10 Things That Every American Should Know About The Federal Reserve

What would happen if the Federal Reserve was shut down permanently?  That is a question that CNBC asked recently, but unfortunately most Americans don’t really think about the Fed much. Most Americans are content with believing that the Federal Reserve is just another stuffy government agency that sets our interest rates and that is watching out for the best interests of the American people.  But that is not the case at all.  The truth is that the Federal Reserve is a private banking cartel that has been designed to systematically destroy the value of our currency, drain the wealth of the American public and enslave the federal government to perpetually expanding debt.  During this election year, the economy is the number one issue that voters are concerned about.  But instead of endlessly blaming both political parties, the truth is that most of the blame should be placed at the feet of the Federal Reserve.  The Federal Reserve has more power over the performance of the U.S. economy than anyone else does.  The Federal Reserve controls the money supply, the Federal Reserve sets the interest rates and the Federal Reserve hands out bailouts to the big banks that absolutely dwarf anything that Congress ever did.  If the American people are ever going to learn what is really going on with our economy, then it is absolutely imperative that they get educated about the Federal Reserve.

The following are 10 things that every American should know about the Federal Reserve….

#1 The Federal Reserve System Is A Privately Owned Banking Cartel

The Federal Reserve is not a government agency.

The truth is that it is a privately owned central bank.  It is owned by the banks that are members of the Federal Reserve system.  We do not know how much of the system each bank owns, because that has never been disclosed to the American people.

The Federal Reserve openly admits that it is privately owned.  When it was defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve stated unequivocally in court that it was “not an agency” of the federal government and therefore not subject to the Freedom of Information Act.

In fact, if you want to find out that the Federal Reserve system is owned by the member banks, all you have to do is go to the Federal Reserve website….

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations–possibly leading to some confusion about “ownership.” For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

Foreign governments and foreign banks do own significant ownership interests in the member banks that own the Federal Reserve system.  So it would be accurate to say that the Federal Reserve is partially foreign-owned.

But until the exact ownership shares of the Federal Reserve are revealed, we will never know to what extent the Fed is foreign-owned.

#2 The Federal Reserve System Is A Perpetual Debt Machine

As long as the Federal Reserve System exists, U.S. government debt will continue to go up and up and up.

This runs contrary to the conventional wisdom that Democrats and Republicans would have us believe, but unfortunately it is true.

The way our system works, whenever more money is created more debt is created as well.

For example, whenever the U.S. government wants to spend more money than it takes in (which happens constantly), it has to go ask the Federal Reserve for it.  The federal government gives U.S. Treasury bonds to the Federal Reserve, and the Federal Reserve gives the U.S. government “Federal Reserve Notes” in return.  Usually this is just done electronically.

So where does the Federal Reserve get the Federal Reserve Notes?

It just creates them out of thin air.

Wouldn’t you like to be able to create money out of thin air?

Instead of issuing money directly, the U.S. government lets the Federal Reserve create it out of thin air and then the U.S. government borrows it.

Talk about stupid.

When this new debt is created, the amount of interest that the U.S. government will eventually pay on that debt is not also created.

So where will that money come from?

Well, eventually the U.S. government will have to go back to the Federal Reserve to get even more money to finance the ever expanding debt that it has gotten itself trapped into.

It is a debt spiral that is designed to go on perpetually.

You see, the reality is that the money supply is designed to constantly expand under the Federal Reserve system.  That is why we have all become accustomed to thinking of inflation as “normal”.

So what does the Federal Reserve do with the U.S. Treasury bonds that it gets from the U.S. government?

Well, it sells them off to others.  There are lots of people out there that have made a ton of money by holding U.S. government debt.

In fiscal 2011, the U.S. government paid out 454 billion dollars just in interest on the national debt.

That is 454 billion dollars that was taken out of our pockets and put into the pockets of wealthy individuals and foreign governments around the globe.

The truth is that our current debt-based monetary system was designed by greedy bankers that wanted to make enormous profits by using the Federal Reserve as a tool to create money out of thin air and lend it to the U.S. government at interest.

And that plan is working quite well.

Most Americans today don’t understand how any of this works, but many prominent Americans in the past did understand it.

For example, Thomas Edison was once quoted in the New York Times as saying the following….

That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt.

Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 — that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost.

But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good.

We should have listened to men like Edison and Ford.

But we didn’t.

And so we pay the price.

On July 1, 1914 (a few months after the Fed was created) the U.S. national debt was 2.9 billion dollars.

Today, it is more than more than 5000 times larger.

Yes, the perpetual debt machine is working quite well, and most Americans do not even realize what is happening.

#3 The Federal Reserve Has Destroyed More Than 96% Of The Value Of The U.S. Dollar

Did you know that the U.S. dollar has lost 96.2 percent of its value since 1900?  Of course almost all of that decline has happened since the Federal Reserve was created in 1913.

Because the money supply is designed to expand constantly, it is guaranteed that all of our dollars will constantly lose value.

Inflation is a “hidden tax” that continually robs us all of our wealth.  The Federal Reserve always says that it is “committed” to controlling inflation, but that never seems to work out so well.

And current Federal Reserve Chairman Ben Bernanke says that it is actually a good thing to have a little bit of inflation.  He plans to try to keep the inflation rate at about 2 percent in the coming years.

So what is so bad about 2 percent?  That doesn’t sound so bad, does it?

Well, just consider the following excerpt from a recent Forbes article….

The Federal Reserve Open Market Committee (FOMC) has made it official:  After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years.  The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.

#4 The Federal Reserve Can Bail Out Whoever It Wants To With No Accountability

The American people got so upset about the bailouts that Congress gave to the Wall Street banks and to the big automakers, but did you know that the biggest bailouts of all were given out by the Federal Reserve?

Thanks to a very limited audit of the Federal Reserve that Congress approved a while back, we learned that the Fed made trillions of dollars in secret bailout loans to the big Wall Street banks during the last financial crisis.  They even secretly loaned out hundreds of billions of dollars to foreign banks.

According to the results of the limited Fed audit mentioned above, a total of $16.1 trillion in secret loans were made by the Federal Reserve between December 1, 2007 and July 21, 2010.

The following is a list of loan recipients that was taken directly from page 131 of the audit report….

Citigroup – $2.513 trillion
Morgan Stanley – $2.041 trillion
Merrill Lynch – $1.949 trillion
Bank of America – $1.344 trillion
Barclays PLC – $868 billion
Bear Sterns – $853 billion
Goldman Sachs – $814 billion
Royal Bank of Scotland – $541 billion
JP Morgan Chase – $391 billion
Deutsche Bank – $354 billion
UBS – $287 billion
Credit Suisse – $262 billion
Lehman Brothers – $183 billion
Bank of Scotland – $181 billion
BNP Paribas – $175 billion
Wells Fargo – $159 billion
Dexia – $159 billion
Wachovia – $142 billion
Dresdner Bank – $135 billion
Societe Generale – $124 billion
“All Other Borrowers” – $2.639 trillion

So why haven’t we heard more about this?

This is scandalous.

In addition, it turns out that the Fed paid enormous sums of money to the big Wall Street banks to help “administer” these nearly interest-free loans….

