing today.  The United States, Japan, and nearly every major nation in Europe are absolutely drowning in debt.  We have heard a lot about “austerity” over in Europe in recent years, but debt to GDP ratios continue to rise in Greece, Spain, Italy, Ireland and Portugal.  In general, most economists consider a debt to GDP ratio of 100% to be a “danger level”, and most of the economies of the western world have either already surpassed that level or are rapidly approaching it.  Of course the biggest debt offender of all in many ways is the United States.  The U.S. debt to GDP ratio has risen from 66.6 percent to 103 percent since 2007, and the U.S. government accumulated more new debt during Barack Obama’s first term than it did under the first 42 U.S. presidents combined.  This insane sovereign debt bubble will continue to expand until a day of reckoning arrives and the system implodes.  Nobody knows exactly when that moment will be reached, but without a doubt it is coming.

But if you listen to the mainstream media in the United States, you would be tempted to think that this giant bubble of debt is not much of a concern at all.  For example, in a recent article in the Washington Post entitled “The case for deficit optimism“, Ezra Klein wrote the following…

“Here’s a secret: For all the sound and fury, Washington’s actually making real progress on debt.”

How many times have we heard that before?

About a decade ago, government officials were projecting that we would be swimming in gigantic government surpluses by now.

Instead, we are running trillion dollar deficits.

But right now there is a lot of optimism about the economy.  The stock market recently hit a 5 year high and the business community is loving all of the false prosperity that all of this debt is buying us.

Even Warren Buffett does not really seem concerned about the exploding U.S. government debt.  He recently made the following statement

“It is not a good thing to have it going up in relation to GDP.  That should be stabilized. But the debt itself is not a problem.”

Oh really?

A debt of 16 trillion dollars “is not a problem”?

Perhaps we should all run our finances that way.

Why don’t we all go out and open up 20 different credit cards, run them all up to the max, and then tell the credit card companies that we can’t pay them back but that it “is not a problem”.

Of course real life does not work that way.

The truth is that government debt is becoming a monstrous problem all over the globe.  Just check out how debt to GDP ratios all over the planet have grown over the past five years

United States

Debt to GDP ratio in 2007: 66.6 percent

Debt to GDP ratio in 2012: 103 percent

United Kingdom

Debt to GDP ratio in 2007: 43.4 percent

Debt to GDP ratio in 2012: 85.0 percent

France

Debt to GDP ratio in 2007: 63.7 percent

Debt to GDP ratio in 2012: 86 percent

Germany

Debt to GDP ratio in 2007: 67.6 percent

Debt to GDP ratio in 2012: 80.5 percent

Spain

Debt to GDP ratio in 2007: 39.6 percent

Debt to GDP ratio in 2012: 69.3 percent

Ireland

Debt to GDP ratio in 2007: 24.8 percent

Debt to GDP ratio in 2012: 106.4 percent

Portugal

Debt to GDP ratio in 2007: 63.9 percent

Debt to GDP ratio in 2012: 108.1 percent

Italy

Debt to GDP ratio in 2007: 106.6 percent

Debt to GDP ratio in 2012: 120.7 percent

Greece

Debt to GDP ratio in 2007: 106.1 percent

Debt to GDP ratio in 2012: 170.6 percent

The Eurozone As A Whole

Debt to GDP ratio in 2007: 68.4 percent

Debt to GDP ratio in 2012: 87.3 percent

Japan

Debt to GDP ratio in 2007: 172.1 percent

Debt to GDP ratio in 2012: 211.7 percent

So how does all of this end?

Well, it is going to be messy, but it is very difficult to say exactly when the system will collapse under the weight of too much debt.  Some nations, such as Japan, are able to handle very high debt loads because they have a very high level of domestic saving.  Up to this point, an astounding 95 percent of all Japanese government bonds have been purchased domestically.  But other nations collapse under the weight of government debt even before they reach a debt to GDP ratio of 100%.  The following is an excerpt from a recent Congressional Research Service report

It is hard to predict at what point bond holders would deem it to be unsustainable. A few other advanced economies have debt-to-GDP ratios higher than that of the United States. Some of those countries in Europe have recently seen their financing costs rise to the point that they are unable to finance their deficits solely through private markets. But Japan has the highest debt-to-GDP ratio of any advanced economy, and it has continued to be able to finance its debt at extremely low costs.

When a government runs up massive amounts of debt, it is playing with fire.  You can pile up mountains of government debt for a while, but eventually it catches up with you.

Over the past 10 years, the U.S. national debt has grown by an average of 9.3 percent per year, but the overall U.S. economy has only grown by an average of just 1.8 percent per year.  That is unsustainable by definition.

There is going to be a tremendous price to pay for the debt binge that the U.S. government has indulged in over the past decade.  During Barack Obama’s first term, the amount of new debt accumulated by the federal government breaks down to about $50,521 for every single household in the United States.  That is utter insanity.

If you can believe it, we have accumulated more new government debt under Obama than we did from the inauguration of George Washington to the end of the Clinton administration.

