If the U.S. economy “grows” by 4 percent in 2011, but by the end of the year we are paying $3.00 for a loaf of bread, $4.00 for a gallon of milk and $5.00 for a gallon of gasoline are the American people going to be better off economically or worse off? The answer is obvious, but most “experts” in the mainstream media continue to insist that as long as U.S. GDP is increasing and as long as the stock market is going up that our economy is improving. But that is just not the case. If the amount of money in circulation was relatively constant, those measurements would be helpful, but unfortunately the U.S. government and the Federal Reserve are dramatically pumping up the money supply right now. Just because larger amounts of paper money are changing hands does not mean that the economy is getting stronger. Of course GDP is going to rise when there is much more money in the system. But economic growth that is fueled by inflation is just an illusion and it is not an indicator of economic health at all.
A very basic example shows this very easily. Imagine if suddenly everyone in the United States had the amount of money they owned instantly doubled. Would the U.S. economy be twice as healthy? Of course not. Very quickly prices would rise to meet the new level of money.
Well, in the United States today our “authorities” are pumping massive amounts of new dollars into the system. That is one reason why so many people are so upset about the Federal Reserve’s “quantitative easing 2″ program. The Federal Reserve is creating money out of thin air and pumping it into the financial system. The first people that get their hands on this new money are Wall Street banks and major financial institutions. The idea is that eventually all of this new money will “trickle down” and will help average Americans, but that just does not seem to be happening.
In addition, when the U.S. government goes into more debt, this also creates more money. The U.S. government has accumulated far more new debt during the last two years than it ever has in any other two year period. When the U.S. government spends all of this money that it borrows it introduces a massive amount of new money into the system.
There are many ways to measure the money supply, and one of the most basic (M1) is displayed below. As you can see, thanks to the actions of the Federal Reserve and the U.S. government, the money supply is rising at an almost exponential rate at this point. The money supply has grown rapidly at various points in the past, but what we are witnessing now is really unprecedented…..
So what happens when you have a lot more money chasing roughly the same number of goods and services?
Well, you have inflation of course.
Are our “leaders” alarmed by any of this?
No, in fact they plan to pump up the money supply even more. The Federal Reserve seems content to continue their “quantitative easing” program and Barack Obama is proposing all kinds of new federal spending which will be funded by more debt.
So the truth is that we had better have some significant “economic growth” during 2011. If this amount of money is pumped into our financial system and we don’t see any “economic growth” then that would be an indication of a major league economic breakdown.
But instead of looking at things rationally, many mainstream economists are hailing the fact that the U.S. economy may grow by a few percentage points in 2011 as a sign that happy days are here again.
According to a recent article in USA Today, economists are becoming increasingly optimistic about 2011, and the consensus seems to be that economic growth in the United States will fall somewhere between 3 and 4 percent….
Economists are more optimistic about the recovery than they were just a few months ago, significantly upgrading their forecasts for 2011 as consumers open their wallets.
Unfortunately, the irrational optimism is not limited to just the United States. As global leaders prepare to descend on the annual meeting of the World Economic Forum in Davos, Switzerland many mainstream media outlets are declaring that the worldwide financial crisis is over and that we are now entering a glorious boom time for the global economy. For example, the following is how one recent article from Bloomberg opened….
For only the third time since the Industrial Revolution, the world may be entering a long-term growth cycle that will lift all economies simultaneously, driving bond yields and commodity prices higher.
People don’t seem to realize that just because more money is changing hands and just because financial markets are going higher that it doesn’t mean that the economic situation is improving.
If a rising GDP and a soaring stock market truly were strong indicators of economic health, then Zimbabwe would have been one of the strongest economies on the planet over the last 10 years.
Inflation changes everything.
Unfortunately, official U.S. government inflation figures have become so manipulated that they are of basically no value at this point. Whenever one particular category starts to experience significant inflation, the U.S. government simply removes that category from the inflation calculations. Over the past 40 years the way that inflation is calculated has been changed way too many times.
If you really want to get a good idea of what is happening with inflation, a good thing to do is to look at the basic commodities that everyone uses around the world.
For example, according to the United Nations, the global price of food hit an all-time high in December. Not only that, but almost every major agricultural commodity that you could possibly name experienced a double-digit percentage increase in price during 2010.
In addition, the price of oil is steamrolling towards $100 a barrel again. In fact, many analysts are convinced that the price of oil will set a new all-time record in 2011.
The final dam to stopping $150-a-barrel oil and $4-a-gallon gas is being breached, as financial regulation continues its daily erosion into worthlessness.
So what is the answer to these problems?
Well, according to many of the top “economic leaders” in the world, the solution is to create even more money and even more credit.
Between 2000 and 2009, the total amount of credit in the world grew from 57 trillion dollars to 109 trillion dollars. Now the World Economic Forum says that we need to grow the total amount of credit by another 100 trillion dollars over the next ten years to “support” the anticipated amount of “economic growth” around the world that they expect to see.
Does that make any sense?
We have to double the amount of debt in the world so that the world economy can grow?
But this is what the world economic system has become at this point. It is a never ending debt spiral that requires constantly increasing levels of debt and paper money.
That is a huge reason why precious metals such as gold and silver are becoming so popular. Investors are becoming sick and tired of the constantly inflating paper currencies. Gold and silver are both very much in demand right now. For example, the Chinese are voraciously gobbling up gold right now. Also, the Central Bank of Russia has announced plans to purchase 100 metric tons of gold per year in order “to replenish the country’s gold reserves”.
Well, the answer is very simple. In an environment of rapidly rising prices, the standard of living for most Americans is going to go down.
In this economic environment, employers are simply not going to increase salaries fast enough to keep up with the rising price of food, gas and health care.
In addition, there are tens of millions of Americans that are on fixed incomes. As prices rise, those fixed incomes will simply not go as far.
So the truth is that most Americans are going to find their finances stretched even thinner in the months and years to come.
Inflation is like a thief. When prices rise it means that the purchasing power of all the dollars that we have accumulated goes down.
But for our politicians, inflation can be a helpful thing. They can take inflation-fueled “economic growth” numbers and claim that their policies are working and that the economy is becoming healthier.
A year from now when these jokers trot out their “economic growth” numbers and yet the cost of nearly everything you buy has increased dramatically, don’t you believe their propaganda.
Yes, U.S. economic numbers are most likely going to experience a little bit of inflation-fueled “growth” in 2011.
But it will not mean that our economy is improving.
