The Federal Reserve is going back to Jekyll Island to celebrate the 100 year anniversary of the infamous 1910 Jekyll Island meeting that spawned the draft legislation that would ultimately create the U.S. Federal Reserve. The title of this conference is “A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve”, and it will be held on November 5th and 6th in the exact same building where the original 1910 meeting occurred. In November 1910, the original gathering at Jekyll Island included U.S. Senator Nelson W. Aldrich, Assistant Secretary of the Treasury Department A.P. Andrews and many representatives from the upper crust of the U.S. banking establishment. That meeting was held in an environment of absolute and total secrecy. 100 years later, Federal Reserve bureaucrats will return to Jekyll Island once again to “celebrate” the history and the future of the Federal Reserve.
Sadly, most Americans have no idea how the Federal Reserve came into being. Forbes magazine founder Bertie Charles Forbes was perhaps the first writer to describe the secretive nature of the original gathering on Jekyll Island in a national publication….
Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundred of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written… The utmost secrecy was enjoined upon all. The public must not glean a hint of what was to be done. Senator Aldrich notified each one to go quietly into a private car of which the railroad had received orders to draw up on an unfrequented platform. Off the party set. New York’s ubiquitous reporters had been foiled… Nelson (Aldrich) had confided to Henry, Frank, Paul and Piatt that he was to keep them locked up at Jekyll Island, out of the rest of the world, until they had evolved and compiled a scientific currency system for the United States, the real birth of the present Federal Reserve System, the plan done on Jekyll Island in the conference with Paul, Frank and Henry… Warburg is the link that binds the Aldrich system and the present system together. He more than any one man has made the system possible as a working reality.
It was a system that was designed by the bankers and for the bankers. Now, the bureaucrats running the system are returning to Jekyll Island to congratulate themselves. Those attending the conference on November 5th and 6th include Federal Reserve Chairman Ben Bernanke, former Fed Chairman Alan Greenspan, Goldman Sachs managing director E. Gerald Corrigan and the heads of the various regional Federal Reserve banks. You can view the entire agenda of the conference right here. It looks like that there will be plenty of hors d’oeuvres to go around, but should the Federal Reserve really be celebrating their accomplishments at a time when the U.S. economy is literally falling to pieces?
Today, 63 percent of Americans do not think that they will be able to maintain their current standard of living. 1.47 million Americans have been unemployed for more than 99 weeks. We are facing a complete and total economic disaster.
Today, the Federal Reserve has more power over the economy than any other single institution in the United States. It is the Fed that primarily determines if we will see high inflation or low inflation, whether the money supply with expand or contract and whether we will have high interest rates or low interest rates. The President and the U.S. Congress have far less power to influence the economy than the Federal Reserve does.
As this election has demonstrated, the American people are absolutely furious about the state of the U.S. economy, but American voters have been mostly blaming our politicians. They just don’t understand that it is actually the Federal Reserve that has the most control over the performance of the economy.
It would be hard to understate how powerful the U.S. Federal Reserve really is in 2010. U.S. Representative Ron Paul recently told MSNBC that he believes that the Federal Reserve is actually more powerful than Congress…..
“The regulations should be on the Federal Reserve. We should have transparency of the Federal Reserve. They can create trillions of dollars to bail out their friends, and we don’t even have any transparency of this. They’re more powerful than the Congress.”
So how has the Federal Reserve performed over the years?
Well, since 1913 inflation has been on a relentless march upwards, U.S. government debt has increased exponentially and the U.S. dollar has lost over 96 percent of its value.
That is not a record to be celebrating.
The truth is that the Federal Reserve was created to enslave the United States government in an endlessly expanding spiral of debt from which it would never be able to escape. As I wrote about yesterday, that is exactly what has happened. The U.S. government debt is escalating at an exponential rate. It is a trap from which the U.S. government will never be able to get out of under our current system.
Now many at the Federal Reserve are touting more “quantitative easing” as the solution to our economic problems. But anyone with a brain should be able to see that creating a gigantic pile of paper money out of thin air and dumping it into the economy is only going to make our long-term problems even worse.
But the Federal Reserve system was never designed to benefit the American people. It was designed to make massive amounts of money for the banking establishment. As I wrote about in “11 Reasons Why The Federal Reserve Is Bad“, the Federal Reserve was created to transfer wealth from the American people to the U.S. government and from the U.S. government to the super wealthy.
The sad truth is that the Federal Reserve is at the very core of our economic and financial problems, and that is nothing to celebrate.
Do you want to see something truly frightening? Just check out the 3 charts posted further down in this article. These charts prove that we are now in the biggest debt bubble in the history of the world. As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none. But that is not even close to accurate. The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world. Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us. So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal.
We have been robbing future generations blind for so long that it doesn’t even seem to bother most people anymore. We have become accustomed to living in debt. We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.
Just check out the chart posted below. It shows the total credit market debt owed in the United States. In other words, it is a measure of what everyone owes (government, businesses and consumers).
30 years ago, total credit market debt owed was less than 5 trillion dollars. Today, it is over 50 trillion dollars. Total credit market debt is now at a level equivalent to about 360 percent of GDP. This is what has been fueling the great era of “economic prosperity” that we have been experiencing….
So what is the answer to this problem?
The truth is that there is not an easy answer under our current system. The only way that the U.S. economy continues to “grow” is if the debt bubble continues to “expand”.
If our leaders allowed the debt bubble to “pop” and the U.S. economy went into a deleveraging cycle, it would mean that we would start living far below our means for an extended period of time and it would spawn a deflationary depression that would make the Great Depression look like a Sunday picnic.
Most Americans are in no mood to take that kind of hard medicine.
Do you really think that the American people are going to vote in politicians who tell them that it is time to live below our means and that we are going to have to experience a standard of living far below what our parents experienced in order to pay for all the debt that they racked up?
No, that is clearly a dog that isn’t going to hunt.
The American people want to hear that better times are ahead.
One way to give the American people “better times”, for the short-term at least, is to crank the debt spiral back up.
By introducing another huge flood of paper money into the economy, the Federal Reserve and the U.S. government are hoping that banks will start lending again and that U.S. consumers will start going into more debt again. Already, as you can see from the chart below, U.S. household debt has started to sink just a little bit. But considering the fact that approximately 70 percent of our GDP is generated by U.S. consumer spending, that is not good news for “economic growth” statistics.