And most Americans realize that something is seriously wrong.  One recent poll found that only 34 percent of all Americans believe that the country is heading in the right direction, and 60 percent of all Americans believe that the country is heading in the wrong direction.

If we keep piling up so much debt, at some point a moment of great crisis will arrive.  When that moment arrives, we could see havoc throughout the entire global financial system.  For instance, most people don’t really understand the key role that U.S. Treasuries play in the derivatives market.  The following is from a recent article posted on Zero Hedge

This time around, things will be far worse if nothing is solved. If the US loses another AAA rating, then the financial markets could face systemic risk. The reason for this is that US Treasuries are one of the senior most forms of collateral used by the banks to backstop the $600+ trillion derivatives market.

As any trader who trades on margin can tell you, when the value of your collateral is called into question, those on the other side of the trade come looking for you to put up more capital on your trades. This can result in assets being sold en masse (similar to what happened after Lehman failed) and things can get very ugly very fast.

For much more on the danger that derivatives pose to our financial system, please see this article: “The Coming Derivatives Panic That Will Destroy Global Financial Markets“.

Once again, nobody knows exactly when the sovereign debt bubble will burst, but if we continue down the path that we are currently on, it will inevitably happen at some point.

And according to Professor Carmen Reinhart, when this bubble does burst things could unravel very rapidly…

“These processes are not linear,” warns Prof. Reinhart. “You can increase debt for a while and nothing happens. Then you hit the wall, and—bang!—what seem to be minor shocks that the markets would shrug off in other circumstances suddenly become big.”

At some point the global financial system will hit the wall that Professor Reinhart has warned about.

Are you ready?

When Will The Bubble Burst?

Warnings That A Massive Stock Market Crash Is Imminent

In the financial world, the month of October is synonymous with stock market crashes.  So will a massive stock market crash happen this year?  You never know. The truth is that our financial system is even more vulnerable than it was back in 2008, and financial experts such as Doug Short, Peter Schiff, Robert Wiedemer and Harry Dent are all warning that the next crash is rapidly approaching.  We are living in the greatest debt bubble in the history of the world and Wall Street has been transformed into a giant casino that is based on a massive web of debt, risk and leverage.  When that web breaks we are going to see a stock market crash that is going to make 2008 look like a Sunday picnic.  Yes, the Federal Reserve has tried to prevent any problems from erupting in the financial markets by initiating another round of quantitative easing, but 40 billion dollars a month will not be nearly enough to stop the massive collapse that is coming.  This will be explained in detail toward the end of the article.  Hopefully we will get through October (and the rest of this year) without seeing a stock market collapse, but without a doubt one is coming at some point.  Those on the wrong end of the coming crash are going to be absolutely wiped out.

A lot of people focus on the month of October because of the history of stock market crashes in this month.  This history was detailed in a recent USA Today article….

When it comes to wealth suddenly disappearing, October can be diabolically frightful. The stock market crash of 1929 that led to the Great Depression occurred in October. So did the 22.6% plunge suffered by the Dow Jones industrial average in 1987 on “Black Monday.”

The scariest 19-day span during the 2008 financial crisis also went down in October, when the Dow plunged 2,675 points after investors fearing a financial collapse went on a panic-driven stock-selling spree that resulted in five of the 10 biggest daily point drops in the iconic Dow’s 123-year history.

So what will we see this year?

Only time will tell.

If a stock market crash does not happen this month or by the end of this year, that does not mean that the experts that are predicting a stock market crash are wrong.

It just means that they were early.

As I have said so many times, there are thousands upon thousands of moving parts in the global financial system.  So that makes it nearly impossible to predict the timing of events with perfect precision.  Financial conditions are constantly shifting and changing.

But without a doubt another major financial collapse similar to what happened back in 2008 (or even worse) is on the way.  Let’s take a look at some of the financial experts that are predicting really bad things for our financial markets in the months ahead….

Doug Short

According to Doug Short, the vice president of research at Advisor Perspectives, the stock market is somewhere between 33% and 51% overvalued at this point.  In a recent article he offered the following evidence to support his position….

● The Crestmont Research P/E Ratio (more)

● The cyclical P/E ratio using the trailing 10-year earnings as the divisor (more)

● The Q Ratio, which is the total price of the market divided by its replacement cost (more)

● The relationship of the S&P Composite price to a regression trendline (more)

Peter Schiff

Peter Schiff, the CEO of Euro Pacific Capital, has been one of the leading voices in the financial community warning people about the crisis that is coming.

During a recent interview with Fox Business, Schiff stated that the massive financial collapse that we witnessed back in 2008 “wasn’t the real crash” and he boldly declared that the “real crash is coming”.

So is Schiff right?

We shall see.

Robert Wiedemer

Economist Robert Wiedemer warned people what was coming before the crash of 2008, and now he is warning that what is coming next is going to be even worse….

“The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation . . . starting in 2012.”

Harry Dent

Financial author Harry Dent believes that the stock market could fall by as much as 60 percent in the coming months.  He is convinced that stocks are hugely overvalued right now….