Today America is very, very frustrated. In fact, we probably have not seen this level of anger in the country since World War 2 ended. So why are so many Americans so frustrated and so angry right now? Well, for most Americans it comes down to the economy. Very few things are more frustrating than not being able to find a job that will enable you to pay the mortgage and feed your family. Middle class Americans that do have a little bit of money are digging into their savings and investments at a staggering rate as they desperately try to keep their heads above water. Millions of other families that do not have a “safety cushion” are on the verge of losing their homes or have already been callously tossed out onto the streets by big, greedy banks. Meanwhile, our politicians continue to burden us with increasingly larger amounts of government debt and they stand idly by as our jobs and our industries are shipped overseas. So even though the mainstream media seems absolutely puzzled by the growing anger in America, the truth is that it is not a great mystery. The economy is an absolute nightmare, and if it gets even worse people are going to become even more angry.
The mainstream media and our top politicians are running around proclaiming that the economy has turned around, and yet all of the important long-term economic numbers continue to get worse. Do they think that the American people are stupid?
Perhaps they are just trying to be “optimistic” and are trying to get us all to “believe” in the economic recovery.
Well, while it certainly does not hurt to “stay positive” and to “have faith” when there is some basis in reality for doing so, but what the mainstream media is asking us all to do is to stick our heads in the sand and to pretend that all of our horrific economic problems are not even there.
Until we recognize exactly what our problems are and how bad they have gotten we will never be able to come up with the appropriate solutions.
Our economy does not just need a “tweak” or two. Our economy is a total nightmare at this point.
The following are 20 things about our nightmare of an economy that you will not want to read if you do not want to become very, very angry….
#1 Today, millions of American families are digging deep into their savings and investments in a desperate attempt to stay afloat. Over the past two years, U.S. consumers have withdrawn $311 billion more from savings and investment accounts than they have put into them.
#215 billion dollars: the total amount of compensation that Goldman Sachs paid out to its employees for 2010.
#3 The number of American families that were booted out of their homes and into the streets set a new all-time record in 2010.
#4 Dozens of packages that we buy in the supermarket have been reduced in size by up to 20%. For example, there are now 2 less slices of cheese in a typical package of Kraft American cheese, and there is now 9 percent less toilet paper in a typical package of Scott toilet paper. So now, you may think that you are paying the same amount for these items that you always have, but the truth is that you have been hit with a large price increase.
#5 One Canadian company is making a ton of money shipping “millions and millions of dollars” worth of manufacturing equipment from factories that are being shut down in the United States over to new factories that are being set up in China.
#6 In America today, the wealthiest 20% own a whopping 93% of all the “financial assets” in the United States.
#7 Only 35 percent of Americans now have enough “emergency savings” to be able to cover three months of living expenses.
#847 percent of all Americans now believe that China is the number one economic power in the world.
#9 If the U.S. banking system is healthy, then why does the number of “problem banks” continue to keep increasing? This past week the number of U.S. banks on the unofficial list of problem banks reached 937.
#10 According to former U.S. Labor Secretary Robert Reich, the wealthiest 0.1% of all Americans make as much money as the poorest 120 million.
#11 U.S. housing prices have now fallen further during this economic downturn than they did during the Great Depression of the 1930s.
#12 According to some very disturbing new research, 45 percent of U.S. college students exhibit “no significant gains in learning” after two years in college.
#13 Americans now owe more than $884 billion on student loans, which is a new all-time record.
#14 The United Nations says that the global price of food hit an all-time record high in December, and the price of oil is surging towards $100 a barrel, but the U.S. government continues to insist that we barely have any inflation at all.
#15 The more Americans that are on food stamps the more profits that JP Morgan makes. Today, an all-time record of 43.2 million Americans are on food stamps, and JP Morgan is making a lot of money processing millions of those benefit payments.
#16 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.
#17Dozens of U.S. states are either implementing tax increases in 2011 or are considering proposals to raise taxes.
#18 The United States has had a negative trade deficit every single year since 1976.
#19 The U.S. national debt has crossed the $14 trillion mark for the first time, and at some point during 2011 it will cross the $15 trillion mark.
#20 What the U.S. economy really needs is for the government to get off all of our backs, but instead they continue to tighten their grip on us. In fact, the Obama administration is proposing a “universal Internet ID” that would watch, track, monitor and potentially control everything that you do on the Internet.
Just what in the world is going on out there? Large groups of animals are keeling over dead, thousands of birds are falling out of the sky dead and millions of dead fish are washing ashore all over the globe. Something is happening. Do any of you know what is causing all this, because I sure don’t. This all seemed to start around the end of December when mass bird deaths and mass fish deaths began to be reported all around the world. Normally “weird” news stories like this kind of fade away after a time, but reports of bird deaths and fish deaths continue to come in and now there are even reports of large groups of land animals suddenly dropping dead. As these reports from all over the globe continue to pile up, it doesn’t take a “conspiracy theorist” to figure out that something very much out of the ordinary is going on. Unfortunately, at this point we have a whole lot more questions than we do answers.
A couple good summaries of the mass bird and fish deaths that we witnessed during the first few weeks of this crisis can be found here and here. Unfortunately, large groups of animals, birds and fish continue to keep dying. The following is just a handful of the reports that have poured in from all over the globe during the past week or so….
It was easy enough to brush off one or two “mass death” news stories, but when they start coming in day after day after day it really starts to get your attention.
So does anyone know why all of this is happening all of a sudden?
Well, there certainly are a lot of theories being floated around out there. When things like this start happening people start coming up with all sorts of really wild ideas. Posted below is a list of some of the most common theories about these mass death. Some of the theories seem to have some substance to them, while others seem just downright bizarre.
Theories That Have Been Put Forward To Explain The Huge Numbers Of Dead Animals, Dead Birds And Dead Fish Around The Globe
*Changes In The Magnetic Field Of The Earth
*Extreme Weather
*A Pole Shift
*Pesticides
*HAARP
*Other Secret Government Programs
*Cold Weather
*”Global Warming”
*The Approach Of 2012
*Methane Gas
*Loud Noises
*Disease
*UFOs Are Responsible
*Effects Of The BP Oil Spill
*The Second Coming Of Jesus
*Birds Are Dying Because Of Indigestion
*Increased Radiation From The Sun
*Large Groups Of Animals Always Die And This Is All Normal
Now, it must be noted that a couple of the recent “mass death episodes” can actually be explained. For example, the U.S. government has admitted being responsible for the deaths of several hundred birds in South Dakota.
But what about the dozens of other “mass death” reports that have been pouring in from all around the earth? How do we explain all of those?
That is something to think about.