Three decades of “economic expansion” have been fueled by consumer debt that has spiralled completely out of control. Over the past 30 years, total U.S. household debt has gone from less than 2 trillion dollars to almost 14 trillion dollars….
So where did the housing bubble come from? It came from Americans going into insane amounts of debt that they could not afford. The truth is that only the top 5 percent of all U.S. households have earned enough additional income to match the rise in housing costs since 1975.
Not only that, but Americans are going into staggering amounts of debt in order to pay for their educations. Total student loan debt in the United States is climbing at a rate of approximately $2,853.88 per second, and today Americans owe an all-time record of more than $849 billion on student loans, which is actually more than the total amount that Americans owe on their credit cards.
The truth is that American families are stretched thinner financially than they ever have been in the post-World War 2 era. According to a poll taken last year, 61 percent of Americans “always or usually” live paycheck to paycheck. That was up significantly from 49 percent in 2008 and 43 percent in 2007.
Many Americans have come to the absolute breaking point. 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.
But remember, approximately 70 percent of our GDP is generated by U.S. consumer spending, so without more consumer spending there won’t be more economic growth.
So, instead of Obama and the Federal Reserve encouraging Americans to get out of debt and to save money, they are trying to get the American people to spend even more money and to go into even more debt because they desperately need positive “economic growth” figures.
The worst offender of all when it comes to debt, of course, is the U.S. federal government. Over the last 30 years, the U.S. national debt has gone from about 1 trillion dollars to almost 14 trillion dollars….
This is the largest single debt in the history of the world.
So just how big is one trillion dollars?
If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
Yet somehow the U.S. government has accumulated a debt that is well over 13 trillion dollars.
Unfortunately, it keeps getting worse month after month after month.
Should we all throw a big party when it crosses the 20 trillion dollar mark?
I can just hear the theme song now….
“I’m going to party like I’m 19.99 trillion in debt!”
But the cold, hard reality is that we are in far, far more trouble than what the official government numbers tell us.
In a recent article, Boston University economics professor Laurence J. Kotlikoff analyzed the financial condition of the U.S. government, and he summarized the horror we are facing by making the following statement….
“Let’s get real. The U.S. is bankrupt.”
After carefully going over Congressional Budget Office data, Kotlikoff came to the conclusion that the U.S. government is now facing a “fiscal gap” of $202 trillion dollars.
Now how in the world did that happen?
Well, it turns out that we have made promises to future generations that we cannot possibly even come close to keeping.
Social Security and Medicare are fiscal nightmares that are far more immense than anything that U.S. government has ever faced before.
According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019. That is before a single penny is spent on anything else.
That is just 9 years away.
When people speak of the financial situation of the U.S. government being “unsustainable”, they aren’t kidding around.
The truth is that the U.S. government has been running gigantic Ponzi schemes which are about to collapse.
Take the Social Security shell game for example. Back in 1950, each retiree’s Social Security benefit was paid for by approximately 16 workers. Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers. By 2025, it is projected that there will be approximately two workers for each retiree.
An eerie calm has descended upon world financial markets as they await perhaps the two most important financial events of the year this week. On Tuesday, investors will be eagerly awaiting the results of one of the most anticipated midterm elections in U.S. history. On Wednesday, the Federal Reserve is expected to end months of speculation by formally announcing the details of a new round of quantitative easing. If either the election or the meeting of the Federal Reserve open market committee delivers a highly unexpected result, it could have a dramatic impact on world financial markets. In fact, many are looking at this week as a potential turning point for the U.S. economy. The decisions that are made or not made this week could set us down a road from which the U.S. economy may never recover.
At this point, it looks like the Republicans will take control of the U.S. House of Representatives and will pick up a number of U.S. Senate seats as well.
There are many in the financial world who already consider Barack Obama to be the most “anti-business” president in U.S. history, so a defeat for the Democrats on Tuesday would be greatly welcomed by many on Wall Street. Barack Obama’s decline in popularity since he was elected has been absolutely stunning. According to Gallup, Barack Obama had an average approval rating of just 44.7% during the seventh quarter of his presidency, which was a brand new low. In fact, Obama’s average approval rating has fallen during every single quarter since he took office. Things have gotten so bad for Obama that one new poll has found that 47% of Democrats now think that Barack Obama should be challenged for the 2012 Democratic presidential nomination.
However, if the Democrats were able to do surprisingly well on Tuesday, it would not only shock the political pundits, but it would also likely put world financial markets in a very bad mood.
If the Republicans do very well on Tuesday, it will likely mean that there will be no more extensions for those receiving long-term unemployment benefits. Some state governments are already anticipating this and are making preparations. For example, armed security guards are now being posted at all 36 full-service unemployment offices in the state of Indiana. It is estimated that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season if Congress does not authorize another emergency extension of benefits by the end of November. If the Republicans do very well on Tuesday, it would make it much more likely that the extension will not happen.
But if millions of unemployed Americans suddenly find themselves without any unemployment checks, that is only going to cause the anger and frustration regarding this economy to grow.
Either way, the unfortunate truth is that this election is not going to change much.
Over the past five elections, incumbents have been re-elected to the U.S. House of Representatives at an average rate of 96 percent.
This time will be a little different of course, but not that much different. The sad truth is that we are still likely to see about 80 percent of the exact same faces going back to the U.S. Congress for the next session.
However, even if the American people could somehow vote out every single member of Congress, it would still not do much to fundamentally change our economic situation because the U.S. Congress does not run the economy and neither does the President.
Of course both of those institutions can influence the U.S. economy, but it is actually the Federal Reserve that runs the economy.
The Federal Reserve controls the money supply. The Federal Reserve controls our interest rates. If the U.S. government wants more money it has to go get it from the Federal Reserve. It is the Federal Reserve that is tasked with the mandate of keeping unemployment low while also keeping inflation at a “reasonable” level.
But these days, Federal Reserve officials don’t really seem to be that concerned about the dangers of inflation. In fact, several top Federal Reserve officials have come out in recent weeks and have made public statements not only advocating more quantitative easing, but also suggesting that inflation is not a danger because it is actually “too low” right now.
In fact, there have been some rumblings that many officials at the Fed would actually welcome more inflation because they think that it would somehow stimulate the economy. In fact, a Federal Reserve paper that was released in September actually floated the idea that a spike in oil prices would be quite good for the U.S. economy.
And these are the people running our economy?
Are we all caught in an episode of The Twilight Zone?
Well, as far as rising oil prices are concerned, the Fed will almost surely get its wish. As I have written about previously, the price of oil is almost certainly heading to 100 dollars a barrel.