“We have the greatest debt bubble in history. We will see a worldwide downturn. And when you are in this type of recessionary environment stocks should be trading at five to seven times earnings.”

So are these guys right?

We shall see.

But I do find it interesting that some of the biggest names in the financial world are currently making moves as if they also believe that a massive financial crisis is coming.

For example, as I have written about previously, George Soros has dumped all of his holdings in banking giants JP Morgan, Citigroup and Goldman Sachs.

Infamous billionaire hedge fund manager John Paulson, the man who made somewhere around 20 billion dollars betting against the U.S. housing market during the last financial crisis, is making massive bets against the euro right now.

So where are these financial titans putting their money?

According to the Telegraph, both of these men are pouring enormous amounts of money into gold….

There was also news last week in an SEC filing that both George Soros and John Paulson had increased their investment in SPDR Gold Trust, the world’s largest publicly traded physical gold exchange traded fund (ETF).

Mr Soros upped his stake in the ETF to 884,400 shares from 319,550 and Mr Paulson bought 4.53m shares, bringing his stake to 21.3m.

At the current price of about $156 a share, these are new investments of about $88m of Mr Soros’ cash and more than $700m from Mr Paulson’s funds. These are significant positions.

So why would they do this?

Why would they pour millions upon millions of dollars into gold?

Well, it would make perfect sense to put so much money into gold if a massive financial crisis was coming.

So is the next financial crisis imminent?

We will see.

Most “financial analysts” that appear in the mainstream media would laugh at the notion that a stock market crash is imminent.

Most of them would insist that everything is going to be perfectly fine for the foreseeable future.

In fact, most of them are convinced that quantitative easing is going to cause stocks to go even higher.

After all, isn’t quantitative easing supposed to be good for stocks?

Didn’t I write an article just last month that detailed how quantitative easing drives up stock prices?

Yes I did.

So how can I be writing now about the possibility of a stock market crash?

Aren’t I contradicting myself?

Not at all.

Let me explain.

The first two rounds of quantitative easing did indeed drive up stock prices.  The same thing will happen under QE3, unless the effects of QE3 are overwhelmed by a major crisis.

For example, if we were to see a total collapse of the derivatives market it would render QE3 totally meaningless.

Estimates of the notional value of the worldwide derivatives market range from 600 trillion dollars all the way up to 1.5 quadrillion dollars.  Nobody knows for sure how large the market for derivatives is, but everyone agrees that it is absolutely massive.

When we are talking about amounts that large, the $40 billion being pumped into the financial system each month by the Federal Reserve during QE3 would essentially be the equivalent of spitting into Niagara Falls.  It would make no difference at all.

Most Americans do not understand what “derivatives” are, so they kind of tune out when people start talking about them.

But they are very important to understand.

Essentially, derivatives are “side bets”.  When you buy a derivative, you are not investing in anything.  You are just gambling that something will or will not happen.

I explained this more completely in a previous article entitled “The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System“….

A derivative has no underlying value of its own.  A derivative is essentially a side bet.  Usually these side bets are highly leveraged.

At this point, making side bets has totally gotten out of control in the financial world.  Side bets are being made on just about anything you can possibly imagine, and the major Wall Street banks are making a ton of money from it.  This system is almost entirely unregulated and it is totally dominated by the big international banks.

Over the past couple of decades, the derivatives market has multiplied in size.  Everything is going to be fine as long as the system stays in balance.  But once it gets out of balance we could witness a string of financial crashes that no government on earth will be able to fix.

Five very large U.S. banks (including Goldman Sachs, JP Morgan and Bank of America) have combined exposure to derivatives in excess of 250 trillion dollars.

Keep in mind that U.S. GDP for 2011 was only about 15 trillion dollars.

So we are talking about an amount of money that is almost inconceivable.

That is why I cannot talk about derivatives enough.  In fact, I apologize to my readers for not writing about them more.

If you want to understand the coming financial collapse, one of the keys is to understand derivatives.  Our entire financial system has been transformed into a giant casino, and at some point all of this gambling is going to cause a horrible crash.

Do you remember the billions of dollars that JP Morgan announced that they lost a while back?  Well, that was caused by derivatives trades gone bad.  In fact, they are still not totally out of those trades and they are going to end up losing a whole lot more money than they originally anticipated.

Sadly, that was just the tip of the iceberg.  Much, much worse is coming.  When you hear of a major “derivatives crisis” in the news, you better run for cover because it is likely that the entire house of cards is about to start falling.

And don’t get too caught up in the exact timing of predictions.

If a stock market crash does not happen this month, don’t think that the storm has passed.

A major financial crisis is coming.  It might not happen this week, this month or even this year, but without a doubt it is approaching.

And when it arrives it is going to be immensely painful and it is going to change all of our lives.

I hope you are ready for that.

