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 Barack Obama is warning that if he does not get everything that he wants that he will force the U.S. government into a devastating debt default which will cripple the entire global economy. In essence, Obama has become so power mad that he is actually willing to take the entire planet hostage in order to achieve his goals. A lot of people are blaming the government shutdown on the Republicans, but they have already voted to fund the entire government except for Obamacare. The U.S. Constitution requires that all spending bills originate in the House of Representatives, and the House did their duty by passing a spending bill. If the Senate or the President do not like the bill that the House has passed, then negotiations need to take place. That is how our system works. And the weak-kneed Republicans have already indicated that they are willing to give up virtually all of their prior demands. In fact, if Obama offered all of them 20 dollar gift certificates to Denny’s to end this crisis they would probably jump at that deal. But that is not good enough for Obama. He has made it clear that he will settle for nothing less than the complete and unconditional surrender of the Republican Party.
Why is Obama doing this? Why is Obama willing to bring the country to the brink of financial disaster?
It isn’t hard to figure out. Just check out what one senior Obama administration official said last week…
“We are winning…. It doesn’t really matter to us” how long the shutdown lasts “because what matters is the end result,” a senior Obama Administration official told the Wall Street Journal last week.
This is all about a political victory and crushing the Republicans. Obama doesn’t really care how long this crisis lasts because he believes that he is getting the end result that he wants.
According to Obama, the Republican Party is just supposed to roll over and give him the exact spending bill that he wants and also give him another trillion dollar increase in the debt limit.
If the Republicans do not give him that, he is willing to plunge us into financial oblivion.
The funny thing is that most Americans do not want the debt limit increased. According to one new poll, 58 percent of all Americans do not even want the debt ceiling to be increased by a single penny.
And recent polls show that Americans are against Obamacare by an average margin of about 10 percent.
But the pathetic Republican Party is actually willing to hand Obama a trillion dollar debt ceiling increase and fully fund Obamacare if Obama will at least give them something.
Unfortunately, Obama won’t even give them the time of day.
So don’t blame the Republicans for what is happening. The Republicans have already compromised themselves to the point of utter disgrace. If Obama had been willing to even compromise a couple of inches this entire crisis would already be over.
And nobody should be claiming that the Republicans won’t vote to end this shutdown. They have already voted to end it. The following is from a recent article by Thomas Sowell…
There is really nothing complicated about the facts. The Republican-controlled House of Representatives voted all the money required to keep all government activities going — except for ObamaCare.
This is not a matter of opinion. You can check the Congressional Record.
As for the House of Representatives’ right to grant or withhold money, that is not a matter of opinion either. You can check the Constitution of the United States. All spending bills must originate in the House of Representatives, which means that Congressmen there have a right to decide whether or not they want to spend money on a particular government activity.
Whether ObamaCare is good, bad or indifferent is a matter of opinion. But it is a matter of fact that members of the House of Representatives have a right to make spending decisions based on their opinion.
Once again, the Republicans have already indicated that they are willing to fund Obamacare. They just want Obama to throw them a bone.
And Obama will not do it.
So either the Republicans are going to cave in completely (a very real possibility) or we are going to pass the “debt ceiling deadline”.
What happens then?
Well, we would have more of a “real government shutdown” than the fake shutdown that we are having right now.
Once the federal government cannot borrow any more money, it will only be able to spend what it actually has on hand. That means that a lot more government functions will have to shut down.
Money will still be coming in to the government, but it won’t be enough to fund everything. According to the Wall Street Journal, the federal government will still have enough money to pay interest on the debt, make Social Security payments, make Medicare payments, make Medicaid payments, provide food stamp benefits and pay the military if they cut almost everything else out.
The other day, I suggested that the federal government could potentially start defaulting on interest payments on the debt as early as November. But that would only happen if the federal government manages their money foolishly.
If the federal government managed their money smartly and saved cash for the interest payments as they came due, they would not have to miss any.
But when was the last time the federal government ever did anything “smartly”?
For the sake of argument, however, let’s assume that the federal government can manage money wisely and can save up enough cash ahead of time for large interest payments as they come due.