But if the price of oil shoots up, isn’t that going to cause significant inflationary pressure on the prices of thousands of other goods and services?
Of course.
Unfortunately, very few of our leaders seem too concerned about inflation or about protecting the value of the U.S. dollar these days.
In fact, now even the IMF is publicly proclaiming that the U.S. dollar is “overvalued”.
What a mess.
But there is another aspect of a new round of “quantitative easing” that the American people really wouldn’t like if they could actually figure out what is going on.
You see, the truth is that “quantitative easing” is not only just a way to stimulate the economy, it is also a way to give backdoor bailouts to the big banks without having to go through the U.S. Congress.
1) The big U.S. banks have massive quantities of junk mortgage-backed securities that are worth little to nothing that they desperately want to get rid of.
2) They convince the Federal Reserve (which the big banks are part-owners of) to buy up these “toxic assets” at significantly above market price.
3) The Federal Reserve creates massive amounts of money out of thin air to buy up all of these troubled assets. The public is told that all of this “quantitative easing” is necessary to stimulate the U.S. economy.
4) The big banks are re-capitalized and have gotten massive amounts of bad mortgage securities off their hands, the Federal Reserve has found a way to pump hundreds of billions (if not trillions) of dollars into the economy, and most of the American people are none the wiser.
Now how do you think the American people would feel about “quantitative easing” if they really understood all this?
But unfortunately, most Americans will be watching the election results on Tuesday night without having even a basic understanding of how our economy is really run.
Already, there are a ton of signs that the U.S. economy is heading in a very bad direction, and dumping a handful of Congress critters out of office might feel good, but it isn’t going to do much to really change our economic problems.
The American people desperately need to be educated about how our financial system really works. But unfortunately, most Americans will likely not wake up until the whole house of cards comes crashing down.
Did you ever think that things in America would get so bad that we would need to put armed guards into our unemployment offices? Well, that is exactly what is happening in Indiana. Armed security guards will now be posted at all 36 full-service unemployment offices in the state of Indiana. So why is this happening now? Well, Indiana Department of Workforce Development spokesman Marc Lotter says that the agency is bringing in the extra security in anticipation of an upcoming deadline when thousands upon thousands of Indiana residents could have their unemployment benefits cut off. But it is not just the state of Indiana that could have a problem. In fact, one recent study found that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season unless Congress authorizes another emergency extension of benefits by the end of November. At this point, however, that is looking less and less likely.
So perhaps all the states will have to start putting armed security guards in their unemployment offices. The truth is that frustration among unemployed Americans is growing by the day.
Could we soon see economic riots similar to what we have seen in Greece and France?
Let’s hope not.
The following is a video news report about the armed guards that are going into Indiana unemployment offices….
So could things really get out of hand when thousands of unemployed workers in Indiana find out that they aren’t going to get checks any longer?
Indiana Department of Workforce Development spokesman Marc Lotter makes it sound like that is very much on his mind….
“Given the upcoming expiration of the federal extensions and the increased stress on some of the unemployed, we thought added security would provide an extra level of protection for our employees and clients.”
So who is paying for all of this extra security?
The Feds of course.
The additional cost of the new security will be approximately $1 million, and it will be paid for with U.S. government funds designated for the administration of the unemployment system according to Lotter.
This is not a good trend. As you go through your daily life, just start taking note of the places that now have armed security that did not have armed security five or ten years ago.
Unfortunately, as the U.S. economy goes downhill even further, the amount of security that people feel is “necessary” is likely to go up even more.
So is America going to become an armed camp where the people and institutions with money are protected by armed guards from the hordes of frustrated unemployed workers that can’t feed themselves or their families?
Americans are certainly not in a good mood about the economy. According to a recent poll conducted by CNBC, 92 percent of Americans believe that the performance of the U.S. economy is either “fair” or “poor”.
The lack of jobs is the main thing that the American people are so mad about. In fact, it is hard for even highly educated people to find work in 2010. In America today, 317,000 waiters and waitresses have college degrees.
People are really hurting and they are getting to the end of their ropes. Over 41 million Americans are now on food stamps, and one out of every six Americans is enrolled in at least one federal anti-poverty program. It is getting hard to believe that this is even America anymore. For many more statistics that reveal the economic horror we are now facing as a nation, please see my previous article entitled “30 Reasons Why People Should Be Getting Really Nervous About The State Of The U.S. Economy“.
But it is not just unemployment that is the problem. In recent years, millions upon millions of Americans have been forced to take reduced hours or a cut in pay due to the economy. Millions of others have had to take jobs that barely enable them to survive. In fact, the number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.
So why aren’t there even close to enough jobs for everyone? Well, there are a number of contributing factors, including the fact that we have been “offshoring” and “outsourcing” millions of our jobs and now it is really starting to catch up with us. I have discussed this so many times now that I am starting to sound like a broken record.
But instead of fixing the fundamental problems with our economy, the Federal Reserve wants to print yet another gigantic pile of paper money and throw it at the problem. It is called “quantitative easing“, and it may help smooth things over for a few months, but it is also going to make our long-term problems even worse.
Unfortunately, the Federal Reserve does not really seem concerned about protecting the value of the U.S. dollar at this point. Not that they ever did, but it would be nice to see Fed officials paying at least some lip service to the dangers of inflation.
Instead, various Fed officials have been publicly making statements about the need for more quantitative easing for weeks. Right now they seem desperate to put the American people back to work – even if it ends up crashing the value of the dollar.
But now even the IMF seems supportive of a dollar devaluation. On Thursday, the IMF actually said that the U.S. dollar is “overvalued” and that adjustments need to be made.
We’ll see what the Fed decides to do next week. Most analysts believe that they will announce a quantitative easing program of some sort or another.
But what have we come to as a nation when those who control our economy believe that the best solution to our economic problems is to print another big pile of paper money and chuck it into the system?
We’ve got an absolutely gigantic economic mess on our hands, and none of our “leaders” seem to have any idea about how to fix it.
Meanwhile, millions of unemployed Americans are just going to become more and more frustrated – especially when it gets to the point when they aren’t receiving unemployment checks anymore.