Hopefully all this will end up being nothing.
Hopefully it will turn out that all of this can be easily explained.
We certainly don’t need any more problems right now.
As I wrote about the other day, the entire world financial system is on the verge of collapse. At this point any kind of major event could be the “tipping point” that pushes the global economy into chaos.
The world as we know it can literally change overnight. Today a reader emailed me the following video. It is entitled “The Day After The Dollar Crashes”, and it takes the viewer through what a potential unraveling of the global financial system might look like. As you watch this, keep in mind that any type of “big event” could set off a panic like this….
Last year was an absolutely fascinating time for world currency markets. The yen, the dollar and the euro all took their turns in the spotlight. Each experienced wild swings at various times, but the overall theme that we saw was that faith in paper currencies is dying. The biggest reason for this is the horrific sovereign debt crisis that has swept the globe. The United States, Japan and a whole host of European nations are all drowning in debt. The U.S. and Japan are both steamrolling toward insolvency, and several European nations would have already defaulted on their debts if they had not been bailed out. So which of the major currencies of the world is going to crash first? Will one (or more) of the big currencies fall before the end of 2011? Once one major currency collapses will the rest start to fall like dominoes? The truth is that the world has never seen a sovereign debt crisis of this magnitude in all of human history. Almost the entire globe is drowning in a sea of red ink and it has brought us right to the brink of financial disaster.
So which of the currencies of the world is going to be the first to come crashing down? Well, let’s take a quick look at the yen, the euro and the dollar….
The Yen
Japan has the 3rd biggest economy in the world, but they are also deeply swamped in debt. At well over 200%, the Japanese government has the biggest debt to GDP ratio of all of the major industrialized nations. In fact, it is estimated that this massive pile of Japanese government debt amounts to approximately 7.5 million yen for every person living in the entire nation of Japan.
So why hasn’t Japan defaulted yet? Well, a big reason is because Japan has one of the highest personal savings rates on the entire globe, and Japanese citizens have been more than happy to gobble up huge amounts of Japanese government debt at very, very low interest rates.
However, Standard & Poor’s has warned that they may have to slash Japan’s credit rating if the debt gets much bigger, and once confidence starts to falter Japan is going to have to start paying higher interest rates.
At some point Japan is going to be facing a financial meltdown, but for the moment they are hanging in there.
The Euro
Several large European nations would have already defaulted on their debts if they had not been bailed out last year. Greece, Portugal, Ireland, Italy, Belgium and Spain are all on very shaky ground right now. Several of them have already had their credit ratings slashed.
Bond yields all over Europe have been absolutely soaring in recent months. It is getting really expensive for many of these nations to take on new debt. Interest rates on 10-year Greek bonds went from 6 percent up to 13 percent in just a single month at one point in 2010. In fact, even some of the nations that aren’t in the most danger are even feeling the pain. For example, the cost of insuring French debt hit a new record high on December 20th.
Right now there are all kinds of rumblings that more European nations are going to need bailouts very soon. Professor Willem Buiter, the chief economist at Citibank, is warning that quite a few EU nations could financially collapse in the next few months if they are not rapidly bailed out….
“The market is not going to wait until March for the EU authorities to get their act together. We could have several sovereign states and banks going under. They are being far too casual.”
So where is all of this bailout money coming from? Well, a lot of it is coming from Germany and a significant amount of it is actually coming from the United States.
But will wealthy nations such as Germany be willing to pour hundreds of billions of euros into these financial black holes indefinitely?
Are the Germans going to accept a situation where they are permanently bailing out the “weak sisters” all over the rest of the continent?
Already some prominent politicians in Europe are calling for the European “bailout fund” to be doubled in size to about 2 trillion dollars. Other analysts believe that it is going to take at least 4 or 5 trillion dollars to properly bail out all of the European nations that need it.
In any event, the truth is that the situation is really, really bad. If at some point the bailouts stop, the defaults are going to begin.
The Dollar
The United States has the biggest national debt of all. The 14 trillion dollar threshold has just been crossed, and the national debt is now less than 300 billion dollars away from the 14.294 trillion dollar debt ceiling. If the U.S. Congress does not raise the debt ceiling, the U.S. government will shortly begin to default on its debts. Of course everyone fully expects that the U.S. Congress will indeed raise the debt ceiling just like they have every time before.
However, U.S. politicians are not going to be able to keep kicking the can down the road forever. Today the U.S. national debt is more than 14 times larger than it was just 30 years ago. Everyone around the world is beginning to realize that this debt is not even close to sustainable. Investors are beginning to become more hesitant about loaning the United States money. The Federal Reserve has been forced to step in and “buy” more and more of the debt the U.S. government is issuing.
Yields on U.S. Treasuries have been moving up in recent months and this could eventually become a huge problem.
Why?
Well, the sad truth is that the U.S. government has been increasingly using short-term debt.
At this point, the average maturity of U.S. government bonds has fallen to 4.4 years. The is the lowest figure of all the major industrialized nations. That means that the U.S. government must constantly roll over massive amounts of debt.
As a point of comparison, UK government debt has an average maturity of approximately 13 years. That obviously gives them a lot more breathing room.
For the United States, the situation could become incredibly dire if interest rates start to go up.
If interest rates on U.S. government debt reach an average of 7 percent, interest payments on the debt would gobble up approximately 45 percent of the tax revenue that the U.S. government takes in each year.
Yes, at that point the game would be over.
But what the United States has going for it that the European nations do not is that the United States can just have the Federal Reserve keep printing currency. Unfortunately for the nations involved in the euro, they do not have that option.
That is why an increasing number of analysts believe that it will be the euro that will crash and burn first.
But only time will tell.
There are even many that believe that authorities at the highest level actually want the dollar, euro and yen to fail.
Why?
Well, many of the same individuals and groups that brought us NAFTA, the WTO, the IMF, the OECD and the World Bank believe that it would be absolutely wonderful for humanity if we could all have a single, united global currency. The “chaos” produced by the fall of our existing global currencies could provide the perfect “opportunity” to provide the grand “solution” that they have been hoping to introduce all along.
All over the world top politicians and financiers have been very open about the fact that a world currency is coming. In fact, men like George Soros are openly talking about these things. The United Nations has been publicly calling for the U.S. dollar to be replaced with a new global currency for some time now. Just this week Chinese President Hu Jintao stated that “the current international currency system is the product of the past.”
So will the American people just sit back and accept it when their dollars are replaced with a new global currency?