If that could somehow be managed, then according to Paul Mampilly the government would never need to actually default…
The U.S. Treasury always has money coming into its accounts. So its always got some amount of cash that it can use to pay interest on bonds. That’s especially true right now because the government is partially shutdown and there’s no cash going out from its accounts.
In fact, when you look at it the U.S. Treasury should simply have no trouble making interest payments on bonds that it has issued.
And there’s no restriction on the U.S. Treasury prioritizing interest payments. Why?
The obligation to pay interest is set by the 1917 Second Liberty Bond Act and laws that commanded the Treasury to pay interest on the debt. You can look this up in section 3123 of Title 31 of the U.S. Code and section 4 of the 14th Amendment of the Constitution and in Supreme Court precedent (Perry v. United States). It’s all there in black and white.
So the only possible way the U.S. defaults on its debt is if Barack Obama, President of the United States, instructs his Treasury secretary Jack Lew to default on the debt.
And according to the Washington Post, Moody’s has just issued a memo that also indicates that the federal government should be able to make all interest payments even if the debt limit is not increased…
In a memo being circulated on Capitol Hill Wednesday, Moody’s Investors Service offers “answers to frequently asked questions” about the government shutdown, now in its second week, and the federal debt limit. President Obama has said that, unless Congress acts to raise the $16.7 trillion limit by next Thursday, the nation will be at risk of default.
Not so, Moody’s says in the memo dated Oct. 7.
“We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.”
Of course the federal government would have to stop throwing money around like a drunk gambler at a casino in Las Vegas in order for this to work.
On the very first day of the government shutdown, the feds gave $445 million to the Corporation for Public Broadcasting. Apparently Elmo is considered to be “essential personnel” by the Obama administration.
And according to CNS News, the U.S. Army has committed more than $47,000 to buy a mechanical bull during this “shutdown”…
The government shutdown may be keeping furloughed federal workers at home, but on Monday the U.S. Army contracted to buy a mechanical bull.
The $47,174 contract was awarded on Oct. 7 to Mechanical Bull Sales Inc. of State College, Penn.
So needless to say, there is some serious doubt about whether the federal government would be able to manage their money effectively in the event that the debt ceiling deadline passes.
And if the U.S. did start defaulting on debt payments, it would be absolutely disastrous for the global economy as I discussed in a previous article…
“A U.S. debt default would cause stocks to crash, would cause bonds to crash, would cause interest rates to soar wildly out of control, would cause a massive credit crunch, and would cause a derivatives panic that would be absolutely unprecedented. And that would just be for starters.”
Other nations that we depend upon to lend us money would stop lending to us and would start dumping U.S. debt instead.
Could you imagine what would happen if China started dumping a large portion of the 1.3 trillion dollars in U.S. debt that they are holding?
It would be a total nightmare. The collapse of Lehman Brothers would pale in comparison.
And already some banks are stuffing their ATM machines with extra cash just in case the general public starts to panic.
But none of this has to happen.
If Obama decides to negotiate with the Republicans, this crisis will likely end very rapidly.
If not, and we pass the “debt ceiling deadline”, the federal government will still have enough money to make interest payments on the debt as long as they manage their money correctly.
Unfortunately, Obama seems far more interested in playing political games than he is in solving our problems.
In fact, Park Service rangers have been ordered to “make life as difficult for people as we can” during this government shutdown. Obama has apparently decided to punish the American people in order to get leverage on the Republicans. Just check out the following example from a new Weekly Standard article…
There’s a cute little historic site just outside of the capital in McLean, Virginia, called the Claude Moore Colonial Farm. They do historical reenactments, and once upon a time the National Park Service helped run the place. But in 1980, the NPS cut the farm out of its budget. A group of private citizens set up an endowment to take care of the farm’s expenses. Ever since, the site has operated independently through a combination of private donations and volunteer workers.
The Park Service told Claude Moore Colonial Farm to shut down.
The farm’s administrators appealed this directive—they explained that the Park Service doesn’t actually do anything for the historic site. The folks at the NPS were unmoved. And so, last week, the National Park Service found the scratch to send officers to the park to forcibly remove both volunteer workers and visitors.
Think about that for a minute. The Park Service, which is supposed to serve the public by administering parks, is now in the business of forcing parks they don’t administer to close. As Homer Simpson famously asked, did we lose a war?