The Federal Reserve Sends Thank You Letters To Congress For Allowing Them To Destroy Our Economy In Secret

The Federal Reserve continues to pump up this “bubble economy” by recklessly printing money and by setting interest rates artificially low, and the U.S. Congress continues to stand aside and allow them to systematically destroy our economy.  The U.S. Congress could choose to end this madness at any time, but the truth is that Congress won’t even pass a law that would allow the American people to see what is going on over at the Federal Reserve.  Congress has voted down every single bill that would authorize a comprehensive audit of the Federal Reserve.  So the folks over at the Fed will continue to be able to destroy our future in secret.  In fact, back in July Federal Reserve Chairman Ben Bernanke actually sent five thank you letters to members of Congress that gave speeches on the floor of the U.S. House of Representatives encouraging their fellow lawmakers to vote against the bill to audit the Fed.  Since the U.S. Congress continues to refuse to do anything to hold the Federal Reserve accountable, the Fed will continue to print unprecedented amounts of money, it will continue to set interest rates insanely low and it will continue to pump up the greatest debt bubble in the history of the world.  Unfortunately, all debt bubbles eventually burst, and when this one does it is going to be a financial nightmare unlike anything we have ever seen before.

It was Politico that first broke the story about the thank you letters that Federal Reserve Chairman Ben Bernanke sent to five members of Congress back in July.  Bernanke acknowledged in the letters that there was never any worry that the “Audit the Fed” bill would actually get through Congress and be signed into law, but he was still extremely grateful that a number of members of Congress got up and publicly denounced the bill….

In July, the Fed chairman sent letters of gratitude to five Democratic members of Congress after they delivered speeches on the House floor urging fellow lawmakers to reject the “Audit the Fed” bill authored by retiring Texas Republican Ron Paul, the central bank’s chief antagonist.

Their efforts failed to defeat the bill, but they were not in vain, at least in Bernanke’s eyes.

“While the outcome of the vote was not in doubt, your willingness to stand up for the independence of the Federal Reserve is greatly appreciated,” Bernanke wrote in the letters, which were obtained by POLITICO through a Freedom of Information Act request.

So who did Bernanke send those letters to?

According to Politico, the thank you letters were delivered to U.S. Representatives Barney Frank, Elijah Cummings, Melvin Watt, Carolyn Maloney and Steny Hoyer.

By refusing to take action against the Federal Reserve, the U.S. Congress is silently endorsing their incredibly foolish policies.

Sadly, most Americans don’t even realize that the Federal Reserve has more control over our economy than anyone else does.  Most Americans that are actually concerned about politics are busy arguing over whether Obama or Romney will be better for the economy when it is actually the Fed that controls the levers of economic power.

Just think about it.

The Federal Reserve played a major role in creating the housing bubble which severely damaged our financial system a few years ago.

As the chart below shows, after 9/11 the Federal Reserve dropped interest rates to historically low levels.  This allowed potential home buyers to get into much larger mortgages, and the big banks (which the Fed supposedly “regulates”) started making home loans to almost anyone with a pulse.

When interest rates started to go back up to normal levels in 2005, many home owners discovered that their adjustable rate mortgages started to become much more painful.  By 2007, we started to see a massive wave of mortgage defaults.  In 2008, the financial system crashed.

In response to the financial crisis of 2008, the Federal Reserve dropped interest rates to record low levels.  The effective federal funds rate is essentially at zero at this point, and the Fed has promised to keep interest rates at ultra-low levels all of the way into 2015.

But didn’t artificially low interest rates cause many of our problems in the first place?  The central planners over at the Fed are convinced that this is the right course for our economy, but can we really live in a zero interest rate bubble indefinitely?  Won’t this eventually cause even greater problems?….

The Fed is also destroying our economy by recklessly printing money.

Once upon a time, the U.S. monetary base rose at a very steady pace.  But since the financial crisis of 2008, Ben Bernanke has been flooding the financial system with money and this has caused an unprecedented explosion in our money supply.

It isn’t too hard to see from this chart what the foolish “quantitative easing” policies of the Federal Reserve have done to our monetary base….

Fortunately a lot of the money from previous rounds of quantitative easing is being stashed by the big banks as “excess reserves” with the Federal Reserve, but when that money starts flowing into the “real economy” (and it will at some point), we are going to have a major problem on our hands.

But more than tripling our monetary base was not enough for Bernanke.  He recently announced yet another round of quantitative easing which he says will last indefinitely.

Basically, Bernanke is taking a sledgehammer to the U.S. dollar.  Our currency is being systematically destroyed, and the U.S. Congress is standing by and doing nothing.

For a lot more on why QE3 is going to be so incredibly destructive for our economy, please see the following five articles….

-“QE3: Helicopter Ben Bernanke Unleashes An All-Out Attack On The U.S. Dollar

-“How QE3 Will Make The Wealthy Even Wealthier While Causing Living Standards To Fall For The Rest Of Us

-“The Federal Reserve Is Systematically Destroying Social Security And The Retirement Plans Of Millions Of Americans

-“QE4? The Big Wall Street Banks Are Already Complaining That QE3 Is Not Enough

-“Quantitative Easing Did Not Work For The Weimar Republic Either

The Federal Reserve seems to think that printing more money is always the solution to whatever economic problems we are having.