Not only did the Federal Reserve give 16.1 trillion dollars in nearly interest-free loans to the “too big to fail” banks, the Fed also paid them over 600 million dollars to help run the emergency lending program.  According to the GAO, the Federal Reserve shelled out an astounding $659.4 million in “fees” to the very financial institutions which caused the financial crisis in the first place.

Does reading that make you angry?

It should.

#5 The Federal Reserve Is Paying Banks Not To Lend Money

Did you know that the Federal Reserve is actually paying banks not to make loans?

It is true.

Section 128 of the Emergency Economic Stabilization Act of 2008 allows the Federal Reserve to pay interest on “excess reserves” that U.S. banks park at the Fed.

So the banks can just send their cash to the Fed and watch the money come rolling in risk-free.

So are many banks taking advantage of this?

You tell me.  Just check out the chart below.  The amount of “excess reserves” parked at the Fed has gone from nearly nothing to about 1.5 trillion dollars since 2008….

But shouldn’t the banks be lending the money to us so that we can start businesses and buy homes?

You would think that is how it is supposed to work.

Unfortunately, the Federal Reserve is not working for us.

The Federal Reserve is working for the big banks.

Sadly, most Americans have no idea what is going on.

Another example of this is the government debt carry trade.

Here is how it works.  The Federal Reserve lends gigantic piles of nearly interest-free cash to the big Wall Street banks, and in turn those banks use the money to buy up huge amounts of government debt.  Since the return on government debt is higher, the banks are able to make large profits very easily and with very little risk.

This scam was also explained in a recent article in the Guardian….

Consider this: we pretend that banks are private businesses that should be allowed to run their own affairs. But they are the biggest scroungers of public money of our time. Banks are lent vast sums of money by central banks at near-zero interest. They lend that money to us or back to the government at higher rates and rake in the difference by the billion. They don’t even have to make clever investments to make huge profits.

That is a pretty good little scam they have got going, wouldn’t you say?

#6 The Federal Reserve Creates Artificial Economic Bubbles That Are Extremely Damaging

By allowing a centralized authority such as the Federal Reserve to dictate interest rates, it creates an environment where financial bubbles can be created very easily.

Over the past several decades, we have seen bubble after bubble.  Most of these have been the result of the Federal Reserve keeping interest rates artificially low.  If the free market had been setting interest rates all this time, things would have never gotten so far out of hand.

For example, the housing crash would have never been so horrific if the Federal Reserve had not created such ideal conditions for a housing bubble in the first place.  But we allow the Fed to continue to make the same mistakes.

Right now, the Federal Reserve continues to set interest rates much, much lower than they should be.  This is causing a tremendous misallocation of economic resources, and there will be massive consequences for that down the line.

#7 The Federal Reserve System Is Dominated By The Big Wall Street Banks

Even since it was created, the Federal Reserve system has been dominated by the big Wall Street banks.

The following is from a previous article that I did about the Fed….

The New York representative is the only permanent member of the Federal Open Market Committee, while other regional banks rotate in 2 and 3 year intervals.  The former head of the New York Fed, Timothy Geithner, is now U.S. Treasury Secretary.  The truth is that the Federal Reserve Bank of New York has always been the most important of the regional Fed banks by far, and in turn the Federal Reserve Bank of New York has always been dominated by Wall Street and the major New York banks.

#8 It Is Not An Accident That We Saw The Personal Income Tax And The Federal Reserve System Both Come Into Existence In 1913

On February 3rd, 1913 the 16th Amendment to the U.S. Constitution was ratified.  Later that year, the United States Revenue Act of 1913 imposed a personal income tax on the American people and we have had one ever since.

Without a personal income tax, it is hard to have a central bank.  It takes a lot of money to finance all of the government debt that a central banking system creates.

It is no accident that the 16th Amendment was ratified in 1913 and the Federal Reserve system was also created in 1913.

They have a symbiotic relationship and they are designed to work together.

We could fill Congress with people that are committed to ending this oppressive system, but so far we have chosen not to do that.

So our children and our grandchildren will face a lifetime of debt slavery because of us.

I am sure they will be thankful for that.

#9 The Current Federal Reserve Chairman, Ben Bernanke, Has A Nightmarish Track Record Of Incompetence

The mainstream media portrays Federal Reserve Chairman Ben Bernanke as a brilliant economist, but is that really the case?

Let’s go to the videotape.

The following is an extended excerpt from an article that I published previously….

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In 2005, Bernanke said that we shouldn’t worry because housing prices had never declined on a nationwide basis before and he said that he believed that the U.S. would continue to experience close to “full employment”….

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

In 2005, Bernanke also said that he believed that derivatives were perfectly safe and posed no danger to financial markets….

“With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

In 2006, Bernanke said that housing prices would probably keep rising….

“Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”

In 2007, Bernanke insisted that there was not a problem with subprime mortgages….

“At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

In 2008, Bernanke said that a recession was not coming….

“The Federal Reserve is not currently forecasting a recession.”

A few months before Fannie Mae and Freddie Mac collapsed, Bernanke insisted that they were totally secure….

“The GSEs are adequately capitalized. They are in no danger of failing.”

For many more examples that demonstrate the absolutely nightmarish track record of Federal Reserve Chairman Ben Bernanke, please see the following articles….

*”Say What? 30 Ben Bernanke Quotes That Are So Stupid That You Won’t Know Whether To Laugh Or Cry

*”Is Ben Bernanke A Liar, A Lunatic Or Is He Just Completely And Totally Incompetent?

But after being wrong over and over and over, Barack Obama still nominated Ben Bernanke for another term as Chairman of the Fed.

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#10 The Federal Reserve Has Become Way Too Powerful

The Federal Reserve is the most undemocratic institution in America.

The Federal Reserve has become so powerful that it is now known as “the fourth branch of government”, but there are less checks and balances on the Fed than there are on the other three branches.

The Federal Reserve runs the U.S. economy but it is not accountable to the American people.  We can’t vote those that run the Fed out of office if we do not like what they do.

Yes, the president appoints those that run the Fed, but he also knows that if he does not tread lightly he won’t get the money from the big Wall Street banks that he needs for his next election.

Thankfully, there are a few members of Congress that are complaining about how much power the Fed has.  For example, Ron Paul once told MSNBC that he believes that the Federal Reserve is now 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.”

As members of Congress such as Ron Paul have started to shed some light on the activities of the Federal Reserve, that has caused many in the mainstream media to come to the defense of the Fed.

For example, a recent CNBC article entitled “If The Federal Reserve Is Abolished, What Then?” makes it sound like there is absolutely no other rational alternative to having the Federal Reserve run our economy.

But this is not what our founders intended.

The founders did not intend for a private banking cartel to issue our money and set our interest rates for us.

According to Article I, Section 8 of the U.S. Constitution, the U.S. Congress has been given the responsibility to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.

So why is the Federal Reserve doing it?

But the CNBC article mentioned above makes it sound like the sky would fall if control of the currency was handed back over to the American people.

At one point, the article asks the following question….

“How would the U.S. economy then function? Something has to take its place, right?”

No, the truth is that we don’t need anyone to “manage” our economy.

The U.S. Treasury could be in charge of issuing our currency and the free market could set our interest rates.

We don’t need to have a centrally-planned economy.

We aren’t China.

And it goes against everything that our founders believed to be running up so much government debt.