Well, sadly, when things go badly most Americans seem to be willing to accept just about anything if it will mean that things will go back to “normal”. When the global economy falls to pieces, and there already lots of signs that we are on the verge of such a collapse, will the American people be willing to say goodbye to the dollar if politicians from both major political parties tell them that the new global currency is the “answer” to our problems?
Hopefully the American people will wake up and will realize that “globalism” is rapidly wiping away almost everything that it means to be an “American”. Now even many of our children and teens are primarily identifying themselves as “citizens of the world” rather than “citizens of the United States”.
Even if the U.S. dollar does collapse, it is absolutely imperative that we continue to have our own national currency. The U.S. Constitution does not make any provision for any sort of “world currency”. If we allow the globalists to push a truly global currency down our throats it will be another giant step towards the creation of a totalitarian one world system.
So what do you think about all of this? Please feel free to leave a comment with your thoughts below….
What could cause an economic collapse in 2011? Well, unfortunately there are quite a few “nightmare scenarios” that could plunge the entire globe into another massive financial crisis. The United States, Japan and most of the nations in Europe are absolutely drowning in debt. The Federal Reserve continues to play reckless games with the U.S. dollar. The price of oil is skyrocketing and the global price of food just hit a new record high. Food riots are already breaking out all over the world. Meanwhile, the rampant fraud and corruption going on in world financial markets is starting to be exposed and the whole house of cards could come crashing down at any time. Most Americans have no idea that a horrific economic collapse could happen at literally any time. There is no way that all of this debt and all of this financial corruption is sustainable. At some point we are going to reach a moment of “total system failure”.
So will it be soon? Let’s hope not. Let’s certainly hope that it does not happen in 2011. Many of us need more time to prepare. Most of our families and friends need more time to prepare. Once this thing implodes there isn’t going to be an opportunity to have a “do over”. We simply will not be able to put the toothpaste back into the tube again.
So we had all better be getting prepared for hard times. The following are 12 economic collapse scenarios that we could potentially see in 2011….
#1 U.S. debt could become a massive crisis at any moment. China is saying all of the right things at the moment, but many analysts are openly worried about what could happen if China suddenly decides to start dumping all of the U.S. debt that they have accumulated. Right now about the only thing keeping U.S. government finances going is the ability to borrow gigantic amounts of money at extremely low interest rates. If anything upsets that paradigm, it could potentially have enormous consequences for the entire world financial system.
#2 Speaking of threats to the global financial system, it turns out that “quantitative easing 2″ has had the exact opposite effect that Ben Bernanke planned for it to have. Bernanke insisted that the main goal of QE2 was to lower interest rates, but instead all it has done is cause interest rates to go up substantially. If Bernanke this incompetent or is he trying to mess everything up on purpose?
#3 The debt bubble that the entire global economy is based on could burst at any time and throw the whole planet into chaos. According to a new report from the World Economic Forum, the total amount of credit in the world increased from $57 trillion in 2000 to $109 trillion in 2009. The WEF says that now the world is going to need another $100 trillion in credit to support projected “economic growth” over the next decade. So is this how the new “global economy” works? We just keep doubling the total amount of debt every decade?
#4 As the U.S. government and the Federal Reserve continue to pump massive amounts of new dollars into the system, the floor could fall out from underneath the U.S. dollar at any time. The truth is that we are already starting to see inflation really accelerate and everyone pretty much acknowledges that official U.S. governments figures for inflation are an absolute joke. According to one new study, the cost of college tuition has risen 286% over the last 20 years, and the cost of “hospital, nursing-home and adult-day-care services” rose 269% during those same two decades. All of this happened during a period of supposedly “low” inflation. So what are price increases going to look like when we actually have “high” inflation?
#5 One of the primary drivers of global inflation during 2011 could be the price of oil. A large number of economists are now projecting that the price of oil could surge well past $100 dollars a barrel in 2011. If that happens, it is going to put significant pressure on the price of almost everything else in the entire global economy. In fact, as I have explained previously, the higher the price of oil goes, the faster the U.S. economy will decline.
#6 Food inflation is already so bad in some areas of the globe that it is setting off massive food riots in nations such as Tunisia and Algeria. In fact, there have been reports of people setting themselves on fire all over the Middle East as a way to draw attention to how desperate they are. So what is going to happen if global food prices go up another 10 or 20 percent and food riots spread literally all over the globe during 2011?
#7 There are persistent rumors that simply will not go away of massive physical gold and silver shortages. Demand for precious metals has never been higher. So what is going to happen when many investors begin to absolutely insist on physical delivery of their precious metals? What is going to happen when the fact that far, far, far more “paper gold” and “paper silver” has been sold than has ever actually physically existed in the history of the planet starts to come out? What would that do to the price of gold and silver?
#8 The U.S. housing industry could plunge the U.S. economy into another recession at any time. The real estate market is absolutely flooded with homes and virtually nobody is buying. This massive oversupply of homes means that the construction of new homes has fallen off a cliff. In 2010, only 703,000 single family, multi-family and manufactured homes were completed. This was a new record low, and it was down 17% from the previous all-time record which had just been set in 2009.
#9 A combination of extreme weather and disease could make this an absolutely brutal year for U.S. farmers. This winter we have already seen thousands of new cold weather and snowfall records set across the United States. Now there is some very disturbing news emerging out of Florida of an “incurable bacteria” that is ravaging citrus crops all over Florida. Is there a reason why so many bad things are happening all of a sudden?
#10 The municipal bond crisis could go “supernova” at any time. Already, investors are bailing out of bonds at a frightening pace. State and local government debt is now sitting at an all-time high of 22 percent of U.S. GDP. According to Meredith Whitney, the municipal bond crisis that we are facing is a gigantic threat to our financial system….
“It has tentacles as wide as anything I’ve seen. I think next to housing this is the single most important issue in the United States and certainly the largest threat to the U.S. economy.”
Former Los Angeles mayor Richard Riordan is convinced that things are so bad that literally 90% of our states and cities could go bankrupt over the next five years….
#11 Of course on top of everything else, the quadrillion dollar derivatives bubble could burst at any time. Right now we are watching the greatest financial casino in the history of the globe spin around and around and around and everyone is hoping that at some point it doesn’t stop. Today, most money on Wall Street is not made by investing in good business ideas. Rather, most money on Wall Street is now made by making the best bets. Unfortunately, at some point the casino is going to come crashing down and the game will be over.
#12 The biggest wildcard of all is war. The Korean peninsula came closer to war in 2010 than it had in decades. The Middle East could literally explode at any time. We live in a world where a single weapon can take out an entire city in an instant. All it would take is a mid-size war or a couple of weapons of mass destruction to throw the entire global economy into absolute turmoil.