The world food situation is starting to get very, very tight. Unprecedented heat and wildfires this summer in Russia and horrific flooding in Pakistan and China have been some of the primary reasons for the rapidly rising food prices we are now seeing around the globe. In places such as Australia and the African nation of Guinea-Bissau, the big problem for crops has been locusts. In a world that already does not grow enough food for everyone (thanks to the greed of the elite), any disruption in food production can cause a major, major problem. Tonight, thousands of people around the world will starve to death. So what happens if things get even worse? Many agricultural scientists are now warning that global food production is facing dangers that are absolutely unprecedented. Crop diseases such as UG99 wheat rust and the “unintended effects” of genetic modification pose challenges that previous generations simply did not have to face. The outbreak of a real, live global famine looks increasingly possible with each passing year. So are you and your family prepared if a global famine does strike?
Already, there are huge warning signs on the horizon. Just check out what agricultural commodities have been doing. They have been absolutely soaring.
Here’s what’s happened to some key farm commodities so far in 2010…
•Corn: Up 63%
•Wheat: Up 84%
•Soybeans: Up 24%
•Sugar: Up 55%
Are you ready to pay 84 percent more for a loaf of bread?
You better get ready – these raw material prices will filter down to U.S. consumers eventually.
So what is going to happen if the world food situation gets even tighter?
Don’t think that it can’t happen.
The following are 5 potential dangers to global crops that could dramatically reduce the world food supply….
UG99 Wheat Rust
UG99 is commonly known as “wheat rust” or “stem rust” because it produces reddish-brown flakes on wheat stalks. The International Maize and Wheat Improvement Center in Mexico believes that approximately 19 percent of the global wheat crop is in imminent danger of being infected with UG99.
Ultimately, it is estimated that about 80 percent of the wheat on the globe is capable of catching the disease.
There is no known cure.
This current strain of wheat rust was discovered in Uganda in 1999 and has spread into areas of Kenya, Sudan, Ethiopia, Yemen and Iran. It is feared that this crippling disease will spread even farther into south Asia, devastating the fertile growing regions of Afghanistan, Pakistan, India and Bangladesh.
If that happens, you might as well kiss world food stability goodbye.
“You can talk about crying wolf,” says Ronnie Coffman, director of the Durable Rust Resistance in Wheat project at the University of Cornell in the US, “but it is a wolf”, he asserts, driving across the corn fields of Kansas.
Later on in the same article, Coffman warns that this disease could cause a devastating famine in which literally millions of people would die….
“It can be absolutely devastating if environmental conditions are right,“ he says. “You can count the number of people who could die from this in the millions.”
Mad Soy Disease
Mad Soy disease is spreading at an alarming rate among soy farms down in Brazil. Previously the disease had been confined to the north part of the country, but now it has been increasingly spreading south. This disease retards the maturation of infected plants, and it has been causing yield losses of up to 40 percent. The USDA says that “there are no known effective treatments.”
Verticillium Wilt
Verticillium Wilt is a fungus that prevents lettuce from absorbing water, causing it to quickly grow yellow and eventually wilt. This dangerous fungus is very hard to get rid of totally because it can stay in the soil for up to seven years.
In 2009, a disease known as “late blight” attacked potato and tomato plants in the United States with a ferocity never seen before. According to a press release from Cornell University, late blight had “never occurred this early and this widespread in the U.S.” when it started showing up all over the place early last year.
Late blight begins as ugly brown spots on the stems of potato and tomato plants, and as the spots increase in size, white fungal growth develops until finally a soft rot completely collapses the stem.
This was the disease that was responsible for the Irish potato famine in the 1850s. A major new outbreak could occur without warning.
Genetic Modification
While it may or may not technically be a disease (depending on how you look at it), genetic modification is having a very serious affect on crops around the globe.
For example, about 10 years ago Chinese farmers began to widely adopt Monsanto’s genetically modified Bt cotton. Well, researchers have found that since that time, mirid bugs that are resistant to the Bt pesticide have experienced a complete and total population boom.
Today, six provinces in Northern China are experiencing what can only be described as a “mirid bug plague”. Mirid bugs eat more than 200 different kinds of fruit, vegetables and grains. Chinese farmers in the region are completely frustrated.
In the United States, a different problem is developing. The complete and total reliance of so many U.S. farmers on Monsanto’s Roundup herbicide has resulted in several varieties of glyphosate-resistant “superweeds” developing in many areas of the United States.
The most feared of these “superweeds”, Pigweed, can grow to be seven feet tall and it can literally wreck a combine. Pigweed has been known to produce up to 10,000 seeds at a time, it is resistant to drought, and it has very diverse genetics.
Superweeds were first spotted in Georgia in 2004, and since then they have spread to South Carolina, North Carolina, Arkansas, Tennessee, Kentucky and Missouri.
In some areas, superweeds have become so bad that literally tens of thousands of acres of U.S. farmland have actually been abandoned.
But that is what we get for trying to “play God”.
We think that we can just do whatever we want with nature and there will not be any consequences.
One of the most frightening things about genetic modification is that it actually reduces that amount of crop diversity in the world.
For example, if nearly all farmers start using the same “brand” of genetically modified plants that are all virtually identical, it sets up a situation where crop diseases and crop failures can cascade across the planet very easily.
Genetic variety is a very desirable thing, but today our scientists are just doing pretty much whatever they want without really considering the consequences.
It has been said many times that genetic engineering is similar to “performing heart surgery with a shovel”.
The truth is that we just do not know enough about how our ecosystems work to be messing around with them so dramatically.
Perhaps even more frightening is that once these genetically engineered monstrosities have been released into our environment, it is absolutely impossible to recall them. They essentially become a permanent part of our ecosystem.
But can we afford to make any serious mistakes at this point?
The truth is that we already live in a world that is not able to feed itself.
Tonight, approximately 1 billion people across the globe will go to bed hungry. Every 3.6 seconds someone in the world starves to death, and three-fourths of those who starve to death are children under the age of five.
It is currently being projected that global demand for food will more than double over the next 50 years.
So what is going to happen if we start seeing widespread crop failures in the coming years?
The global food supply is not nearly as stable as most people believe. At some point, it is going to be tested severely.