For example, Thomas Jefferson once declared that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing….

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

Oh, how things would have been different if we had only listened to Thomas Jefferson.

Please share this article with as many people as you can.  These are things that every American should know about the Federal Reserve, and we need to educate the American people about the Fed while there is still time.

The Financial Crisis Of 2008 Was Just A Warm Up Act For The Economic Horror Show That Is Coming

The people out there that believe that the U.S. economy is experiencing a permanent recovery and that very bright days are ahead for us should have their heads examined.  Unfortunately, what we are going through right now is simply just a period of “hopetimism” between two financial crashes.  Things may seem relatively stable right now, but it won’t last long.  The truth is that the financial crisis of 2008 was just a warm up act for the economic horror show that is coming.  Nothing really got fixed after the crash of 2008.  We are living in the biggest debt bubble in the history of the world, and it has gotten even bigger since then.  The “too big to fail” banks are larger now than they have ever been.  Americans continue to run up credit card balances like there is no tomorrow.  Tens of thousands of manufacturing facilities and millions of jobs continue to leave the country.  We continue to consume far more than we produce and we continue to become poorer as a nation.  None of the problems that caused the crisis of 2008 have been solved and we are even weaker financially than we were back then.  So why in the world are so many people so optimistic about the economy right now?

Just take a look at the chart posted below.  It shows the growth of total debt in the United States.  During the financial crisis of 2008 there was a little “hiccup”, but the truth is that not much deleveraging really took place at all.  And since the recession “ended”, total credit market debt has gone on to even greater heights….

So what does this mean for the future?

Well, if a small “hiccup” in the debt bubble caused so much chaos back in 2008, what is going to happen when this debt bubble finally bursts?

That is something to think about.

Sadly, most Americans seem oblivious to all of this.

If you go out to malls in the wealthy areas of America today, people are charging up a storm.  In all, Americans charged a whopping 2.5 trillion dollars on their credit cards during 2011.  Way too many people have already forgotten the lessons that we all learned back in 2008.

Of course some Americans pay off their credit cards every month, but way too many Americans are not doing that.  Today, Americans are carrying 793 billion dollars in revolving credit balances.

And student loan debt is an even bigger bubble than credit card debt is.  As I have written about previously, total student loan debt in America is rapidly approaching a trillion dollars.

So it looks like U.S. consumers have not learned to stay away from debt.

That is not good.

Well, what about the banks?

Has the financial system learned any lessons since 2008?

No, not really.

Sadly, the “too big to fail” banks are now even bigger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.  If they were to fail today, they would be even more of a threat to our financial system than they were back in 2008.

And our major banks continue to be very highly leveraged.  In fact, major banks all over the world are absolutely swamped with debt.

The following statistics come from Zero Hedge….

The U.S. banking system is leveraged 13 to 1.

The Japanese banking system is leveraged 23 to 1.

The French banking system is leveraged 26 to 1.

The German banking system is leveraged 32 to 1.

These are insane levels of leverage, and they are just inviting another major financial crisis.

Do you all remember Lehman Brothers?  The fact that they were leveraged so highly is what did them in back in 2008.  When the value of their holdings declined by just a little bit they were totally wiped out.

Well, during this next financial crisis large financial institutions are going to be wiped out all over the world.  Major banks all over the globe are going to be crying out for more bailouts when things take a turn against them.

They are making the exact same mistakes that they made before, and they are going to be expecting more government handouts when things go bad.

Will we ever learn?

So obviously the banking system has not learned any lessons.

What about the federal government?

Well, if you follow my blog regularly, you know that I love to write about how horrific U.S. government debt is.

Unfortunately, over the past four years things have gotten so much worse.

Back in 2008, the U.S. national debt crossed the 10 trillion dollar mark.

Just recently, it crossed the 15 trillion dollar mark.

So now we are in a much weaker position financially to respond to another major financial crisis.

Just check out the chart posted below.  This is a recipe for national financial suicide….

During fiscal 2011, the Obama administration stole close to 150 million dollars from our children and our grandchildren every single hour.

At the moment, the legacy of debt that we are passing on to future generations is sitting a grand total of $15,351,406,294,640.49.

But keep in mind that it is going up every single hour.

Meanwhile, our ability to service that debt is declining.  We are rapidly getting poorer as a nation.

During 2011, the amount of money that left the United States exceeded the amount of money that entered the United States by more than a half a trillion dollars.

This gap is called a trade deficit, and it is absolutely ripping our economy to shreds.

For a moment, imagine Uncle Sam standing next to a giant pile of money on a map of the United States.  Then imagine a half a trillion dollars being taken out of that pile every single year.

So why haven’t we totally run out of money yet?

Well, it is because we borrow those dollars back.  In order to maintain our false standard of living, our federal government, our state governments and our local governments have to go out and beg the rest of the world to lend us our dollars back.

Sadly, our government schools have “dumbed-down” the population so much that most of them don’t even know what a “trade deficit” is anymore.

Meanwhile, our economic infrastructure is being gutted like a fish.

Look, I know that I go over this point over and over and over, but it is absolutely imperative that we all understand this.

The half a trillion dollars a year that leaves this country every year could have gone to support businesses and jobs inside the United States.

But instead it is going to support businesses and jobs on the other side of the world.

The consequences of this are absolutely devastating.

According to U.S. Representative Betty Sutton, an average of 23 manufacturing facilities a day closed down in the United States during 2010.  Overall, more than 56,000 manufacturing facilities in the United States have shut down since 2001.

Even many so-called “American companies” have been bought up by the rest of the world.  The following comes from a recent article posted on Economy In Crisis….

RCA is now a French company, Zenith is a Korean company. Frigidaire is a Swedish company. IBM’s Personal Computer Division—with its 500 patents—is now a Chinese company. Westinghouse Nuclear Energy’s major shareholder is Toshiba—a Japanese Company. Lucent Technologies, a former research division of AT&T, along with all the patents acquired from the beginning of the phone system, is now a French company. In 2008, Brazilian-Belgian brewing company InBev purchased the iconic American brewer Anheuser-Busch, makers of Budweiser. With the sale of these manufacturing companies, the future profit and technologies all belong to foreign entities.

We once had the greatest economic machine in the history of the world.

Now it is being dismantled and bought up by foreigners.

When America’s economic infrastructure declines, that means that there are less jobs available for all of us.

As I wrote about the other day, the employment situation in this country is not getting better and we have never even come close to recovering from the recession that started back in 2008.

During 2008 and 2009, the U.S. economy lost millions of jobs.  Since the beginning of 2010, the percentage of the U.S. population that has had a job has remained very stable….

Normally, when a recession ends the percentage of Americans that have a job bounces back pretty dramatically.

So considering the fact that the employment situation has never recovered from the last financial crisis, what is going to happen when the next financial crisis hits?

And most of the jobs that have been “created” during this so-called “recovery” have been low income jobs.  In fact, if you look closely at the employment numbers that were released last Friday, you will find that the vast majority of the “new jobs” were part-time jobs.

But you cannot pay a mortgage and support a family on a part-time job.

Sadly, the truth is that median household income in America has been steadily dropping over the past several years.  Tens of millions of American families are deeply struggling and more Americans than ever are falling into poverty.