Once again, let us hope that none of these economic collapse scenarios happens in 2011.
However, we have got to realize that we can’t keep dodging these bullets forever.
As bad as 2010 was, the truth is that it went about as good as any of us could have hoped. Things are still pretty stable and times are still pretty good right now.
But instead of using these times to “party”, we should be using them to prepare.
A really, really vicious economic storm is coming and it is going to be a complete and total nightmare. Get ready, hold on tight, and say your prayers.
JP Morgan is the largest processor of food stamp benefits in the United States. JP Morgan has contracted to provide food stamp debit cards in 26 U.S. states and the District of Columbia. JP Morgan is paid for each case that it handles, so that means that the more Americans that go on food stamps, the more profits JP Morgan makes. Yes, you read that correctly. When the number of Americans on food stamps goes up, JP Morgan makes more money. In the video posted below, JP Morgan executive Christopher Paton admits that this is “a very important business to JP Morgan” and that it is doing very well. Considering the fact that the number of Americans on food stamps has exploded from 26 million in 2007 to 43 million today, one can only imagine how much JP Morgan’s profits in this area have soared. But doesn’t this give JP Morgan an incentive to keep the number of Americans enrolled in the food stamp program as high as possible?
There are just some things that are a little too “creepy” to be “outsourced” to private corporations. The JP Morgan executive in the interview below does his best to put a positive spin on all this, but it just seems really unsavory for a big Wall Street bank to be making so much money off of the suffering of tens of millions of Americans….
So if unemployment goes down will this ruin JP Morgan’s food stamp business?
Well, apparently not. In the interview Paton says that 40% of food stamp recipients are currently working, and he seems convinced that there could be further “growth” in that segment.
So is this what America is turning into?
A place where tens of millions of the unemployed and the working poor crawl over to Wal-Mart and the dollar store every month to use the food stamp debit cards provided to them by JP Morgan?
It turns out that JP Morgan also provides child support debit cards in 15 U.S. states and they also provide unemployment insurance benefit debit cards in seven states.
Apparently states have found that they can save millions of dollars by “outsourcing” the provision of these benefits to big financial firms like JP Morgan.
So what happens if you have a problem with your food stamp debit card?
Well, you call up a JP Morgan service center. When you do this, there is a very good chance that you are going to be helped by a JP Morgan call center employee in India.
That’s right – it turns out that JP Morgan is saving money by “outsourcing” food stamp customer service calls to India.
When ABC News asked JP Morgan about this, the company would not tell ABC News which states have customer service calls sent to India and which states have them handled inside the United States….
JP Morgan is the only one today still operating public-assistance call centers overseas. The company refused to say which states had calls routed to India and which ones had calls stay domestically. That decision, the company said, was often left up to the individual states.
JP Morgan has been moving some of these call center jobs back inside the United States due to political pressure, but this whole situation is a really good example of what the “global economy” is doing to middle class Americans.
Just try to imagine the irony – a formerly middle class American that has lost a job to outsourcing calls up to get help with food stamp benefits only to be answered by a call center employee in India.
Welcome to the global economy, eh?
But wait, there is more.
It has just been announced that JP Morgan has admitted that they wrongly foreclosed on over a dozen military families and that they have been overcharging “thousands” of other military families on their mortgages.
Ouch.
It is a really bad public relations move to mess with military families.
Is anyone over at JP Morgan even paying attention?
JP Morgan has also been one of the primary financial institutions involved in the foreclosure “robo-signing” scandal.
They just seem to be having all kinds of problems lately. But they are not alone.
The truth is that we have gotten to the point where big Wall Street banks such as JP Morgan, Goldman Sachs, Citibank and Morgan Stanley just have way, way too much power.
The biggest Wall Street financial institutions had no trouble begging for bailouts from the U.S. government during the financial crisis, but when the American people have needed a little grace and mercy from them they have been less than helpful.
So what do you think about how the big Wall Street banks have been behaving? Feel free to post a comment with your opinion below….
Over the past couple of years, most Americans have shown little concern as austerity measures were imposed on financially troubled nations across Europe. Even as austerity riots erupted in nations such as Greece and Spain, most Americans were still convinced that nothing like that could ever happen here. Well, guess what? Austerity has arrived in America. At this point, it is not a formal, mandated austerity like we have seen in Europe, but the results are just the same. Taxes are going up, services are being slashed dramatically, thousands of state and city employees are being laid off, and politicians seem to be endlessly talking about ways to make even deeper budget cuts. Unfortunately, even with the incredibly severe budget cuts that we have seen already, many state and local governments across the United States are still facing a sea of red ink as far as the eye can see.
Most Americans tend to think of “government debt” as only a problem of the federal government. But that is simply not accurate. The truth is that there are thousands of “government debt problems” from coast to coast. Today, state and local government debt has reached at an all-time high of 22 percent of U.S. GDP. It is a crisis of catastrophic proportions that is not going away any time soon.
A recent article in the New York Times did a good job of summarizing the financial pain that many state governments are feeling right now. Unfortunately, as bad as the budget shortfalls are for this year, they are projected to be even worse in 2012….
While state revenues — shrunken as a result of the recession — are finally starting to improve somewhat, federal stimulus money that had propped up state budgets is vanishing and costs are rising, all of which has left state leaders bracing for what is next. For now, states have budget gaps of $26 billion, by some estimates, and foresee shortfalls of at least $82 billion as they look to next year’s budgets.
So what is the solution? Well, for state and local politicians from coast to coast, the answer to these financial problems is to impose austerity measures. Of course they never, ever use the term “austerity measures”, but that is exactly what they are.
The following are 22 signs that austerity has already arrived in America and that it is going to be very, very painful….
#1 The financial manager of the Detroit Public Schools, Robert Bobb, has submitted a proposal to close half of all the schools in the city. His plan envisions class sizes of up to 62 students in the remaining schools.
#2 Detroit Mayor Dave Bing wants to cut off 20 percent of the entire city from police and trash services in order to save money.
#4 New York Governor Andrew Cuomo is proposing to completely eliminate 20 percent of state agencies.
#5 New York City Mayor Michael Bloomberg has closed 20 fire departments at night and is proposing layoffs in every single city agency.
#6 In the state of Illinois, lawmakers recently pushed through a 66 percent increase in the personal income tax rate.
#7 The town of Prichard, Alabama came up with a unique way to battle their budget woes recently. They simply stopped sending out pension checks to retired workers. Of course this is a violation of state law, but town officials insist that they just do not have the money.