For about a decade and a half, crime rates in the United States have generally fallen. That is the good news. The bad news is that even during those “good” years, the United States still had the most car thefts, the most rapes and the most murders in the world. And even though the United States has the most people in prison in the entire world by a large margin, there are all kinds of signs that there are still enough criminals out there for crime to start moving back up again. Sure, there are some areas that are still recording small decreases in the crime rate, but there are other areas where the jump in crime statistics is more than a bit alarming. There are millions of Americans that have been out of work for over a year at this point, and when people lose everything that they have they tend to totally lose it. People get desperate when they lose their homes and they don’t have anything to eat. For example, police in Chesterfield, Virginia are investigating 16 separate incidents just this month in which thieves stole food or drinks from homes, cars and even people walking on the street. It wasn’t money that these crooks were after. They just wanted something to eat. As the economy gets even worse over the next couple of years, it is inevitable that we are going to start to see a lot more of this kind of thing. Frustration and anger are on the rise from coast to coast, and when people don’t feel like they have anything to live for they become very dangerous.
As mentioned at the beginning of the article, it is undeniable that violent crime rates are significantly lower than they were 15 or 20 years ago in many areas of the nation. An unprecedented standard of living fueled by our addiction to debt has kept most Americans fat, happy and generally sedated. However, there are indications that we are approaching a “turning point” – a moment when crime rates start to go up significantly once again.
In fact, there are some forms of crime (such as sexual crime against children) that are already at ridiculously high record-setting levels. For example, how in the world did we ever get to the point as a society where we have 400,000 registered sex predators running around?
As the economy continues to unravel, things are not going to get any better. In fact, people who are suffering are only going to become more desperate. Already, there are quite a few troubling signs out there. The following are 12 crime statistics that make you wonder what is happening to America….
#1 The murder rate in New York City has increased more than 15 percent in 2010, and the number of rapes has shot up from 943 in 2009 to 1075 so far this year.
#2 In the city of Detroit, crime has gotten so bad and the citizens are so frustrated by the lack of police assistance that they have resorted to forming their own organizations to fight back. One group, known as “Detroit 300″, was formed after a 90-year-old woman on Detroit’s northwest side was brutally raped in August.
#3 Crime in Miami Beach was up almost 11 percent during the first half of 2010.
#4 The murder rate in Tempe, Arizona is now the highest it has been in 10 years.
#5 Shoplifting is completely and totally out of control. According to the National Association of Shoplifting Prevention, every single day Americans steal more than $35 million worth of goods from retail stores.
#7 U.S. authorities claim that there are now over 1 million members of criminal gangs operating inside the United States. According to federal statistics, these 1 million gang members are responsible for up to 80% of the violent crimes committed in the U.S. each year.
#8 The median age of the victims of imprisoned sex offenders in the United States is 13 years old.
#9 The crime rate in the San Diego school system is escalating out of control. The following is what San Diego School Police Chief Don Braun recently told the press about the current situation….
“Violent crime in schools has risen 31 percent. Property crime has risen 12 percent. Weapons violations (have gone up) almost 8 percent.”
#1053 percent of all investigated burglaries in the states of California, New Mexico, Nevada, Arizona and Texas are perpetrated by illegal aliens.
#11 Law enforcement officials estimate that about 600,000 Americans and 65,000 Canadians are trading dirty child pictures online. They also say that the total profit from creating and trading these images is approximately two to three billion dollars every year.
#12 Each year, one out of every five people in the U.S. is victimized by crime. No other nation on the planet has a rate that is higher.
So will the police step in to protect us all as crime increases?
Well, unfortunately police forces all across the United States are being slashed because the money just isn’t there anymore.
So all of us may soon be facing much more crime with much fewer police to assist us.
For example, because of extreme budget cuts and police layoffs, Oakland, California Police Chief Anthony Batts has announced that there are a number of crimes that his department simply will no longer respond to due to a lack of resources. The following is a partial list of the crimes that police officers in Oakland will no longer be responding to….
burglary
theft
embezzlement
grand theft
grand theft: dog
identity theft
false information to peace officer
required to register as sex or arson offender
dump waste or offensive matter
loud music
possess forged notes
pass fictitious check
obtain money by false voucher
fraudulent use of access cards
stolen license plate
embezzlement by an employee
extortion
attempted extortion
false personification of other
injure telephone/power line
interfere with power line
unauthorized cable tv connection
vandalism
Not that Oakland wasn’t already a mess before all this, but now how long do you think it will be before total chaos and anarchy reigns on the streets of Oakland?
But this kind of thing is not just happening in Oakland.
The sheriff’s department in Ashtabula County, Ohio has been reduced from 112 deputies to 49 deputies, and now there is just one vehicle remaining to patrol all 720 square miles of the county.
So what in the world are the citizens of that county supposed to do to protect themselves?
The truth is that there are already many communities across the United States where it is simply not a good idea to go out of your home at night.
There has never been a bigger gang problem in U.S. history than we are facing today, there have never been more sex predators running around, and millions of Americans are going to become increasingly desperate as they lose their homes and can’t find jobs.
So how is crime where you live? Feel free to leave a comment with what you are seeing in your neighborhood….
The mainstream media is full of happy economic news these days. The S&P 500 has shot up 16 percent since the beginning of July. Ford Motor Company just reported a profit that jumped nearly 70 percent in the third quarter. It was Ford’s best third quarter performance ever and it was the 6th quarterly profit in a row for the company. Other major firms have announced earnings that have far exceeded expectations in recent weeks. Hooray! The pundits are proclaiming that the economic collapse is over and that the U.S. economy has won. It is almost enough to make one tear into a stirring rendition of “Happy Days Are Here Again”. But perhaps we should take a moment and get a hold of ourselves first. After all, the underlying economic fundamentals have not changed. The same long-term trends that were ripping the U.S. financial system apart a month or two ago are still continuing to do so. Millions upon millions of American families are still deeply suffering. So exactly what in the world is going on here? Well, this is what is known as a “sucker’s rally”. Those on the inside know better than to throw money at this market. In fact, corporate insiders are now selling off stock so fast you would think it is going out of style. Meanwhile, hordes of innocent rubes are jumping back into the stock market thinking that it is the perfect time to get in.
The truth is that these “good times” are only temporary. Don’t get used to them. The following are 30 reasons why people should be getting really, really nervous about the state of the U.S. economy….
#1 Corporate insiders are selling off stock at a blinding pace and are looking for the exits. Alan Newman, the editor of the Crosscurrents newsletter, examined a number of the top performing stocks in the market including Google, Apple and Target and found that the ratio of corporate insider stock sold to corporate insider stock purchased over the last six months for those companies was 3,177 to 1. At the group of firms that Newman looked at, corporate insiders had purchased 38,000 shares of stock over the last six months and yet had sold off over 120 million shares.