The hypocrisy that Obama has demonstrated during this “government shutdown” has been astounding.
He has barricaded open air war memorials to keep military veterans from visiting them, but he temporarily reopened the National Mall so that a huge pro-immigration rally that would benefit him politically could be held.
He has continued to fund al-Qaeda rebels in Syria that are trying to overthrow the Syrian government, but he has been withholding death benefits from families of fallen U.S. soldiers.
The conduct of the Obama administration during this shutdown has been so egregious that is hard to put into words. Obama has chosen to purposely harm the American people in order to score political points.
But this is how our politicians view us these days. As Monty Pelerin recently explained, most of our politicians have absolutely no problem with exploiting us for their own purposes…
The concept of political service has been replaced by that of masked exploitation. The public is no longer viewed as clients or constituents to be served. Instead they have become political prey. Politicians see the public as a collection of wallets and votes, fair game to be hunted as the means to expand power and wealth. Constituents are now the Soylent Green of the political food chain.
The political class assumes the public exists to serve them, not the other way around. Public participation beyond the lightening of wallets or the provision of votes is unwelcome. It is considered “interference” that must be deterred by the ruling class.
The political class is now a huge, voracious parasite. Like the plant in the Little Shop of Horrors, its needs have grown to the point where it threatens anything productive. Its needs now exceed the willingness for continued sacrifice on the part of the productive. The parasite threatens the very existence of the host.
The political Ponzi scheme of tax, borrow and spend has reached its limit. Either it will die when citizens turn on it or it will kill the productive, ensuring its own destruction.
It perishes in the end. Whether it takes civilization with it is the bigger question.
Is there anyone out there that still does not believe that our system is broken?
Hopefully cooler heads will prevail and power mad Obama will decide to toss the Republicans a few crumbs and this crisis will be resolved.
Because if this crisis is not resolved soon, it could have consequences that are far beyond what any of us could possibly imagine.
 A U.S. debt default that lasts for more than a couple of days could potentially cause a financial crash unlike anything that the world has ever seen before. If the U.S. government purposely wanted to damage the global financial system, the best way that they could do that would be to default on U.S. debt obligations. A U.S. debt default would cause stocks to crash, would cause bonds to crash, would cause interest rates to soar wildly out of control, would cause a massive credit crunch, and would cause a derivatives panic that would be absolutely unprecedented. And that would just be for starters. But don’t just take my word for it. These are the things that top financial experts all over the planet are saying will happen if there is an extended U.S. debt default.
Because they are so close together, the “government shutdown” and the “debt ceiling deadline” are being confused by many Americans.
As I wrote about the other day, the “partial government shutdown” that we are experiencing right now is pretty much a non-event. Yeah, some national parks are shut down and some federal workers will have their checks delayed, but it is not the end of the world. In fact, only about 17 percent of the federal government is actually shut down at the moment. This “shutdown” could continue for many more weeks and it would not affect the global economy too much.
On the other hand, if the debt ceiling deadline (approximately October 17th) passes without an agreement that would be extremely dangerous.
And if the U.S. government is eventually forced to start delaying interest payments on U.S. debt (which could potentially happen as soon as November), that would be absolutely catastrophic.
Once again, just don’t take my word for it. The following are 12 very ominous warnings about what a U.S. debt default would mean for the global economy…
#1 Gerald Epstein, a professor of economics at the University of Massachusetts Amherst: “If the US does default, that will make the Lehman Brothers bankruptcy look like a cakewalk”
#2 Tim Bitsberger, a former Treasury official under President George W. Bush: “If we miss an interest payment, that would blow Lehman out of the water”
#3 Peter Tchir, founder of New York-based TF Market Advisors: “Once the system starts to break down related to settlement and payments, then liquidity disappears, as we saw after Lehman”
#4 Bill Isaac, chairman of Cincinnati-based Fifth Third Bancorp: “We can’t even imagine all the things that might happen, just like Henry Paulson couldn’t imagine all the bad things that might happen if he let Lehman go down”
#5 Jim Grant, founder of Grant’s Interest Rate Observer: “Financial markets are all confidence-based. If that confidence is shaken, you have disaster.”