#8 New Jersey Governor Chris Christie recently purposely skipped a scheduled 3.1 billion dollar payment to that state’s pension system.
#9 The state of New Jersey is in such bad shape that they still are facing a $10 billion budget deficit for this year even after cutting a billion dollars from the education budget and laying off thousands of teachers.
#10 Due to a very serious budget shortfall, the city of Newark, New Jersey recently made very significant cuts to the police force. Subsequently, there has been a very substantial spike in the crime rate.
#11 The city of Camden, New Jersey is “the second most dangerous city in America”, but because of a huge budget shortfall they recently felt forced to lay off half of the city police force.
#12 Philadelphia, Baltimore and Sacramento have all instituted “rolling brownouts” during which various city fire stations are shut down on a rotating basis.
#14 Oakland, California Police Chief Anthony Batts has announced that due to severe budget cuts there are a number of crimes that his department will simply not be able to respond to any longer. The crimes that the Oakland police will no longer be responding to include grand theft, burglary, car wrecks, identity theft and vandalism.
#15 In Connecticut, the governor is asking state legislators to approve the biggest tax increase that the state has seen in two decades.
#16 All across the United States, conditions at many state parks, recreation areas and historic sites are deplorable at best. Some states have backlogs of repair projects that are now over a billion dollars long. The following is a quote from a recent MSNBC article about these project backlogs….
More than a dozen states estimate that their backlogs are at least $100 million. Massachusetts and New York’s are at least $1 billion. Hawaii officials called park conditions “deplorable” in a December report asking for $50 million per year for five years to tackle a $240 million backlog that covers parks, trails and harbors.
#17 The state of Arizona recently announced that it has decided to stop paying for many types of organ transplants for people enrolled in its Medicaid program.
#18 Not only that, but Arizona is so desperate for money that they have even sold off the state capitol building, the state supreme court building and the legislative chambers.
#19 All over the nation, asphalt roads are actually being ground up and are being replaced with gravel because it is cheaper to maintain. The state of South Dakota has transformed over 100 miles of asphalt road into gravel over the past year, and 38 out of the 83 counties in the state of Michigan have transformed at least some of their asphalt roads into gravel roads.
#20 The state of Illinois is such a financial disaster zone that it is hard to even describe. According to 60 Minutes, the state of Illinois is six months behind on their bill payments. 60 Minutes correspondent Steve Croft asked Illinois state Comptroller Dan Hynes how many people and organizations are waiting to be paid by the state, and this is how Hynes responded….
“It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state.”
#21 The city of Chicago is in such dire straits financially that officials there are actually toying with the idea of setting up a city-owned casino as a way to raise cash.
#22 Michigan Governor Rick Snyder is desperately looking for ways to cut the budget and he says that “hundreds of jurisdictions” in his state could go bankrupt over the next few years.
But everything that you have just read is only the beginning. Budget shortfalls for our state and local governments are projected to be much worse in the years ahead.
So what is the answer? Well, our state and local governments are going to have to spend less money. That means that we are likely to see even more savage budget cutting.
In addition, our state and local politicians are going to feel intense pressure to find ways to “raise revenue”. In fact, we are already starting to see this happen.
According to the National Association of State Budget Officers, over the past couple of years a total of 36 out of the 50 U.S. states have raised taxes or fees of some sort.
So hold on to your wallets, because the politicians are going to be coming after them.
We are entering a time of extreme financial stress in America. The federal government is broke. Most of our state and local governments are broke. Record numbers of Americans are going bankrupt. Record numbers of Americans are being kicked out of their homes. Record numbers of Americans are now living in poverty.
The debt-fueled prosperity of the last several decades came at a cost. We literally mortgaged the future. Now nothing will ever be the same again.
Have you noticed that most Americans seem to know far more about American Idol, Dancing with the Stars, Justin Bieber and their favorite sports teams than they do about world affairs? Most Americans cannot even find Tunisia and Algeria on a map, and if you told them that food riots are happening in those nations right now most of them would not even care anyway. We have become a very self-centered, self-involved and self-absorbed nation. Quite a few people have accused this column of being obsessed with “doom and gloom”, but the truth is that the world really is falling apart out there. What are we supposed to do? Are we all supposed to stick our heads in the sand and pretend that everything is going to be okay? Should we all not try to warn others so that they can prepare for what is coming? Until people understand that we are facing absolutely massive problems they are not going to be motivated to take significant action, and hopefully those of us that are proclaiming “doom and gloom” are doing a good enough job of describing what is really going on out there that some people are starting to wake up and actually make changes.
Most Americans may not care, but the food riots that are starting to erupt around the globe are actually very serious.
Do you remember what happened back in the summer of 2008?
That summer, the price of oil spiked to an all-time high of $147 a barrel and that caused a substantial increase in the price of food all over the globe. Suddenly millions of poor people couldn’t afford to feed themselves anymore and food riots erupted all over the world.
Well, here we are in 2011 and the price of oil hasn’t even reached $100 a barrel, and yet the food riots are already beginning.
Violent food riots are being reported in Tunisia, in Algeria, in Chile and in Mozambique.
Yes, that is how serious things are getting already.
Unfortunately, it looks like the global food situation is only going to get even worse.
Australia is a major food producer and right now they are experiencing flooding of Biblical proportions. In fact, it has been reported that at one point the flooding covered an area greater than France and Germany combined.
In Brazil, another major food producer, horrific flooding has killed more than 500 people so far. This flooding is being called the “worst-ever natural disaster” in the history of Brazil.
Meanwhile, record cold temperatures and record snowfalls are playing havoc with winter crops all over the Northern Hemisphere.
But even before all of these weather disasters struck the price of food had been going up significantly. The UN recently announced that the global price of food hit an all-time high during the month of December, and world leaders all over the globe are openly expressing concern about what 2011 is going to bring.
Sadly, the truth is that there has been a trend of rising food prices for quite some time. According to Forbes, corn is up 94% since June, soybeans are up 51% since June, and wheat is up 80% since last June.
As one of my readers recently pointed out to me, it usually takes about six months for the prices of agricultural futures to filter down into the supermarkets. So the very high prices for agricultural commodities that we are seeing right now should really start to be felt around the globe by the middle of 2011.
In addition to everything else, reports continue to come in of thousands of birds and millions of fish suddenly dying all over the globe, and nobody seems to really know what is causing it.
Do you want some more doom and gloom?
*There are reports of “panic buying” of silver and other precious metals right now.