Back in the year 2000, about one out of every nine Americans was living in poverty.  Today, about one out of every seven Americans is living in poverty.

All of this is causing a great deal of anxiety in America today.  Large numbers of Americans know that something has fundamentally changed, even if they don’t understand the specifics.  That is one reason why sites such as this one have become so popular.  People want some answers.

And once people get some answers about what is really happening, they tend to want to prepare for the hard times that are coming.

In a few days, a new series on National Geographic entitled “Doomsday Preppers” premieres.  The mainstream media is starting to take notice of the growing “prepper” movement in America today.  It is estimated that there are at least 2 million “preppers” in the United States at this point.  Of course people are “prepping” for a whole host of reasons, but the number one concern among most groups of preppers is the economy.

As the economy crumbles, more Americans than ever have decided that it is not a good thing to be 100% dependent on the system.

Back in 2008 and 2009, millions of Americans suddenly lost their jobs.  Because they did not have any finances stored up, large numbers of them also lost their homes.  Many went from being solidly middle class to being out on the street in a matter of months.

That doesn’t have to happen to you.  Instead of blowing your money on frivolous things, do what you can to set something aside for the difficult times that are on the horizon.

A lot of those “in the know” are quietly making their own preparations.  For example, legendary film director James Cameron (Avatar, Titanic and Terminator) has purchased more than 2600 acres of farmland in New Zealand and he is getting out of the U.S. for good apparently.

Unfortunately, most of us do not have the resources for something like that.  But what most of us can do is we can change our priorities and start focusing on the things that will help us survive the hard times that are coming.

So are you ready?

The United Nations Wants To Crash The World Economy In Order To Save The Environment

The United Nations says that the earth is in great danger and that the way you and I are living is the problem.  In a shocking new report entitled, “Resilient People, Resilient Planet: A Future Worth Choosing” the UN declares that the entire way that we currently approach economics needs to be changed.  Instead of focusing on things like “economic growth”, the UN is encouraging nations all over the world to start basing measurements of economic success on the goal of achieving “sustainable development”.  But there is a huge problem with that.  The UN says that what we are doing right now is “unsustainable” by definition, and the major industrialized nations of the western world are the biggest culprits.  According to the UN, since we are the ones that create the most carbon emissions and the most pollution, we are the ones that should make the biggest sacrifices.  In addition, since we have the most money, we should also be willing to finance the transition of the developing world to a “sustainable development” economy as well.  As you will see detailed in the rest of this article, the United Nations basically wants to crash the world economy in order to save the environment.  Considering the fact that the U.S. and Europe are in the midst of a horrible economic crisis and are already drowning in debt, this is something that we simply cannot afford.

There is certainly nothing wrong with taking care of the environment.  But what the United Nations wants is a fundamental restructuring of the global economy based on flawed science.

In this new UN report, we find the following statement….

Achieving sustainability requires us to transform the global economy. Tinkering on the margins will not do the job.

This is absolutely crucial to understand.

The folks over at the UN don’t just want to change things a little.

Their goal is a radical transformation of the entire world.

According to the United Nations, if we don’t implement their recommendations the consequences will be absolutely disastrous….

But what, then, is to be done if we are to make a real difference for the world’s people and the planet? We must grasp the dimensions of the challenge. We must recognize that the drivers of that challenge include unsustainable lifestyles, production and consumption patterns and the impact of population growth. As the global population grows from 7 billion to almost 9 billion by 2040, and the number of middle-class consumers increases by 3 billion over the next 20 years, the demand for resources will rise exponentially. By 2030, the world will need at least 50 percent more food, 45 percent more energy and 30 percent more water — all at a time when environmental boundaries are throwing up new limits to supply. This is true not least for climate change, which affects all aspects of human and planetary health.

So what changes are needed in order for us to achieve a “sustainable” global economy?

Well, the following are some of the disturbing recommendations that we find in the new UN report….

Raise Prices

According to the United Nations, we need to start significantly raising the prices of things that are made in an “unsustainable” way so that they reflect the “true cost” of their production….

Most goods and services sold today fail to bear the full environmental and social cost of production and consumption. Based on the science, we need to reach consensus, over time, on methodologies to price them properly. Costing environmental externalities could open new opportunities for green growth and green jobs

That means that you and I would start paying a lot more for the basic things that we need every day – food, gasoline, etc.

Carbon Taxes

The UN report also discusses the need to use regulations and taxation as tools to penalize economic activities that are not “sustainable”….

Establish natural resource and externality pricing instruments, including carbon pricing, through mechanisms such as taxation, regulation or emissions trading systems, by 2020

This is one of the favorite things that social engineers like to do.  They love to use taxation and regulations as weapons to get people to do the things they want.

Base Lending Decisions On Sustainable Development Criteria

The United Nations is actually suggesting that lending decisions be based on whether or not the money will be used for something “sustainable”….

Reform national fiscal and credit systems to provide long-term incentives for sustainable practices, as well as disincentives for unsustainable behaviour

Considering the fact that the entire global economy is based on credit, this is a very dangerous recommendation.

Green Jobs

The UN report also says that governments all over the world should seek to create as many “green jobs” as possible….

Governments should adopt and advance “green jobs” and decent work policies as a priority in their budgets and sustainable development strategies while creating conditions for new jobs in the private sector.

This is something that we have seen Barack Obama try to do, but obviously he has not had much success at it.

A New Economic Paradigm

According to the UN, the very way that we define “economic success” needs to be changed.  Instead of looking at statistics such as GDP and inflation, we should be measuring what we do by how much it gets us closer to a “sustainable world”….

Expanding how we measure progress in sustainable development by creating a sustainable development index or set of indicators

So an economic collapse could actually be “good” if we make “progress” toward the goal of sustainable development.

Wealthy Countries Funding The Sustainable Development Goals Of Poor Countries

The UN report makes it clear that you and I will be paying for sustainable development all over the world in addition to paying for our own transition to a sustainable economy….

Financing sustainable development requires vast new sources of capital from both private and public sources. It requires both mobilizing more public funds and using global and national capital to leverage global private capital through the development of incentives. Official development assistance will also remain critical for the sustainable development needs of low-income countries

But considering the fact that the United States is already flat broke, where are we going to come up with all of this money?

Teach Sustainable Development To Our Children

The United Nations also believes that this philosophy of “sustainable development” should be taught to children in public schools all over the globe….

Government and non-governmental entities should promote the concept of sustainable development and sustainable consumption, and these should be integrated into curricula of primary and secondary education.

Sadly, this agenda is already being pushed on our children in schools all over the United States.  When these children grow up, the concepts behind “sustainable development” will be second nature for them.

Population Control

Those that believe in sustainable development want to reduce carbon emissions by as much as possible.

When you sit down and really think about that, it becomes quite frightening.

Nearly every form of economic activity produces carbon emissions.

In fact, if you just sit in your home and breathe, you are producing carbon emissions.

So to them, you and I are the problem.

For those that are worried about man-made global warming, the math is simple.

The more people on earth, the higher the level of carbon emissions will be.

The less people on earth, the lower the level of carbon emissions will be.

So those that believe in sustainable development love to promote things that will reduce the human population of the earth.

In fact, we see this agenda reflected in one of the recommendations of the new UN report….

Ensuring universal access to quality and affordable family-planning and other sexual and reproductive rights and health services.