#6 Richard Bove, VP of research at Rafferty Capital Markets: “If they seriously default on the debt, what we’re really talking about is a depression”
#7 Chinese vice finance minister Zhu Guangyao: “The U.S. is clearly aware of China’s concerns about the financial stalemate [in Washington] and China’s request for the US to ensure the safety of Chinese investments.”
#8 The U.S. Treasury Department: “A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse”
#9 Goldman Sachs: “We estimate that the fiscal pull-back would amount to 9pc of GDP. If this were allowed to occur, it could lead to a rapid downturn in economic activity if not reversed quickly”
#10 Simon Johnson, former chief economist for the IMF: “It would be insane to default, but it’s no longer a zero-percent probability”
#11 Warren Buffett about the potential of a debt default: “It should be like nuclear bombs, basically too horrible to use”
#12 Bloomberg: “Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.”
A U.S. debt default could be the trigger for the “nightmare scenario” that so many people have been writing about in recent years. In fact, it could greatly accelerate the timetable for the inevitable economic collapse that is coming. A recent Yahoo article described some of the things that we would likely see in the event of an extended U.S. debt default…
A default would upend money markets, destroy bond funds, slam the brakes on lending, cause interest rates to spiral, make our banks insolvent, and deal a blow to our foreign trading partners and creditors around the globe; all of which would throw the U.S. and the world into economic disarray.
And of course stocks would crash big time. Deutsche Bank’s David Bianco believes that if the U.S. government starts missing interest payments on U.S. Treasury bonds, we could see the S&P 500 go down to 850 by the end of the year.
There would be almost immediate panic among ordinary Americans as well. In fact, it is being reported that some banks are already stuffing their ATM machines will extra cash just in case…
With just 10 days left to raise the debt ceiling and congressional Republicans threatening to force the government to default on its obligations, banks are taking some dramatic steps to prepare for the economic chaos that would result should the brinkmanship continue.
The Financial Times reports that one major U.S. bank has started stuffing its automatic teller machines with extra cash in preparation for a possible bank run from panicked depositors. The New York Times reports that another bank is weighing a plan to advance funds to customers who rely on Social Security and other government payments that could stop in the event of a default.
Let’s hope that cooler heads will prevail and that a U.S. debt default will be avoided.
Unfortunately, it appears that the Democrats are absolutely determined not to be moved from their current position a single inch. They have decided to refuse to negotiate and demand that the Republicans give them every single thing that they want.
And who can really blame them for adopting that strategy? After all, it has certainly worked in the past. Whenever Democrats have stood united and have refused to give a single inch, the Republicans have always freaked out and caved in eventually.
Will this time be any different?
The funny thing is that once upon a time, Barack Obama was adamantly against any increase in the debt limit. The following comes courtesy of Zero Hedge…
But now Obama says that it is so unreasonable to be opposed to a debt limit increase that any negotiations are out of the question.
So which Obama is right?
If the Democrats will not negotiate, a debt default could still be avoided if the Republicans give in.
And that is what they always do, right?
Perhaps not this time. Just check out what John Boehner had to say on Sunday…
“I, working with my members, decided to do this in a unified way,” the speaker said — with demands to defund, delay or otherwise alter the Affordable Care Act.
Boehner had expected that the Obamacare fight would come during the next vote to raise the debt ceiling, “but, you know, working with my members, they decided, let’s do it now,” he said. “And the fact is, this fight was going to come, one way or another. We’re in the fight. We don’t want to shut the government down. We’ve passed bills to pay the troops. We passed bills to make sure the federal employees know that they’re going to be paid throughout this.”
“You’ve never seen a more dedicated group of people who are thoroughly concerned about the future of our country,” he said of House Republicans. “It is time for us to stand and fight.”
But will the Republicans really stand and fight?
In the past, betting on the intestinal fortitude of the Republican Party has been a loser every single time.
So we’ll see. Boehner insists that this time is different. Boehner insists that he is not going to fold like a 20 dollar suit this time. In fact, when he was asked if the U.S. government was headed toward a debt default if Obama continued to refuse to negotiate, Boehner made the following statement…
“That’s the path we’re on.”
The mainstream media has certainly been placing most of the blame at the feet of the Republicans, but at least the U.S. House of Representatives has been trying to get an agreement reached. The House has voted 26 times since the Senate last voted. Harry Reid has essentially shut the Senate down until the Republicans fold and give the Democrats exactly what they want.