But of course the Fed has been debasing our currency from the very beginning.  The entire Federal Reserve system is designed to create inflation.

From the time that the Federal Reserve was created back in 1913, the purchasing power of a U.S. dollar has declined from $1.00 to only about 4 pennies today.

And now Bernanke seems bound and determined to wipe out those last 4 pennies.

The Federal Reserve system was also designed to create a never ending spiral of government debt.

Sadly, most Americans simply have no idea where money comes from.  Most Americans have no idea that money that the Federal Reserve zaps into existence out of thin air is loaned to the U.S. government at interest.  Most Americans have no idea that the primary reason why we are 16 trillion dollars in debt is because this is what the system was designed to do to us.

Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was originally created in 1913.  This did not happen by accident….

Not that our politicians should be off the hook for this.  They have been spending money as if there is no tomorrow.  Most of them have shown no concern at all about the legacy of debt that they are passing on to future generations of Americans.

If our politicians had been more responsible, the national debt would still be there, but it would be at a much more manageable level.

If we ever want to totally get rid of our national debt, the Federal Reserve must be abolished.

There is no other way.

And government debt is not the only bubble that the Federal Reserve has pumped up.

The following is a chart that shows the growth of all forms of debt (government, business, consumer, etc.) in the United States.  The total amount of debt in the United States has grown from less than $2 trillion to more than $55 trillion over the past 40 years….

How in the world could we have been so foolish?

How in the world did we allow the total amount of debt in our country to get more than 27 times larger over the past 40 years?

As you can see, there was a slight “hiccup” in the bubble as a result of the financial crisis of 2008, but now it has started growing again.

At this point our entire financial system is based on debt, and if the debt bubble does not continue to expand the entire thing will collapse.

But no financial bubble grows forever.  History has proven that to us over and over.

At some point this bubble is going to burst.

When it does, we will either experience a deflationary collapse or a hyperinflationary collapse depending on how “the powers that be” respond to what is happening.

History has shown us that financial collapse is often accompanied by social upheaval.   Many times it even leads to war.

So what will happen to America when our economic collapse happens?

That is a very good question.

How would you answer it?

12 Signs That Spain Is Shifting Gears From Recession To Depression

Where have we seen this before?  Bond yields soar above the 7 percent danger level.  Check.  The stock market crashes to new lows.  Check.  Industrial activity plummets like a rock and the economy contracts.  Check.  The unemployment rate skyrockets to more than 20 percent.  Check.  The bursting of a massive real estate bubble pushes the banking system to the brink of implosion.  Check.  Broke local governments beg the broke national government for bailouts.  Check.  The international community pressures the national government to implement deep austerity measures which will slow down the economy even more and hordes of violent protesters take to the streets.  Check.  All of this happened in Greece, it is happening right now in Spain, and mark my words it will eventually happen in the United States.  Every debt bubble eventually bursts, and right now Spain is experiencing a level of economic pain that very, very few people saw coming.  The recession in Spain is rapidly becoming a full-blown economic depression, and at this point there is no hope and no light at the end of the tunnel.

The bad news for the global economy is that Spain is much larger than Greece.  According to the United Nations, the Greek economy is the 32nd largest economy in the world.  The Spanish economy, on the other hand, is the 4th largest economy in the eurozone and the 12th largest economy on the entire planet.  It is nearly five times the size of the Greek economy.

Financial markets all over the globe are very nervous right now because if the Spanish government ends up asking for a full-blown bailout it could spell the end for the eurozone.  There simply is not enough money to do the same kind of thing for Spain that is being done for Greece.

Of course European officials are going to do their best to keep the eurozone from collapsing, but what they have completely failed to do is to keep these countries from falling into depression.

As I have written about previously, Greece has already been in an economic depression for some time.

I warned that Spain, Italy, Portugal and a bunch of other European nations were going down the exact same path.

Now we are watching a virtual replay of what happened in Greece take place in Spain.

Unfortunately, the global financial system may not be able to handle a complete implosion of the Spanish economy.

The following are 12 signs that Spain is shifting gears from recession to depression….

#1 At one point on Monday, the IBEX stock market index fell to 5,905, which was the lowest level in nearly ten years.  When it hit 5,905 that represented a drop of about 12 percent over just two trading days.  If that happened in the United States, it would be the equivalent of the Dow falling by about 1500 points in 48 hours.

#2 So far this year, the Spanish stock market is down more than 25 percent.  Back in 2008, the IBEX 35 was well over 15,000.  Today it is sitting just above 6,000.

#3 Spain has banned many forms of short selling for 3 months.

#4 The yield on 10 year Spanish bonds is now well above the 7 percent “danger level”.

#5 Thanks to the problems in Spain, the euro continues to fall like a rock.  On Monday it hit a new two year low against the U.S. dollar, and it is near a twelve year low against the Japanese yen.