If more women have access to abortion facilities, then less babies will be born.  For those that believe in sustainable development, that is a good thing.

But the UN has been pushing this kind of agenda for a long time.

For example, the United Nations Population Fund released a report back in 2009 entitled “Facing a Changing World: Women, Population and Climate” that included the following very chilling statement….

“Each birth results not only in the emissions attributable to that person in his or her lifetime, but also the emissions of all his or her descendants. Hence, the emissions savings from intended or planned births multiply with time.”

This population control agenda is also being heavily promoted by many of the wealthiest people in the world.  Many big “philanthropists” such as Bill Gates are using their money to fund research into population control measures.  For example, Gates is currently funding research on “cutting edge” forms of birth control that could potentially be used all over the world.  The following comes from a recent Natural News article….

Mass vaccination is apparently not the only depopulation strategy being employed by the Bill & Melinda Gates Foundation, as new research funded by the organization has developed a way to deliberately destroy sperm using ultrasound technology. BBC News reports that the Gates Foundation awarded a grant to researchers from the University of North Carolina (UNC) to develop this new method of contraception.

For their study, the UNC team tested ultrasound on lab rats and found that two 15-minute doses “significantly reduced” both sperm counts and sperm integrity. When administered two days apart through warm salt water, ultrasound caused the rats’ sperm counts to drop below ten million sperm per milliliter, which is five million less than the “sub-fertile” range, and stay that way for up to six months.

This population control agenda is one of the most frightening elements of sustainable development.  Many advocates of sustainable development would actually cheer if something suddenly caused the population of the earth to drop dramatically.

Much Stronger Global Governance

The new UN report also advocates stronger “international governance” by bodies such as the United Nations….

International institutions have a critical role. International governance for sustainable development must be strengthened by using existing institutions more dynamically and by considering the creation of a global sustainable development council and the adoption of sustainable development goals

But this has been the ultimate goal of these control freaks for a long time.  The idea is that a “global government” and a “global economy” will bring a great era of peace and prosperity to all of humanity.

Of course that is a complete and total lie, but there are a lot of people out there that actually believe this stuff.

In fact, the economic crisis that we are going through right now has renewed calls for a “global currency” which would be used by the whole world.

For example, you can watch banker Evelyn de Rothschild discuss the “need” for an “international currency” on Bloomberg Television in the following video….

The new UN report reflects this globalist agenda.  The report states that “the peoples of the world” are not going to put up with all of this “inequality” any longer and that they will be demanding that their national governments adopt a “sustainable development” agenda….

“The peoples of the world will simply not tolerate continued environmental devastation or the persistent inequality which offends deeply held universal principles of social justice. Citizens will no longer accept governments and corporations breaching their compact with them as custodians of a sustainable future for all. More generally, international, national and local governance across the world must fully embrace the requirements of a sustainable development future, as must civil society and the private sector.”

If you want to get a really good idea of what a “sustainable development” society would look like, just check out the video posted below….

If you do not want to end up living in a “Planned-opolis” where virtually everything you do is watched, tracked and controlled by bureaucratic control freaks, then you better say something now.

If the United Nations actually succeeded in implementing this agenda worldwide, it would crash the global economy and it would be the end of national sovereignty.

Unfortunately, many of those that are promoting this agenda are absolute fanatics about it because they are convinced that they are saving the planet.  They are so obsessed with “rescuing the earth” that they would do almost anything to all the rest of us in order to accomplish that goal.

Yes, we need to be concerned about the future of the planet, but the truth is that the “sustainable development” agenda is based on flawed science and it would make our economic problems far worse.

But the control freaks that are obsessed with “sustainable development” are going to continue to try to cram this agenda down our throats, so this is a battle that is likely to go on for many years.

16 Statistics Which Show That The Number Of Americans Dependent On The Government Is At An All-Time High

A higher percentage of the American population is receiving government benefits than ever before.  Yes, there have always been poor people that have needed our assistance, but what does it say about our economy that the number of Americans dependent on the government is at an all-time high?  Every night on the evening news we are told that the economy is improving, and Barack Obama is endlessly giving speeches about the “economic recovery” that is supposedly underway.  But that is not the reality on the ground for those on the bottom rungs of the income ladder in America.  People are really hurting out there, and the number of Americans that are turning to the government for financial assistance just continues to increase.  Yes, we should always have a “safety net”, but right now our “safety net” is becoming massively overloaded as millions more Americans jump on to it every single year.  What all of these impoverished Americans really need are jobs, but the U.S. Congress and the past several administrations have been systematically killing job growth in America.  So unfortunately the number of poor Americans is going to continue to rise, and that is really bad news for a nation that is already drowning in debt.

Some people out there want to blame the poor for the statistics that you are about to read, but that is a mistake.  Yes, there are a lot of people out there that are abusing the system, and that needs to be stopped.

But many Americans that are dependent on the government are in that situation because there simply are not enough jobs in this country.

And unfortunately, the Obama administration and the U.S. Congress continue to pursue the same job-killing policies that have gotten us into this mess in the first place.  So millions of Americans that have learned to survive as government dependents are not being given the opportunity to break out of that cycle.  When there is a shortage of decent jobs, it is easy to give up.  Many tend to become more and more comfortable being dependent on the government as time goes by.

Once you become addicted to getting a government check in the mail, it can be very difficult to give that up.  There are some that get trapped in a life of government dependence for years or even decades.

The following are 16 statistics which show that the number of Americans dependent on the government is at an all-time high….

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

#2 The amount of money that the federal government gives directly to Americans has increased by 32 percent since Barack Obama entered the White House.

#3 The number of Americans receiving Social Security disability benefits has increased by 10 percent since Barack Obama first took office.

#4 Back in 1990, the federal government accounted for 32 percent of all health care spending in America.  Today, that figure is up to 45 percent and it is projected to surpass 50 percent very shortly.

#5 The number of Americans on food stamps recently hit a new all-time high.  It has increased by 3 million since this time last year and by more than 14 million since Barack Obama first entered the White House.

#6 Today, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.  This is unprecedented in American history.

#7 In 2010, 42 percent of all single mothers in the United States were on food stamps.

#8 Back in 1980, government transfer payments accounted for just 11.7% of all income.  In 2010, government transfer payments accounted for 18.4% of all income, which was a new all-time high.

#9 By the end of 2011, approximately 55 million Americans received a total of approximately 727 billion dollars in Social Security benefits.  As the retirement crisis becomes much worse, that dollar figure is projected to absolutely skyrocket.

#10 According to the Congressional Budget Office, the Social Security system paid out more in benefits than it received in payroll taxes in 2010.  That was not supposed to happen until at least 2016.

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

#12 The U.S. government now says that the Medicare trust fund will run out five years faster than previously anticipated.

#13 The total cost of just three federal government programs – the Department of Defense, Social Security and Medicare – exceeded the total amount of taxes brought in during fiscal 2010 by 10 billion dollars.

#14 It is being projected that entitlement spending by the federal government will nearly double by the year 2050.

#15 Right now, spending by the federal government accounts for about 24 percent of GDP.  Back in 2001, it accounted for just 18 percent.

#16 When you total it all up, American households are now receiving more money directly from the federal government than they are paying to the government in taxes.