The funny thing is that this could probably be solved very easily. If the Democrats agreed to a one year delay to the individual mandate, the Republicans would probably jump at it. And because of epic technical failures, hardly anyone has been able to get signed up for Obamacare anyway. So a one year delay would give the Obama administration time to get their act together.
Unfortunately, the Democrats seem absolutely obsessed with the idea that they will not give the Republicans one single inch. They seem to believe that this will be to their political benefit.
But this is a very dangerous game that they are playing. The U.S. government must roll over 441 billion dollars of short-term debt between October 18th and November 15th.
If a debt ceiling increase is not in place by that time, it will send interest rates soaring. Borrowing costs for state and local governments, corporations, and ordinary Americans will go through the roof and economic activity will be hit really hard.
And as detailed above, we could potentially be looking at a financial crash that would make 2008 look like a Sunday picnic.
So let us hope for a political solution soon. That will at least kick the can down the road for a little bit longer.
If a debt default were to happen before the end of this year, that would bring a tremendous amount of future economic pain into the here and now, and the consequences would likely be far greater than any of us could possibly imagine.
 Why are young people in America so frustrated these days? You are about to find out. Most young adults started out having faith in the system. They worked hard, they got good grades, they stayed out of trouble and many of them went on to college. But when their educations where over, they discovered that the good jobs that they had been promised were not waiting for them at the end of the rainbow. Even in the midst of this so-called “economic recovery”, the full-time employment rate for Americans under the age of 30 continues to fall. And incomes for that age group continue to fall as well. At the same time, young adults are dealing with record levels of student loan debt. As a result, more young Americans than ever are putting off getting married and having families, and more of them than ever are moving back in with their parents.
It can be absolutely soul crushing when you discover that the “bright future” that the system had been promising you for so many years turns out to be a lie. A lot of young people ultimately give up on the system and many of them end up just kind of drifting aimlessly through life. The following is an example from a recent Wall Street Journal article…
James Roy, 26, has spent the past six years paying off $14,000 in student loans for two years of college by skating from job to job. Now working as a supervisor for a coffee shop in the Chicago suburb of St. Charles, Ill., Mr. Roy describes his outlook as “kind of grim.”
“It seems to me that if you went to college and took on student debt, there used to be greater assurance that you could pay it off with a good job,” said the Colorado native, who majored in English before dropping out. “But now, for people living in this economy and in our age group, it’s a rough deal.”
Young adults as a group have been experiencing a tremendous amount of economic pain in recent years. The following are 30 statistics about Americans under the age of 30 that will blow your mind…
#1 The labor force participation rate for men in the 18 to 24 year old age bracket is at an all-time low.
#2 The ratio of what men in the 18 to 29 year old age bracket are earning compared to the general population is at an all-time low.
#3 Only about a third of all adults in their early 20s are working a full-time job.
#4 For the entire 18 to 29 year old age bracket, the full-time employment rate continues to fall. In June 2012, 47 percent of that entire age group had a full-time job. One year later, in June 2013, only 43.6 percent of that entire age group had a full-time job.
#5 Back in the year 2000, 80 percent of men in their late 20s had a full-time job. Today, only 65 percent do.
#6 In 2007, the unemployment rate for the 20 to 29 year old age bracket was about 6.5 percent. Today, the unemployment rate for that same age group is about 13 percent.
#7 American families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.
#8 During 2012, young adults under the age of 30 accounted for 23 percent of the workforce, but they accounted for a whopping 36 percent of the unemployed.
#9 During 2011, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.
#10 At this point about half of all recent college graduates are working jobs that do not even require a college degree.
#11 The number of Americans in the 16 to 29 year old age bracket with a job declined by 18 percent between 2000 and 2010.
#12 According to one survey, 82 percent of all Americans believe that it is harder for young adults to find jobs today than it was for their parents to find jobs.
#13 Incomes for U.S. households led by someone between the ages of 25 and 34 have fallen by about 12 percent after you adjust for inflation since the year 2000.