#2 Analysts at both Bank of America and Goldman Sachs both believe that the U.S. Federal Reserve is going to initiate a new round of quantitative easing in November. It does not take a genius to figure out that this is very likely to push up inflation and have very serious consequences for the U.S. dollar.
#3 Economists at Goldman Sachs are projecting that the Fed will have to purchase at least $4 trillion in assets during this next round of quantitative easing to get the U.S. economy moving in a positive direction once again.
#4 In the United States today, there are 5,057 janitors with Ph.D.’s, other doctorates, or professional degrees.
#5 Investors have very little faith in the U.S. dollar (and in paper currencies in general) at this point. Precious metals are soaring to obscene heights. The price of gold has increased more than 20 percent in 2010. The price of silver has skyrocketed about 40 percent this year. These are not signs that indicate that the U.S. financial system is stable.
#6 Robin Griffiths, a technical strategist at Cazenove Capital, told CNBC on Monday that the U.S. dollar is in danger of becoming “toxic waste”.
#8 U.S. lending institutions repossessed an all-time record total of 102,134 homes in the month of September. That was the first time that home repossessions in the U.S. had ever exceeded the 100,000 mark during a single month.
#9 According to a Standard & Poor’s/Case-Shiller home price report that was released on Tuesday, single family home prices in the United States declined for a second straight month in August.
#11 During the months of August and September, the state of Nevada had an unemployment rate of 14.4 percent, which was the highest in the history of the state. Not that the rest of the country is doing any better. The state of California has become a complete and total economic disaster zone, and the city of Detroit, Michigan is literally dying.
#12 The “official” unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months.
#13 The number of people unemployed in the state of California is approximately equivalent to the populations of Nevada, New Hampshire and Vermont combined.
#14 According to the president of the Federal Reserve Bank of New York, there are approximately 3 million more vacant housing units than usual in the United States.
#15 China has reduced the export quota on rare earth elements for the second half of 2010 by 72%, thus strengthening their position in the world economy even more. Rare earth elements are absolutely crucial to the manufacture of a vast array of high technology products, and now even more of them will have to be made in China.
#16 In 1985, the U.S. trade deficit with China was 6 million dollarsfor the entire year. In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.
#17 Wheat, corn and other staples are absolutely soaring in price on world markets. These higher food prices are going to hit U.S. consumers hard.
#18 In 2007, 3 U.S. banks failed. In 2008, 25 U.S. banks failed. In 2009, 140 U.S. banks failed. Last Friday, it was announced that 139 U.S. banks have failed so far this year and it is not even the end of October yet.
#20 Back in 1980, the United States imported approximately 37 percent of the oil that we use. Now we import nearly 60 percent of the oil that we use.
#21 According to an analysis by the Congressional Joint Committee on Taxation, the health care reform legislation that Congress didn’t read but passed into law anyway will generate $409.2 billion in additional taxes on the American people by the year 2019.
#22 Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009. That was the second yearly decline in a row.
#23 One out of every six Americans is now enrolled in a government anti-poverty program, and yet the number of Americans signing up for food stamps and other social programs just continues to set new all-time records month after month after month.
#24 The number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.
#26 According to a recent poll conducted by CNBC, 92 percent of Americans believe that the performance of the U.S. economy is either “fair” or “poor”.
#27 After analyzing Congressional Budget Office data, Boston University economics professor Laurence J. Kotlikoff came to the conclusion that the U.S. government is now facing a “fiscal gap” of $202 trillion dollars.
#28 A trillion $10 bills, if they were taped end to end, would wrap around the earth more than 380 times. That amount of money would still not be enough to pay off the U.S. national debt.
#30 At our current pace, the Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.
The U.S. economy is in the midst of a long-term decline. There are always going to be moments when it seems like things are getting a bit better, but then reality will kick in and the depressing slide will continue.
If you really want to understand what is happening to the U.S. economy, do not become fixated on the short-term numbers. Instead, always keep an eye on the long-term trends.
The U.S. economy is dying. We are getting whipped by the rest of the world and we are drowning in a sea of debt. A little rally in the stock market is not going to do a thing to fix our very deep fundamental economic problems.
Most Americans still do not understand just how bad the economic horror we are facing really is. Today, millions of Americans are living as paupers in the land that their foreathers built even as America’s infrastructure is literally being sold out from under their feet by corrupt politicians. The “official” unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months, and today it takes the average unemployed American about 35 weeks to find a job. However, the “official” unemployment rate is misleading, because it does not include workers that have quit looking for work or that have had their hours cut back to part-time. According to 60 Minutes, when you add those “discouraged workers” and “underemployed workers” into the equation the actual rate is about 17 percent, and in the state of California the actual rate is about 22 percent. Meanwhile, foreign nations are using sovereign wealth funds to buy up staggering amounts of U.S. infrastructure. America is quite literally for sale in 2010. All across the United States, highways, ports, toll roads and even parking meters are being gobbled up by foreign powers. We have shipped massive amounts of wealth and jobs to other nations, and now those very same countries are turning around and buying huge amounts of U.S. infrastructure with the gigantic piles of dollars that they have accumulated.
Widespread long-term chronic unemployment was something that America was never supposed to see again. Our leaders promised us that the U.S. financial system was so strong that we would never have another “Great Depression” in our lifetimes. But then the financial crisis of 2008 happened. Unprecedented numbers of Americans started losing their jobs and the U.S. Congress did something that it had never done before. Congress decided to extend unemployment benefits all the way out to 99 weeks.
Doing that has cost U.S. taxpayers approximately $100 billion dollars to this point, but we were promised that it was a “temporary” fix and that it would give displaced U.S. workers a chance to find new jobs.
Surely any industrious American worker could get another job within 99 weeks, right?
Wrong.
Today, there are at least 1.5 milion “99ers” – those Americans that have completely exhausted all 99 weeks of unemployment benefits and that still do not have jobs.
Sadly, as bad as that number sounds, it is likely to keep growing. Today, over one-third of all unemployed Americans have already been unemployed for at least one year. If this trend continues, we are going to end up with millions of “99ers”.
60 Minutes recently did a report on some of these “99ers”. Many of them are very highly educated and very highly qualified. If you have not seen this 60 Minutes report yet, you have got to take few minutes to sit down and watch it. This video is so shocking that many of you will have your jaws on the floor by the time you finish watching it….
So is there much reason for these “99ers” to be optimistic?
No, not really.
In fact, there are some indications that unemployment in America is actually getting worse. Gallup’s measure of unemployment, which is not adjusted for “seasonal factors”, exhibited a sharp increase in the month of September. According to Gallup, unemployment has increased from 8.9% in July to 9.3% in August and to 10.1% in September.