Once again, I am not blaming the poor.  Almost all of us know of someone that is on government assistance.  Most of them are not dependent on the government because they are lazy or because they want to cheat the system.  Most of them have just had their dreams crushed by this horrible economy and need a helping hand.

It is incredible how anyone can run around claiming that the U.S. economy is heading in the right direction with all of this going on.

Yes, things are going fairly well for the boys and girls down on Wall Street, but for the vast majority of Americans things are looking quite bleak.

For example, things have gotten so bad that the state of Florida is actually considering using ballparks and sports stadiums as shelters for the homeless.

But when it comes to so many people being financially dependent on the federal government, there is a major problem.

The problem is that the federal government is absolutely drowning in debt.

So why don’t our politicians just explain to the American people that we need to start cutting back and reducing the size of some of these programs?

Well, if any of our politicians try to do that they won’t get elected next time around.

The truth is that the American people are deeply addicted to government money.

Any politician that proposes significant cuts to Social Security or Medicare is a goner.

Every poll or survey that is done on this subject shows that the American people are overwhelmingly against cuts to programs like Social Security and Medicare.

So politicians will just keep spending money like there is no tomorrow, and the American people will just keep sending them back to Washington.

But just like we saw in Greece, a day of reckoning comes eventually.

There will come a time when the federal government will not be able to steal 150 million dollars an hour from our children and our grandchildren.

There will come a time when there will not be enough money for all of these growing social programs.

So once the government checks stop rolling in, what is going to happen then?

If The Economy Is Improving….

Everywhere you turn these days, someone is proclaiming that the economy is improving.  Barack Obama is endlessly touting the “improvement” in the economy, the mainstream media is constantly talking about “the economic recovery” and an increasing number of Americans seem to be buying into this line of thinking.  A new NBC/Wall Street Journal poll found that 37 percent of Americans believe that the economy will improve over the next year, while only 17 percent of Americans believe that it will get worse.  But is the economy actually improving?  Not really.  At the moment things are relatively stable.  Some economic statistics are improving slightly and some continue to get even worse.  However, it is very important to keep in mind that one of the biggest reasons why things have stabilized is because the federal government is pumping more than a trillion dollars a year into the economy that it does not have.  The Obama administration is engaging in a debt binge unlike anything America has ever seen before, and yet many economic indicators are still in decline.  So what is going to happen when the federal government stops injecting gigantic waves of borrowed money into the economy?  That is a frightening thing to think about.  The best efforts of our “leaders” in Washington D.C. are not accomplishing a whole lot.  The Federal Reserve has pushed interest rates as low as they can go and the federal government is spending unprecedented amounts of money.  But even with the federal government and the Federal Reserve pushing the accelerator all the way to the floor, the economy is still not improving much at all.  Millions upon millions of Americans out there are anticipating some sort of a “great economic recovery”, and they are going to be bitterly disappointed.

But right now there are some “bright spots” in the economy, and you are bound to run into family and friends that will repeat to you the nonsense that they are hearing on the television about how the economy is recovering.

When they try to convince you that the economy is getting better, ask them these questions….

If the economy is getting better, then why did new home sales in the United States hit a brand new all-time record low during 2011?

If the economy is getting better, then why are there 6 million less jobs in America today than there were before the recession started?

If the economy is getting better, then why is the average duration of unemployment in this country close to an all-time record high?

If the economy is getting better, then why has the number of homeless female veterans more than doubled?

If the economy is getting better, then why has the number of Americans on food stamps increased by 3 million since this time last year and by more than 14 million since Barack Obama entered the White House?

If the economy is getting better, then why has the number of children living in poverty in America risen for four years in a row?

If the economy is getting better, then why is the percentage of Americans living in “extreme poverty” at an all-time high?

If the economy is getting better, then why is the Federal Housing Administration on the verge of a financial collapse?

If the economy is getting better, then why do only 23 percent of American companies plan to hire more employees in 2012?

If the economy is getting better, then why has the number of self-employed Americans fallen by more than 2 million since 2006?

If the economy is getting better, then why did an all-time record low percentage of U.S. teens have a job last summer?

If the economy is getting better, then why does median household income keep declining?  Overall, median household income in the United States has declined by a total of 6.8% since December 2007 once you account for inflation.

If the economy is getting better, then why has the number of Americans living below the poverty line increased by 10 million since 2006?

If the economy is getting better, then why is the average age of a vehicle in America now sitting at an all-time high?

If the economy is getting better, then why are 18 percent of all homes in the state of Florida currently sitting vacant?

If the economy is getting better, then why are 19 percent of all American men between the ages of 25 and 34 living with their parents?

If the economy is getting better, then why does the number of “long-term unemployed workers” stay so high?  When Barack Obama first took office, the number of “long-term unemployed workers” in the United States was approximately 2.6 million.  Today, that number is sitting at 5.6 million.

But there is some good news.

When Barack Obama first took office, an ounce of gold was going for about $850.  Today, the price of an ounce of gold is over $1700.

The era of great prosperity that America has enjoyed for so long is coming to an end.

In fact, our long-term economic decline is about to accelerate.

So enjoy this “bubble of hope” while you can, because it won’t last long.

As I have written about previously, many are warning that Europe is on the verge of a nightmarish financial crisis that could potentially plunge us into a global recession even worse than 2008.

So let us hope for the best, but let us also prepare for the worst.

Just because the economy is about to go through hard times does not mean that you have to go through hard times personally.

Right now, you can decide to make an investment or start a business that will thrive in a tough economic environment.

Victory often goes to the most prepared.  So don’t just sit there while the storm clouds gather.  Instead, this should be a time when you are gathering resources and developing a gameplan for the coming economic chaos.

Those that choose to have blind faith in “the system” are going to be tremendously disappointed in the years ahead.  Just because you have a job right now does not mean that it is always going to be there.  Just because your stock portfolio is doing well right now does not mean that will always be the case.

Hopefully we all learned some important lessons from 2008.  The global financial situation can turn on a dime.  When markets fall apart, they tend to do so very rapidly.

Ultimately, the debate about whether the economy is improving or not is going to be ended very emphatically.  When the next wave of the financial crisis hits, there will be no doubt about what direction things are going.

Don’t let the next wave catch you by surprise.

Now is the time to prepare.

If The U.S. Government Keeps Spending Money Like This We Are Doomed And If The U.S. Government Stops Spending Money Like This We Are Doomed

If you increased your credit card spending by a couple thousand dollars per month would your lifestyle improve?  Of course it would.  By going into large amounts of debt, it is possible to live a lifestyle that you can’t really afford, at least for a while.  But if you keep racking up huge amounts of credit card debt every single month, eventually it gets to a point where it is extremely difficult to even keep up with the minimum monthly payments and the credit card companies will not lend you any more money.  Well, on a larger scale it is the same thing with government debt.  Right now, the U.S. government is spending more than a trillion dollars more than it takes in every year.  Even if the U.S. government spends all of that money on incredibly stupid stuff, it still gets into the pockets of ordinary Americans.  In turn, those ordinary Americans use that money to pay the mortgage, buy food, shop at the mall, etc.  All of this borrowing and spending by the U.S. government has created a “false prosperity” bubble that is not real.  It may feel real to you right now, but it is unsustainable by definition.  If the U.S. government suddenly started spending only the money that it actually brought in every year, our economy would be doomed and all of this “false prosperity” would rapidly disappear.  But if the U.S. government continues to rack up debt at this pace we are doomed as well.  In fact, every dollar that gets borrowed makes our eventual collapse ever worse.  We are heading down the exact same road that Greece has gone.  Eventually the rest of the world is not going to lend us gigantic mountains of super cheap money anymore.  When the flow of cheap money stops, it can be extremely painful.  Anyone that has ever seen the interest rates on their credit cards go above 20 percent knows how this feels.  If we had addressed these problems as a nation a decade or two ago, perhaps we could have found a solution.  But now there is no way out under our current financial system and a devastating economic collapse is on the horizon no matter what we do.