#6 During the first quarter of 2012, the Spanish economy contracted by 0.3 percent.  During the second quarter of 2012, the Spanish economy contracted by 0.4 percent.

#7 Local governments all over Spain are flat broke and need to be bailed out by the broke national government.  The following is from a recent CNBC article….

Adding to Madrid’s woes, media reports suggested another half a dozen of Spain’s 17 regional authorities, facing an undeclared funding crisis, were ready to follow Valencia in seeking aid from the central government.

#8 The percentage of bad loans on the books of Spanish banks has reached an 18 year high.  European officials have already promised a 100 billion euro bailout for Spain’s troubled banking system, but most analysts agree that 100 billion euros will not be nearly enough.

#9 Spanish industrial output declined for the ninth month in a row in May.

#10 The unemployment rate in Spain is up to an astounding 24.6 percent.  The unemployment rate in Spain is already higher than it was in the United States at the peak of the Great Depression of the 1930s.

#11 The youth unemployment rate in Spain is now over 52 percent.

#12 The Spanish government has just announced a whole bunch of new tax increases and spending cuts which will cause the Spanish economy to slow down even more.  In response to these austerity measures, people are taking to the streets all over Spain.  Last week, 100,000 demonstrators poured into the streets to protest in Madrid alone.

Sadly, the nightmare in Spain is just beginning.

If the yield on 10 year Spanish bonds stays above 7 percent, that is going to be a really bad sign.  According to the Wall Street Journal, the 7 percent level is key as far as investor confidence is concerned….

Monday’s dramatic market moves suggest Spain may be stuck in a spiral that culminates in a bailout from other euro-zone countries.

“The rise in the 10-year yield well beyond 7% carries a very distinct reminder of events in Greece in April 2010, Ireland in October 2010 and Portugal in February 2011,” said analysts at Bank of New York Mellon. “In each case, a decisive move beyond 7% signaled the start of a collapse in investor confidence that, in each case, led to a bailout within weeks,” they added.

So keep an eye on that number in the weeks ahead.

Meanwhile, the Spanish economy continues to get worse with each passing month.

So just how bad are things in Spain right now?

Just check out this excerpt from a recent article by Mark Grant….

Recently two noted Spanish economists were interviewed. One was always an optimist and one was always a pessimist. The optimist droned on and on about how bad things were in Spain, the dire situation with the regional debt, the huge problems overtaking the Spanish banks and the imminent collapse of the Spanish economy. In the end he said that the situation was so bad that the Spanish people were going to have to eat manure. The pessimist was shocked by the comments of his colleague who had never heard him speak in such a manner. When it was the pessimist’s turn to speak he said that he agreed with the optimist with one exception; the manure would soon run out.

That may make you laugh, but for those in Europe going through these horrific economic conditions it is no laughing matter.

On Sunday, Greek Prime Minister Antonis Samaras actually told former U.S. president Bill Clinton that Greece is already in a “Great Depression“.

Like Spain, the unemployment rate in Greece is well above 20 percent and the youth unemployment rate is above 50 percent.

The only reason the Greek financial system has not totally collapsed is because of outside assistance, but now there are indications that the assistance may soon be cut off.

At this point there are persistent rumors that the IMF does not plan to give any more aid money to Greece unless Greece “shapes up”.

Meanwhile, the suffering in Greece just gets worse and worse.

Sadly, most Americans pay very little attention to what is going on in Greece and Spain.

Most Americans just assume that we will always have “the greatest economy on earth” and that we can take prosperity for granted.

Unfortunately, the truth is that the United States already has more government debt per capita than either Greece or Spain does.

Just like Greece and Spain, we are also rapidly traveling down the road to economic oblivion, and depression-like conditions will arrive in this country soon enough.

So enjoy these last months of economic prosperity while you still can.

A whole lot of pain is on the horizon.

Too Much Debt: Our Biggest Economic Problem

What is the biggest economic problem that the United States is facing?  Very simply, our biggest problem is that we have way too much debt.  Over the past 30 years, household debt, corporate debt and government debt have all grown much faster than our GDP has.  But no nation on earth has ever been able to expand debt much faster than national output indefinitely.  All debt bubbles eventually burst.  Right now, we are living in the greatest debt bubble in the history of the world.  All of this debt has fueled a “false prosperity” which has enabled many Americans to live like kings and queens.  But no nation (or household) can pile on more debt forever.  At some point the weight of the debt becomes just too great.  It is amazing that the United States has been able to pile up as much debt as it has.  Over the years, many authors have predicted that U.S. government finances would collapse long before the U.S. national debt ever got to this level.  So the mountain of debt that we have accumulated is quite an “achievement” if you want to look at it that way.  But the clock is ticking on this debt bubble and when it collapses we will say “bye bye” to our vastly inflated standard of living and we will discover that we have destroyed the economy for all future generations of Americans.

Household Debt

Sometimes a picture is worth a thousand words.  When most Americans think of the “debt problem” in this country, they think of the debt of the federal government.