In addition, the seasonally-adjusted “Alternate Unemployment Rate” compiled by Shadow Government Statistics also indicates that unemployment in the U.S. is going up once again. The Alternate Unemployment Rate calculated by SGS reflects estimated “long-term discouraged workers”, which the U.S. government stopped keeping track of back in 1994….
But it is not just the massive number of Americans that are completely unemployed that we need to be concerned about. The truth is that more Americans than at any other time in recent history are working part-time jobs because that is all they can find. The number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.
Meanwhile, sovereign wealth funds from nations such as Saudi Arabia, China, Kuwait, Libya, Singapore and the United Arab Emirates are buying up highways, ports, toll roads and even parking meters from coast to coast.
So exactly what is a sovereign wealth fund?
Well, just think of it as a huge mountain of state-owned money that roams about the countryside looking for assets to gobble up.
In a recent piece for Rolling Stone, Matt Taibbi described some of the U.S. infrastructure assets that these sovereign wealth funds are buying up….
A toll highway in Indiana. The Chicago Skyway. A stretch of highway in Florida. Parking meters in Nashville, Pittsburgh, Los Angeles, and other cities. A port in Virginia. And a whole bevy of Californian public infrastructure projects, all either already leased or set to be leased for fifty or seventy-five years or more in exchange for one-off lump sum payments of a few billion bucks at best, usually just to help patch a hole or two in a single budget year.
It turns out that U.S. politicians have figured out that they can help solve their budget problems by selling off or leasing out pieces of infrastructure. Foreign nations with money to burn have been glad to come in and start buying a lot of this infrastructure up. Today, it is estimated that the rest of the world currently owns several trillion dollars more of America than America owns of the rest of the world. Later on in his article, Taibbi noted that the trend toward selling off pieces of infrastructure only seems to be accelerating….
At this writing Nashville and Pittsburgh are speeding ahead with their own parking meter deals, as is L.A. New York has considered it, and the city of Miami just announced its own plans for a leasing deal. There are now highways, airports, parking garages, toll roads — almost everything you can think of that isn’t nailed down and some things that are — for sale, to bidders unknown, around the world.
Sadly, both the number and the value of major acquisitions made by sovereign wealth funds approximately doubled during the first half of 2010.
Instead of being the “land of the free”, we are rapidly becoming the “land that has been leased out to foreign nations”.
So where in the world did these sovereign wealth funds get all this money?
Well, they got it from us of course.
Every single month, the United States buys massive amounts of oil from the Middle East and massive amounts of cheap plastic crap from China. The rest of the world buys a bunch of stuff from us too, but not nearly as much as we buy from the rest of the world.
So every single month tens of billions of dollars that used to belong to the American people ends up in the hands of foreigners. Now some of that money is returning to this country and is being used to buy up our infrastructure.
Many of these highways and toll roads that are being sold off had already been completely paid for. Can you imagine the frustration of the taxpayers in many of these areas when they realize that a road that they have already completely paid for with their tax dollars has been sold out from underneath them?
Another place that all these U.S. dollars held by foreigners is going is into U.S. Treasuries. In fact, the federal government very much encourages this. After all, we have to finance our exploding debt somehow.
In essence, first we made some folks in the Middle East and in Asia incredibly wealthy, and now we are asking them to please lend that money back to us so that we can continue living far beyond our means.
The borrower is the servant of the lender, and we are rapidly becoming enslaved to the rest of the world.
This is national economic suicide, but our politicians have become so addicted to debt that there doesn’t seem to be much hope that things can be turned around any time soon.
The price of oil has been hovering around 80 dollars a barrel for quite some time now, but get ready, because it is going to move significantly higher. Oil prices have already risen about 9 percent over the past month, and many believe that this could very well be the start of a new trend. Lawrence Eagles, a top analyst at JP Morgan, recently made headlines across the globe when he stated that oil could hit 100 dollars a barrel “much sooner than we expect”. Not only that, but a number of top OPEC officials are also publicly discussing the possibility of 100 dollar oil. But just because a few people are talking about it does not mean that it is going to happen. So are there any other reasons why we should anticipate a significant increase in the price of oil?
Well, yes there is.
*The Decline Of The U.S. Dollar
Since August 27th, the U.S. dollar has declined approximately 4.8% against the currencies of major U.S. trading partners. Unfortunately, there seems to be every indication that the dollar is going to continue to decline. As the U.S. dollar continues to display weakness, just about everything priced in dollars (including oil) is going to continue to rise.
*The Threat Of Quantitative Easing By The Federal Reserve
For weeks, top Federal Reserve officials have been making public statements about the need for more quantitative easing. If the Fed does initiate a significant program of quantitative easing in the coming months, that is going to put even more downward pressure on the U.S. dollar and even more upward pressure on the price of oil.
*Other Commodities Have Been Skyrocketing
Over recent weeks, the prices of a wide array of key commodities have been absolutely skyrocketing. As I noted in a previous article, not only has the price of gold been setting records, the truth is that almost every major commodity has been spiking. In a recent column entitled “An Inflationary Cocktail In The Making“, Richard Benson noted some of the commodity price increases that he has been tracking this year….
-Agricultural Raw Materials: 24%
-Industrial Inputs Index: 25%
-Metals Price Index: 26%
-Coffee: 45%
-Barley: 32%
-Oranges: 35%
-Beef: 23%
-Pork: 68%
-Salmon: 30%
-Sugar: 24%
-Wool: 20%
-Cotton: 40%
-Palm Oil: 26%
-Hides: 25%
-Rubber: 62%
-Iron Ore: 103%
The increase in the price of oil is just part of a larger trend of soaring commodity prices. As long as this trend in commodity prices continues it is unlikely that the price of oil will go down.
*The Strikes In France
The austerity strikes in France have interrupted the flow of gasoline in that country. Once the strikes are over there will be an increase in demand as inventories are restocked.
*Increased Demand From China And Other Emerging Nations
Most analysts are forecasting that the demand for oil in China and other emerging nations will continue to grow at an impressive pace. This growing demand will also cause upward pressure on the price of oil.
*The Potential Of War In The Middle East
As always, war could break out in the Middle East at any time. A minor conflict in the Middle East would likely push the price of oil over 100 dollars a barrel very quickly. A major conflict would likely push it over 200 dollars or even beyond. War is very, very difficult to predict, but it does seem quite likely that some kind of conflict will break out in the Middle East at some point over the next several years.