If there was a Hollywood movie where some crooks successfully stole 150 million dollars, what would you think of those crooks?

Would you have admiration for them?

Would you be disgusted with them?

Would you feel like your intelligence was insulted because nobody could ever steal 150 million dollars and get away with it?

Well, right now the federal government is stealing approximately 150 million dollars from our children and our grandchildren every single hour.

That’s right – the U.S. government is borrowing an astounding 150 million dollars an hour that our children and our grandchildren will be expected to deal with.

It is a theft so vast that it is almost unimaginable.

So what should be done?

A lot of people out there think that our problems would be solved if the government would just quit borrowing so much money.

Well, it is just not that simple.

Look at Greece.  They were forced by the EU and the IMF to dramatically reduce government spending.  But when Greece reduced government spending, that caused the economy to shrink rapidly and it caused tax receipts to go down more than expected.  So Greek budget deficits were even larger than anticipated and so Greece was forced to cut spending even more.  But that created even more economic problems.

A recent article by John Mauldin described the nightmarish effect that this cycle has had on Greece….

And as Greece began shake and bake its way to “austerity,” the very act of cutting deficits pushed the country into recession, which lowered tax revenues and increased expenses, putting the elusive goal of a balanced budget even further off. We should quickly note that this is not just a Greek problem. Spain’s “draconian” cuts have meant that its 6% deficit target for the year has this week been raised to a more likely 8%, making it harder to get back to even.

For country after country, this is the Endgame. It is the end of the Debt Supercycle. Debt has grown to the size that it cannot be sustained. The market will not lend any more money on terms that can be afforded, and any efforts to cut spending and raise taxes will result in an even worse economy, in various degrees of recession, with falling revenues and rising costs.

This is what happens when a country that has been spending far beyond its means is forced to dramatically cut back.

Those that are convinced that balancing the federal budget in the United States will be relatively painless should take a close look at what is happening in Greece.

As I have written about previously, the Greek economy has been plunged into a 21st century “Great Depression”.  In Greece, 20 percent of all retail stores have already shut down, the unemployment rate for those under the age of 24 is sitting at 39 percent, and one third of the entire nation is living in poverty.

And this is only just the beginning for Greece.

Things are going to get even worse.

Unfortunately, many believe that the United States is destined to experience far worse pain than Greece is currently experiencing.

For example, Peter Schiff insists that the United States is in worse financial shape than Europe at this point.  Just check out this video….

Anyone that attempts to downplay the U.S. debt problem is making a serious mistake.  Yes, we are still able to borrow trillions of dollars for next to nothing, but that is going to come to an end.

Remember all of those “suckers” that signed up for mortgages at “teaser rates” that later got jacked up dramatically?

Of course you do.

So what happened to them?

When the rates went up many of them ended up losing everything.

Well, we have gotten ourselves into the exact same kind of a position.  All of this cheap money has enabled us to live very nicely for now, but when the cheap money ends the nightmare will begin.

Right now, our debt is growing much, much faster than our economy is.  Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.

What would your household finances look like if your total debt grew by 61 percent next year but your income only grew by 4 percent?

When I was a little boy, the U.S. national debt was considered to be a huge national crisis.  Politicians from both major political parties were promising that they would fix things.

But what has happened since then?

Well, when Ronald Reagan took office the U.S. national debt was less than 1 trillion dollars.  Today, the U.S. national debt is over 15.2 trillion dollars.

During 2011, the federal government went into more debt than the U.S. government accumulated from the time that George Washington became president to the time that Ronald Reagan became president.

That may be hard to believe, but it is true.

During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars.

That is utter insanity, and yet most Americans have become convinced that this is “normal” and that there is nothing to worry about.

It is hard to grasp how much money a trillion dollars is.

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.

That is how much money a trillion dollars is.

And things look even worse when you look at the balance sheet of the U.S. government.

The U.S. government has total assets of 2.7 trillion dollars and has total liabilities of 17.5 trillion dollars.  Those liabilities do not even count 4.7 trillion dollars of intragovernmental debt that is currently outstanding.

But it is not just the federal government that has been living a fantasy.

The chart posted below shows the growth of total debt in America over the past several decades.  Consumers, businesses and government officials have been on a debt binge that is absolutely unprecedented….

The scary thing is that even with all of this borrowed money, our economy is still in the dumps.

So what in the world is it going to look like when the debt bubble totally bursts?

Even with all of this “borrowed prosperity”, anger at the government is rapidly growing.  A recent Gallup poll found that “satisfaction with government” in the United States is now at an all-time record low of 29 percent.

So how angry will the American people be when all of this “borrowed prosperity” disappears?

When this whole thing comes tumbling down, a lot of people are going to blame our problems on “capitalism”.

In fact, it is already happening.  Just check out what the founder of the World Economic Forum is saying….

“We have a general morality gap, we are over-leveraged, we have neglected to invest in the future, we have undermined social coherence, and we are in danger of completely losing the confidence of future generations,” said Klaus Schwab, host and founder of the annual World Economic Forum.

“Solving problems in the context of outdated and crumbling models will only dig us deeper into the hole.

“We are in an era of profound change that urgently requires new ways of thinking instead of more business-as-usual,” the 73-year-old said, adding that “capitalism in its current form, has no place in the world around us.”

But capitalism is not the problem.  Capitalism has produced the greatest eras of prosperity that the world has ever seen.

No, the real problem is our debt-based financial system that is managed and run by the central banks of the world.

You see, debt-based central banking is not capitalism.  But way too many people equate the two.

A lot of people cannot even imagine this, but theoretically you could have capitalism without any debt whatsoever.

But what we have today is a financial system that has debt as the very foundation.  And such a system is inevitably going to fail someday.

As I have written about so many times before, the Federal Reserve is at the very heart of our economic problems here in the United States.

The Federal Reserve was designed to be a perpetual debt machine.  And it has performed that task very well.  The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.

So yes, even though things seem somewhat “stable” for the moment, there are all kinds of reasons to be concerned about the viability of our economy and our financial system in the years ahead.

The other day, I was quoted in a Reuters article about our coming economic problems….

“Most people have a gut feeling that something has gone terribly wrong, but that doesn’t mean that they understand what is happening,” he said. “A lot of Americans sense that a massive economic storm is coming and they want to be prepared for it.”

Of course the Reuters reporter did not even bother to spell my name correctly, but at least he got the quote right.

A great economic storm is coming.

Don’t let this false prosperity and this “calm before the storm” fool you.

We are living in the greatest debt bubble the world has ever seen, and no matter how it plays out there is going to be a massive amount of pain.