But that is not the only debt bubble that we are facing.

Thirty years ago, household debt in the United States was approaching the 2 trillion dollar mark.  Today, it is sitting at about 13 trillion dollars….

We have been trained to pay for everything with debt.

We pay for our homes with debt, and mortgage debt as a percentage of GDP has more than tripled since 1955.

We pay for our cars with debt, and at this point about 70 percent of all auto purchases in the United States involve an auto loan.

We pay for higher education with debt, and the total amount of student loan debt in America recently surpassed the one trillion dollar mark.

Wherever we go we pay with plastic.

If you want a heated cat bed and a cute little cat sweater for your little kitty just put it on your Visa or Mastercard.

Amazingly, consumer debt in America has risen by a whopping 1700% since 1971, and if you can believe it, 46% of all Americans carry a credit card balance from month to month.

We are absolutely addicted to debt and we do not know how to stop.

State And Local Government Debt

Our state and local governments are also addicted to debt.

30 years ago, state and local government debt was approaching the 400 million dollar mark.  Today, state and local government debt is hovering around the 3 trillion dollar mark….

In the United States today, we don’t just have one “government debt problem” – the truth is that we have hundreds of them.  All over the country, state and local governments are facing bankruptcy because of too much debt.

For example, according to Fox News the city of Stockton, California is right on the verge of declaring bankruptcy.  In fact, an announcement could come as early as this week….

Stockton, Calif., is set to declare bankruptcy as early as this week, according to local officials, a move that would make it one of the largest U.S. cities ever to file for reorganization. 

On Monday, a state-required mediation with creditors to find a fiscal solution is scheduled to expire. Stockton’s City Council is then slated to meet Tuesday to decide whether to adopt a budget for operating in bankruptcy, a move widely considered the last step before the city formally submits a Chapter 9 petition to federal bankruptcy court. 

Federal Government Debt

Of course the biggest offender of all is the federal government.  30 years ago, Ronald Reagan was running around proclaiming what a nightmare it was that the U.S. national debt was reaching the one trillion dollar mark.

Well, now we are about to blast through the 16 trillion dollar mark with no end in sight….

Running up debt at a much faster rate than our GDP is rising is a recipe for national financial suicide.  Our politicians continue to steal about 150 million dollars an hour from future generations and everybody just acts like this is perfectly normal.

We are going down the same path that Greece, Portugal, Italy, Ireland and Spain have gone.

In fact, we already have more government debt per capita than all of those nations do.

Both political parties have been doing this to us, and it just keeps getting worse and worse.

Incredibly, the national debt has grown more under Obama in less than 4 years than it did under George W. Bush during his entire 8 year term.

Since Barack Obama entered the White House, we have accumulated more than five trillion dollars of additional debt.

We are on the road to national financial oblivion, and most Americans don’t seem to care.

Debt From Sea To Shining Sea

Now let’s add up all the debt in the country.  When you total up all household debt, business debt and government debt, it comes to more than 300% of our GDP….

In fact, if current trends continue we will hit 400% of GDP before too long.

As you can see from the chart, there was a little “hiccup” during the last recession, but now the debt bubble is growing again.

So how high can it go before the entire system collapses?

Total credit market debt owed is roughly 10 times larger than it was about 30 years ago.

How in the world did we accumulate 10 times more debt in just 30 years?

If we do that again in the next 30 years, our total debt will be more than 500 trillion dollars in the 2040s.

Unfortunately, that is the way that debt spirals work.  They either have to keep expanding or they collapse.

So will the U.S. debt spiral continue to expand?

Or will we soon see a collapse?

Sadly, this exact same thing is happening all over the world.  The government debt to GDP ratio in Japan (the third largest economy in the world) blew past the 200% mark quite a while ago, and almost every country in the EU is absolutely drowning in debt.

The world has never faced anything quite like this.  There is way, way too much debt in the world, but the only way we can continue to enjoy this level of prosperity under the current system is to pile up a lot more debt.

The western world is like a debt addict in a deep state of denial.  Some debt addicts end up with dozens of credit card accounts.  They will keep opening more accounts as long as someone will let them.  Most debt addicts actually believe that they will be able to get out of the hole at some point, but most never do.

Most Americans still believe that we are experiencing “temporary” economic problems that will eventually go away.  Most Americans still believe that even greater prosperity is still ahead.

Sadly, what the mainstream media and the two major political parties are telling them is a bunch of lies.

We have enjoyed the greatest prosperity that we will ever see in the United States, and when the debt bubble bursts there is going to be an immense amount of pain.

That is a very painful truth, but it is better to come to grips with it now than be blindsided by it later.