So how soon will oil reach the 100 dollar mark?
That is very hard to say.
But even now, Americans are already having to dig deeper into their wallets at the gas pump.
For the two week period ending October 22nd, the average price of gasoline in the United States increased 5.23 cents to $2.82 a gallon.
As the price of oil continues to rise significantly over the long-term, it is going to have an impact on thousands of other prices. Virtually all products must be transported, and an increase in the price of oil will cause those transportation costs to go up.
So an increase in the price of oil would be really bad news.
If we do see 100 dollar oil, that will be a huge challenge for the U.S. economy.
If we end up seeing 150 dollar oil (especially for an extended period of time) it will be an absolute nightmare for the U.S. economy.
So where do you think the price of oil is going? Feel free to leave a comment with your opinion….
The Federal Reserve is going back to Jekyll Island to celebrate the 100 year anniversary of the infamous 1910 Jekyll Island meeting that spawned the draft legislation that would ultimately create the U.S. Federal Reserve. The title of this conference is “A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve”, and it will be held on November 5th and 6th in the exact same building where the original 1910 meeting occurred. In November 1910, the original gathering at Jekyll Island included U.S. Senator Nelson W. Aldrich, Assistant Secretary of the Treasury Department A.P. Andrews and many representatives from the upper crust of the U.S. banking establishment. That meeting was held in an environment of absolute and total secrecy. 100 years later, Federal Reserve bureaucrats will return to Jekyll Island once again to “celebrate” the history and the future of the Federal Reserve.
The Calm Before The Storm
At this point, it looks like the Republicans will take control of the U.S. House of Representatives and will pick up a number of U.S. Senate seats as well.
There are many in the financial world who already consider Barack Obama to be the most “anti-business” president in U.S. history, so a defeat for the Democrats on Tuesday would be greatly welcomed by many on Wall Street. Barack Obama’s decline in popularity since he was elected has been absolutely stunning. According to Gallup, Barack Obama had an average approval rating of just 44.7% during the seventh quarter of his presidency, which was a brand new low. In fact, Obama’s average approval rating has fallen during every single quarter since he took office. Things have gotten so bad for Obama that one new poll has found that 47% of Democrats now think that Barack Obama should be challenged for the 2012 Democratic presidential nomination.
However, if the Democrats were able to do surprisingly well on Tuesday, it would not only shock the political pundits, but it would also likely put world financial markets in a very bad mood.
If the Republicans do very well on Tuesday, it will likely mean that there will be no more extensions for those receiving long-term unemployment benefits. Some state governments are already anticipating this and are making preparations. For example, armed security guards are now being posted at all 36 full-service unemployment offices in the state of Indiana. It is estimated that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season if Congress does not authorize another emergency extension of benefits by the end of November. If the Republicans do very well on Tuesday, it would make it much more likely that the extension will not happen.
But if millions of unemployed Americans suddenly find themselves without any unemployment checks, that is only going to cause the anger and frustration regarding this economy to grow.
Either way, the unfortunate truth is that this election is not going to change much.
Over the past five elections, incumbents have been re-elected to the U.S. House of Representatives at an average rate of 96 percent.
This time will be a little different of course, but not that much different. The sad truth is that we are still likely to see about 80 percent of the exact same faces going back to the U.S. Congress for the next session.
However, even if the American people could somehow vote out every single member of Congress, it would still not do much to fundamentally change our economic situation because the U.S. Congress does not run the economy and neither does the President.
Of course both of those institutions can influence the U.S. economy, but it is actually the Federal Reserve that runs the economy.
The Federal Reserve controls the money supply. The Federal Reserve controls our interest rates. If the U.S. government wants more money it has to go get it from the Federal Reserve. It is the Federal Reserve that is tasked with the mandate of keeping unemployment low while also keeping inflation at a “reasonable” level.
But these days, Federal Reserve officials don’t really seem to be that concerned about the dangers of inflation. In fact, several top Federal Reserve officials have come out in recent weeks and have made public statements not only advocating more quantitative easing, but also suggesting that inflation is not a danger because it is actually “too low” right now.
In fact, there have been some rumblings that many officials at the Fed would actually welcome more inflation because they think that it would somehow stimulate the economy. In fact, a Federal Reserve paper that was released in September actually floated the idea that a spike in oil prices would be quite good for the U.S. economy.
And these are the people running our economy?
Are we all caught in an episode of The Twilight Zone?
Well, as far as rising oil prices are concerned, the Fed will almost surely get its wish. As I have written about previously, the price of oil is almost certainly heading to 100 dollars a barrel.
But if the price of oil shoots up, isn’t that going to cause significant inflationary pressure on the prices of thousands of other goods and services?
Of course.
Unfortunately, very few of our leaders seem too concerned about inflation or about protecting the value of the U.S. dollar these days.
In fact, now even the IMF is publicly proclaiming that the U.S. dollar is “overvalued”.
What a mess.
But there is another aspect of a new round of “quantitative easing” that the American people really wouldn’t like if they could actually figure out what is going on.
You see, the truth is that “quantitative easing” is not only just a way to stimulate the economy, it is also a way to give backdoor bailouts to the big banks without having to go through the U.S. Congress.
In a previous article, I described how this works….
1) The big U.S. banks have massive quantities of junk mortgage-backed securities that are worth little to nothing that they desperately want to get rid of.
2) They convince the Federal Reserve (which the big banks are part-owners of) to buy up these “toxic assets” at significantly above market price.
3) The Federal Reserve creates massive amounts of money out of thin air to buy up all of these troubled assets. The public is told that all of this “quantitative easing” is necessary to stimulate the U.S. economy.
4) The big banks are re-capitalized and have gotten massive amounts of bad mortgage securities off their hands, the Federal Reserve has found a way to pump hundreds of billions (if not trillions) of dollars into the economy, and most of the American people are none the wiser.
Now how do you think the American people would feel about “quantitative easing” if they really understood all this?
But unfortunately, most Americans will be watching the election results on Tuesday night without having even a basic understanding of how our economy is really run.
Already, there are a ton of signs that the U.S. economy is heading in a very bad direction, and dumping a handful of Congress critters out of office might feel good, but it isn’t going to do much to really change our economic problems.
The American people desperately need to be educated about how our financial system really works. But unfortunately, most Americans will likely not wake up until the whole house of cards comes crashing down.