*S&P and Moody’s have both warned once again that the United States is in danger of having its credit rating slashed if it does not get government debt under control.
*U.S. housing prices have now fallen further during this economic downturn than they did during the Great Depression of the 1930s.
Meanwhile, America’s economic infrastructure continues to be taken apart piece by piece.
The United States is losing more jobs to China. In fact, the United States is losing more high technology “green jobs” to China.
Evergreen Solar, a company that manufactures solar panels, is closing their factory in Devon, Massachusetts and they are moving their production facilities to China. This is going to result in the loss of 800 good American jobs.
“Solar manufacturers in China have received considerable government and financial support and, together with their low manufacturing costs, have become price leaders within the industry.”
Is it any wonder that a recent survey found that 47 percent of Americans now believe that China is the world’s leading economic power while only 31 percent still believe that the United States is the world’s leading economic power?
As America continues to lose good jobs, millions of Americans find themselves simply unable to pay the bills. In fact, at this point one out of every six Americans is now enrolled in at least one government-run anti-poverty program.
As things have fallen apart in the United States, many private citizens have tried to step forward and do what they can to help people, but now in many areas of the country the government is actually stepping in and shutting down these private avenues of assistance.
For example, in the city of Houston, Texas a couple named Bobby and Amanda Herring has been feeding homeless people for over a year. They never left behind any trash and no trouble was ever caused.
So will they be able to get a permit? Well, it turns out that city officials are saying that this “Feed a Friend” effort most likely will be denied one.
Apparently the city “officials” believe that the homeless “are the most vulnerable to foodborne illness” and that therefore the warm meals that the Herrings were providing for them were potentially dangerous.
Can you believe this?
This is what happens when political correctness and bureaucracy get wildly out of control.
Now it is illegal to go out and feed homeless people?
What is American turning into?
As the economy continues to fall part, the iron grip of the government is likely only going to get tighter as it desperately tries to keep order.
The truth is that there is a reason why so many websites are now reporting so much “doom and gloom”. Things really are getting bad out there.
Sadly, most Americans have only known tremendous prosperity all of their lives, so they can’t even conceive of what it would be like to go through difficult times.
Most Americans have been conditioned to believe that while we may have brief “recessions” once in a while, in the end our economy will always get better and the good times will continue to roll.
But the good news is that an increasing number of Americans are waking up and are trying to warn their family and friends about what is coming.
So do you believe that the food shortages and the food riots are going to get even worse throughout the rest of 2011? Please feel free to leave a comment with your thoughts below….
2010 was quite a year, wasn’t it? 2010 will be remembered for a lot of things, but for those living in the United States, one of the main things that last year will be remembered for is economic decline. The number of foreclosure filings set a new record, the number of home repossessions set a new record, the number of bankruptcies went up again, the number of Americans that became so discouraged that they simply quit looking for work reached a new all-time high and the number of Americans on food stamps kept setting a brand new record every single month. Meanwhile, U.S. government debt reached record highs, state government debt reached record highs and local government debt reached record highs. What a mess! In fact, even many of the “good” economic records that were set during 2010 were indications of underlying economic weakness. For example, the price of gold set an all-time record during 2010, but one of the primary reasons for the increase in the price of gold was that the U.S. dollar was rapidly losing value. Most Americans had been hoping that 2010 would be the beginning of better times, but unfortunately economic conditions just kept getting worse.
So will things improve in 2011? That would be nice, but at this point there are not a whole lot of reasons to be optimistic about the economy. The truth is that we are trapped in a period of long-term economic decline and we are now paying the price for decades of horrible decisions.
Amazingly, many of our politicians and many in the mainstream media have declared that “the recession is over” and that the U.S. economy is steadily improving now.
Well, if anyone tries to tell you that the economy got better in 2010, just show them the statistics below. That should shut them up for a while.
The following are 20 new economic records that were set during 2010….
#2 The number of homes that were actually repossessed reached the 1 million mark for the first time ever during 2010.
#3 The price of gold moved above $1400 an ounce for the first time ever during 2010.
#4 According to the American Bankruptcy Institute, approximately 1.53 million consumer bankruptcy petitions were filed in 2010, which was up 9 percent from 1.41 million in 2009. This was the highest number of personal bankruptcies we have seen since the U.S. Congress substantially tightened U.S. bankruptcy law several years ago.
#6 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs, which is believed to be a new record low.
#7 The number of Americans working part-time jobs “for economic reasons” was the highest it has been in at least five decades during 2010.
#8 The number of American workers that are so discouraged that they have given up searching for work reached an all-time high near the end of 2010.
#9 Government spending continues to set new all-time records. In fact, at the moment the U.S. government is spending approximately 6.85 million dollars every single minute.
#10 The number of Americans on food stamps surpassed 43 million by the end of 2010. This was a new all-time record, and government officials fully expect the number of Americans enrolled in the program to continue to increase throughout 2011.
#11 The number of Americans on Medicaid surpassed 50 million for the first time ever in 2010.
#12 The U.S. Census Bureau originally announced that 43.6 million Americans are now living in poverty and according to them that was the highest number of Americans living in poverty that they had ever recorded in 51 years of record-keeping. But now the Census Bureau says that they miscalculated and that the real number of poor Americans is actually 47.8 million.
#13 According to the FDIC, 157 banks failed during 2010. That was the highest number of bank failures that the United States has experienced in any single year during the past decade.
#14 The Federal Reserve brought in a record $80.9 billion in profits during 2010. They returned $78.4 billion of that to the U.S. Treasury, but the real story is that thanks to the Federal Reserve’s continual debasement of our currency, the U.S. dollar was worth less in 2010 than it ever had been before.
#15 It is projected that the major financial firms on Wall Street will pay out an all-time record of $144 billion in compensation for 2010.
#16 Americans now owe more than $881 billion on student loans, which is a new all-time record.
#18 According to Zillow, U.S. housing prices have now declined a whopping 26 percent since their peak in June 2006. Amazingly, this is even farther than house prices fell during the Great Depression. From 1928 to 1933, U.S. housing prices only fell 25.9 percent.
#19 State and local government debt reached at an all-time record of 22 percent of U.S. GDP during 2010.
#20 The U.S. national debt has surpassed the 14 trillion dollar mark for the first time ever and it is being projected that it will soar well past 15 trillion during 2011.
There are some people that have a hard time really grasping what statistics actually mean. For people like that, often pictures and charts are much more effective. Well, that is one reason I like to include pictures and graphs in many of my articles, and below I have posted my favorite chart from this past year. It shows the growth of the U.S. national debt from 1940 until today. I honestly don’t know how anyone can look at this chart and still be convinced that our nation is not headed for a complete financial meltdown….