22 Signs That The Collapsing Spanish Economy Is Heading Into A Great Depression

What happens when debt-fueled false prosperity disappears?  Just look at Spain.  The 4th largest economy in the eurozone was riding high during the boom years, but now the Spanish economy is collapsing with no end in sight.  When a debt bubble gets interrupted, the consequences can be rather chaotic.  Just like we saw in Greece, austerity is causing the economy to slow down in Spain.  But when the economy slows down, tax revenues fall and that makes it even more difficult to meet budget targets.  So even more austerity measures are needed to keep debt under control and the cycle just keeps going.  Unfortunately, even with all of the recently implemented austerity measures the Spanish government is still not even close to a balanced budget.  Meanwhile, the housing market in Spain is crashing and unemployment is already above 24 percent.  The Spanish banking system is a giant, unregulated mess that is on the verge of a massive implosion, and the Spanish stock market has been declining rapidly.  The Spanish government is going to need a massive bailout and so will the entire Spanish banking system.  But that is going to be a huge problem, because the Spanish economy is almost 5 times as large as the Greek economy.  When the Spanish financial system collapses, the entire globe is going to feel the pain and there will be no easy solution.

So just how bad are things in Spain at this point?

The following are 22 signs that the collapsing Spanish economy is heading into a great depression….

#1 The unemployment rate in Spain has reached 24.4 percent – a new all-time record high.  Back in April 2007, the unemployment rate in Spain was only 7.9 percent.

#2 The unemployment rate in Spain is now higher than the U.S. unemployment rate was during any point during the Great Depression of the 1930s.

#3 According to CNBC, some analysts are projecting that the unemployment rate in Spain is going to go above 30 percent.

#4 The unemployment rate for those under the age of 25 in Spain is now a whopping 52 percent.

#5 There are more than 47 million people living in Spain today.  Only about 17 million of them have jobs.

#6 Retail sales in Spain have declined for 21 months in a row.

#7 The Bank of Spain has officially confirmed that Spain has already entered another recession.

#8 Last week, Standard & Poor’s Ratings Services slashed Spain’s credit rating from A to BBB+.

#9 The yield on 10-year Spanish bonds is up around 6 percent again.  That is considered to be very dangerous territory.

#10 Two of Spain’s biggest banks have announced that they are going to stop increasing their holdings of Spanish government debt.

#11 Of all the loans held by Spanish banks, 8.15 percent are considered to be “bad loans”.

#12 The total value of all bad loans in Spain is equivalent to approximately 13 percent of Spanish GDP.

#13 Of all real estate assets held by Spanish banks, more than 50 percent of them are considered to be “troubled” by the Spanish government.

#14 That total amount of money loaned out by Spanish banks is equivalent to approximately 170 percent of Spanish GDP.

#15 Home prices in Spain fell by 11.2 percent last year, and the number of property repossessions in Spain rose by a staggering 32 percent during 2011.

#16 Spanish housing prices are now down 25 percent from the peak of the housing market and Citibank’s Willem Buiter expects the eventual decline to be somewhere around 60 percent.

#17 It is being projected the the economy of Spain will shrink by 1.7 percent this year, although there are some analysts that feel that projection is way too optimistic.

#18 The Spanish government has announced a ban on all cash transactions larger than 2,500 euros.

#19 One key Spanish stock index has already fallen by more than 19 percent so far this year.

#20 The Spanish government recently admitted that its 2011 budget deficit was much larger than originally projected and that it probably will not meet its budget targets for 2012 either.

#21 Spain’s debt to GDP ratio is projected to rise by more than 11 percent during 2012.

#22 Worldwide exposure to Spanish debt is estimated to be well over a trillion euros.

Spain is going down the exact same road that Greece went down.

Greece is already suffering through a great depression and now Spain is joining them.  The following is from a recent BBC article….

“In Spain today, a cycle similar to Greece is starting to develop,” said HSBC chief economist Stephen King.

“The recession is so deep that when you take one step forward on austerity, it takes you two steps back.”

In Spain right now there is a lot of fear and panic about the economy.  In many areas, it seems like absolutely nobody is hiring right now.  The following is from a recent USA Today article….

“The situation is very bad. There’s no work,” said Enrique Sebastian, a 48-year-old unemployed surgery room assistant as he left one of Madrid’s unemployment offices. “The only future I see is one with wages of €400 ($530) a month for eight-hour days. And that’s if you can find it.”

But Spain is just at the beginning of a downward spiral.  Just wait until they have been through a few years of economic depression.  Once that happens, millions of people begin to lose all hope.  A recent Reuters article discussed the epidemic of suicides that is happening in Greece right now….

On Monday, a 38-year-old geology lecturer hanged himself from a lamp post in Athens and on the same day a 35-year-old priest jumped to his death off his balcony in northern Greece. On Wednesday, a 23-year-old student shot himself in the head.

In a country that has had one of the lowest suicide rates in the world, a surge in the number of suicides in the wake of an economic crisis has shocked and gripped the Mediterranean nation – and its media – before a May 6 election.

And you know what?

The nightmares that we are seeing unfold in Spain and Greece right now are just a preview of what is coming to most of the rest of the world.

The next wave of the economic crisis will soon envelop the United States, Japan and the rest of Europe.

When it strikes, the pain will be immense.

But it won’t be the end – it will only be just the beginning.

The global financial system is starting to crumble.

You better get ready.

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