You might want to get yourself and your family prepared for that.

Warning Signs That We Should Prepare For The Worst

The warning signs are all around us.  All we have to do is open up our eyes and look at them.  Almost every single day there are more prominent voices in the financial world telling us that a massive economic crisis is coming and that we need to prepare for the worst.  On Wednesday, it was the World Bank itself that issued a very chilling warning.  In an absolutely startling report, the World Bank revised GDP growth estimates for 2012 downward very sharply, warned that Europe could be on the verge of a devastating financial crisis, and declared that the rest of the world better “prepare for the worst.”  You would expect to hear this kind of thing on The Economic Collapse Blog, but this is not the kind of language that you would normally expect to hear from the stuffed suits at the World Bank.  Obviously things have gotten bad enough that nobody is even really trying to deny it anymore.  Andrew Burns, the lead author of the report, said that if the sovereign debt crisis gets even worse we could be looking at an economic crisis that could be even worse than the last one: “An escalation of the crisis would spare no-one. Developed- and developing-country growth rates could fall by as much or more than in 2008/09.”  Burns also stated that the “importance of contingency planning cannot be stressed enough.”  In other words, Burns is saying that it is time to prepare for the worst.  So are you ready?

But of course it isn’t just the World Bank that is warning about these things.  The chorus of voices that is warning about the next great financial crisis just seems to grow by the day.

Some of these voices were profiled in a Bloomberg article the other day entitled “Apocalypse How? Dire ’12 Forecasts“.  The following is just a sampling of quotes from that article….

-John Mauldin, president of Millennium Wave Advisors: “We’ve got a cancer. That cancer is debt”

-Mark Spitznagel of Universa Investments: “Too much malinvestment has been kept alive, and history shows an inevitable wipeout, which started in 2000.”

-Michael Panzner of Financial Armageddon: “The fundamental outlook is even worse now than it was a few weeks ago, given (the lack of positive) developments in Europe and growing evidence that the economies of major countries around the world are deteriorating fast.”

If you have time, you should go check out the rest of that article.  It really is fascinating.

When this crisis is over, all sorts of people are going to be running around claiming that they predicted it.  But it does not take a genius to see what is coming.  All you have to do is open up your eyes and look at the flashing red warning signs.

So what should we all be looking for next?

March 20th is a key date to keep your eye on.  That is the day when Greece will either makes its 14.5 billion euro bond payment or it will default.

Greece does not have a prayer of making that payment without help.  If Greece can convince the EU and the IMF to release the next scheduled bailout payment and if Greece can reach a satisfactory deal with private bondholders, then the coming Greek default might be “orderly”.  But if something goes wrong, the coming Greek default might be quite “disorderly”.

At this point, almost everyone in the financial world is anticipating a Greek default of one form or another….

-Edward Parker, the managing director for Fitch’s sovereign and supranational group in Europe, the Middle East and Africa, recently declared that a Greek default is inevitable….

“It is going to happen. Greece is insolvent so it will default.”

-Moritz Kraemer, the head of S&P’s European sovereign ratings unit, made the following statement on Bloomberg Television on Monday:

“Greece will default very shortly. Whether there will be a solution at the end of the current rocky negotiations I cannot say.”

-Richard McGuire, a strategist at Dutch bank Rabobank, was recently quoted by CNBC as saying the following….

“People often ask if Greece is going to default which … is a misnomer because Greece is (already) defaulting”

-Diane Swonk, the chief economist at Mesirow Financial in Chicago, says that the default by Greece will probably be an “orderly” one but that the situation could change at any moment….

“It appears at the moment that the market is accepting a Greek default as inevitable, and it will be an orderly default. But that can change on a dime.”

But whether there is a default or not, the reality is that Greece is already experiencing a full-blown economic depression.  In Greece, 20 percent of all retail stores have already shut down.  The unemployment rate for those under the age of 24 is now at 39 percent.  Large numbers of Greeks are trying to get themselves and their money out of the country while they still can.

Pessimism regarding Greece is at an all-time high.  Michael Fuchs, the deputy leader of Angela Merkel’s political party, recently made the following statement….

“I don’t think that Greece, in its current condition, can be saved.”

But of course Greece is not the only declining economy in Europe by a long shot.

Italy has a much larger economy, and if Italy totally collapses it will be an absolute nightmare for the entire globe.

Right now, the Bank of Italy is forecasting a significant recession for the Italian economy in 2012.  The following is from a statement that Bank of Italy has just released….

“The uncertainty that surrounds the medium-term perspectives of the Italian economy … are extraordinarily high and are directly linked to the evolution of the eurozone debt crisis”

Italy’s youth unemployment rate has hit the highest level ever, and nearly all sectors of the Italian economy are showing signs of slowing down.

Plus there is the looming problem of Italian debt.  As I wrote about yesterday, when you add the maturing debt that the Italian government must roll over in 2012 to their projected budget deficit, it comes to 23.1 percent of Italy’s GDP.

Originally it was hoped that the economic problems in Europe could be contained to just a few countries.  But now it has become clear that is just not going to happen.

Trends forecaster Gerald Celente recently explained to ABC Australia that much of Europe is already essentially experiencing an economic depression….

“If you live in Greece, you’re in a depression; if you live in Spain, you’re in a depression; if you live in Portugal or Ireland, you’re in a depression,” Celente said. “If you live in Lithuania, you’re running to the bank to get your money out of the bank as the bank runs go on. It’s a depression. Hungary, there’s a depression, and much of Eastern Europe, Romania, Bulgaria. And there are a lot of depressions going on [already].”

The troubling news out of Europe just seems to keep coming in waves.  Here are some more recent examples….

-Manufacturing activity in the euro zone has fallen for five months in a row.

-Germany’s economy actually contracted during the 4th quarter of 2011.

-It is being reported that the Spanish economy contracted during the 4th quarter of 2011.

-Bad loans in Spain recently hit a 17-year high and the unemployment rate is at a 15-year high.

So will all of this economic trouble eventually spread to the United States?

Of course it will.

The global economy is more interconnected today than ever.  Back in 2008 the financial crisis that started on Wall Street ended up devastating economies all over the planet.  The same thing will happen during this next great financial crisis.

Only this time the U.S. is in a much weaker position.  The U.S. debt problem has gotten much worse since the last crisis.

During 2008, our national debt crossed the 10 trillion dollar mark.  Less than 4 years later, we have crossed the 15 trillion dollar mark.

So what are we going to do the next time large numbers of banks fail and unemployment skyrockets?

Where are we going to get the money to bail out all of those banks and to take care of all of those newly unemployed people?

Some people say that socialism is the answer, but the truth is that we are already a socialist welfare state.  If you can believe it, nearly half of all Americans live in a household that receives some form of financial benefits from the U.S. government.

During the next great crisis, the number of people that are dependent on the government will go even higher.

If you don’t want to end up dependent on the government, you should heed the warning signs and you should use this time to prepare for the hard times that are coming.

When even the World Bank tells us to hope for the best but to prepare for the worst, you know that it is late in the game.

Unfortunately, the vast majority of people out there only believe what they want to believe.  They don’t want to believe that a great economic crisis is coming, and so when it does happen they are going to be absolutely blindsided by it.

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