Today America is very, very frustrated. In fact, we probably have not seen this level of anger in the country since World War 2 ended. So why are so many Americans so frustrated and so angry right now? Well, for most Americans it comes down to the economy. Very few things are more frustrating than not being able to find a job that will enable you to pay the mortgage and feed your family. Middle class Americans that do have a little bit of money are digging into their savings and investments at a staggering rate as they desperately try to keep their heads above water. Millions of other families that do not have a “safety cushion” are on the verge of losing their homes or have already been callously tossed out onto the streets by big, greedy banks. Meanwhile, our politicians continue to burden us with increasingly larger amounts of government debt and they stand idly by as our jobs and our industries are shipped overseas. So even though the mainstream media seems absolutely puzzled by the growing anger in America, the truth is that it is not a great mystery. The economy is an absolute nightmare, and if it gets even worse people are going to become even more angry.
Paper Money Madness: Inflation-Fueled Economic Growth Does Not Indicate That An Economy Is Getting Stronger
A very basic example shows this very easily. Imagine if suddenly everyone in the United States had the amount of money they owned instantly doubled. Would the U.S. economy be twice as healthy? Of course not. Very quickly prices would rise to meet the new level of money.
Well, in the United States today our “authorities” are pumping massive amounts of new dollars into the system. That is one reason why so many people are so upset about the Federal Reserve’s “quantitative easing 2″ program. The Federal Reserve is creating money out of thin air and pumping it into the financial system. The first people that get their hands on this new money are Wall Street banks and major financial institutions. The idea is that eventually all of this new money will “trickle down” and will help average Americans, but that just does not seem to be happening.
In addition, when the U.S. government goes into more debt, this also creates more money. The U.S. government has accumulated far more new debt during the last two years than it ever has in any other two year period. When the U.S. government spends all of this money that it borrows it introduces a massive amount of new money into the system.
There are many ways to measure the money supply, and one of the most basic (M1) is displayed below. As you can see, thanks to the actions of the Federal Reserve and the U.S. government, the money supply is rising at an almost exponential rate at this point. The money supply has grown rapidly at various points in the past, but what we are witnessing now is really unprecedented…..
So what happens when you have a lot more money chasing roughly the same number of goods and services?
Well, you have inflation of course.
Are our “leaders” alarmed by any of this?
No, in fact they plan to pump up the money supply even more. The Federal Reserve seems content to continue their “quantitative easing” program and Barack Obama is proposing all kinds of new federal spending which will be funded by more debt.
So the truth is that we had better have some significant “economic growth” during 2011. If this amount of money is pumped into our financial system and we don’t see any “economic growth” then that would be an indication of a major league economic breakdown.
But instead of looking at things rationally, many mainstream economists are hailing the fact that the U.S. economy may grow by a few percentage points in 2011 as a sign that happy days are here again.
According to a recent article in USA Today, economists are becoming increasingly optimistic about 2011, and the consensus seems to be that economic growth in the United States will fall somewhere between 3 and 4 percent….
Unfortunately, the irrational optimism is not limited to just the United States. As global leaders prepare to descend on the annual meeting of the World Economic Forum in Davos, Switzerland many mainstream media outlets are declaring that the worldwide financial crisis is over and that we are now entering a glorious boom time for the global economy. For example, the following is how one recent article from Bloomberg opened….
People don’t seem to realize that just because more money is changing hands and just because financial markets are going higher that it doesn’t mean that the economic situation is improving.
If a rising GDP and a soaring stock market truly were strong indicators of economic health, then Zimbabwe would have been one of the strongest economies on the planet over the last 10 years.
Inflation changes everything.
Unfortunately, official U.S. government inflation figures have become so manipulated that they are of basically no value at this point. Whenever one particular category starts to experience significant inflation, the U.S. government simply removes that category from the inflation calculations. Over the past 40 years the way that inflation is calculated has been changed way too many times.
If you really want to get a good idea of what is happening with inflation, a good thing to do is to look at the basic commodities that everyone uses around the world.
For example, according to the United Nations, the global price of food hit an all-time high in December. Not only that, but almost every major agricultural commodity that you could possibly name experienced a double-digit percentage increase in price during 2010.
In addition, the price of oil is steamrolling towards $100 a barrel again. In fact, many analysts are convinced that the price of oil will set a new all-time record in 2011.
A recent editorial in Newsweek was not optimistic that we will be able to stem this rising tide of inflation….
So what is the answer to these problems?
Well, according to many of the top “economic leaders” in the world, the solution is to create even more money and even more credit.
Between 2000 and 2009, the total amount of credit in the world grew from 57 trillion dollars to 109 trillion dollars. Now the World Economic Forum says that we need to grow the total amount of credit by another 100 trillion dollars over the next ten years to “support” the anticipated amount of “economic growth” around the world that they expect to see.
Does that make any sense?
We have to double the amount of debt in the world so that the world economy can grow?
But this is what the world economic system has become at this point. It is a never ending debt spiral that requires constantly increasing levels of debt and paper money.
That is a huge reason why precious metals such as gold and silver are becoming so popular. Investors are becoming sick and tired of the constantly inflating paper currencies. Gold and silver are both very much in demand right now. For example, the Chinese are voraciously gobbling up gold right now. Also, the Central Bank of Russia has announced plans to purchase 100 metric tons of gold per year in order “to replenish the country’s gold reserves”.
But what about average Americans? What is going to happen to them in a world where prices are rising rapidly?
Well, the answer is very simple. In an environment of rapidly rising prices, the standard of living for most Americans is going to go down.
In this economic environment, employers are simply not going to increase salaries fast enough to keep up with the rising price of food, gas and health care.
In addition, there are tens of millions of Americans that are on fixed incomes. As prices rise, those fixed incomes will simply not go as far.
So the truth is that most Americans are going to find their finances stretched even thinner in the months and years to come.
Inflation is like a thief. When prices rise it means that the purchasing power of all the dollars that we have accumulated goes down.
But for our politicians, inflation can be a helpful thing. They can take inflation-fueled “economic growth” numbers and claim that their policies are working and that the economy is becoming healthier.
A year from now when these jokers trot out their “economic growth” numbers and yet the cost of nearly everything you buy has increased dramatically, don’t you believe their propaganda.
Yes, U.S. economic numbers are most likely going to experience a little bit of inflation-fueled “growth” in 2011.
But it will not mean that our economy is improving.