#14 In 1984, the median net worth of households led by someone 65 or older was 10 times larger than the median net worth of households led by someone 35 or younger. Today, the median net worth of households led by someone 65 or older is 47 times larger than the median net worth of households led by someone 35 or younger.
#15 In 2011, SAT scores for young men were the worst that they had been in 40 years.
#16 Incredibly, approximately two-thirds of all college students graduate with student loans.
#17 According to the Federal Reserve, the total amount of student loan debt has risen by 275 percent since 2003.
#18 In America today, 40 percent of all households that are led by someone under the age of 35 are paying off student loan debt. Back in 1989, that figure was below 20 percent.
#19 The total amount of student loan debt in the United States now exceeds the total amount of credit card debt in the United States.
#20 According to the U.S. Department of Education, 11 percent of all student loans are at least 90 days delinquent.
#21 The student loan default rate in the United States has nearly doubled since 2005.
#22 One survey found that 70% of all college graduates wish that they had spent more time preparing for the “real world” while they were still in college.
#23 In the United States today, there are more than 100,000 janitors that have college degrees.
#24 In the United States today, 317,000 waiters and waitresses have college degrees.
#25 Today, an all-time low 44.2 percent of all Americans between the ages of 25 and 34 are married.
#26 According to the Pew Research Center, 57 percent of all Americans in the 18 to 24 year old age bracket lived with their parents during 2012.
#27 One poll discovered that 29 percent of all Americans in the 25 to 34 year old age bracket are still living with their parents.
#28 Young men are nearly twice as likely to live with their parents as young women the same age are.
#29 Overall, approximately 25 million American adults are living with their parents according to Time Magazine.
#30 Young Americans are becoming increasingly frustrated that previous generations have saddled them with a nearly 17 trillion dollar national debt that they are expected to make payments on for the rest of their lives.
And this trend is not just limited to the United States. As I have written about frequently, unemployment rates for young adults throughout Europe have been soaring to unprecedented heights. For example, the unemployment rate for those under the age of 25 in Italy has now reached 40.1 percent.
Simon Black of the Sovereign Man blog discussed this global trend in a recent article on his website…
Youth unemployment rates in these countries are upwards of 40% to nearly 70%. The most recent figures published by the Italian government show yet another record high in youth unemployment.
An entire generation is now coming of age without being able to leave the nest or have any prospect of earning a decent wage in their home country.
This underscores an important point that I’ve been writing about for a long time: young people in particular get the sharp end of the stick.
They’re the last to be hired, the first to be fired, the first to be sent off to fight and die in foreign lands, and the first to have their benefits cut.
And if they’re ever lucky enough to find meaningful employment, they can count on working their entire lives to pay down the debts of previous generations through higher and higher taxes.
But when it comes time to collect… finally… those benefits won’t be there for them.
Meanwhile, the overall economy continues to get even weaker.
In the United States, Gallup’s daily economic confidence index is now the lowest that it has been in more than a year.
For young people that are in high school or college right now, the future does not look bright. In fact, this is probably as good as the U.S. economy is going to get. It is probably only going to be downhill from here.
The system is failing, and young people are going to become even angrier and even more frustrated.
So what will that mean for our future?
Please feel free to share what you think by posting a comment below…
 Karen Hudes is a graduate of Yale Law School and she worked in the legal department of the World Bank for more than 20 years. In fact, when she was fired for blowing the whistle on corruption inside the World Bank, she held the position of Senior Counsel. She was in a unique position to see exactly how the global elite rule the world, and the information that she is now revealing to the public is absolutely stunning. According to Hudes, the elite use a very tight core of financial institutions and mega-corporations to dominate the planet. The goal is control. They want all of us enslaved to debt, they want all of our governments enslaved to debt, and they want all of our politicians addicted to the huge financial contributions that they funnel into their campaigns. Since the elite also own all of the big media companies, the mainstream media never lets us in on the secret that there is something fundamentally wrong with the way that our system works.
Remember, this is not some “conspiracy theorist” that is saying these things. This is a Yale-educated attorney that worked inside the World Bank for more than two decades. The following summary of her credentials comes directly from her website…
Karen Hudes studied law at Yale Law School and economics at the University of Amsterdam. She worked in the US Export Import Bank of the US from 1980-1985 and in the Legal Department of the World Bank from 1986-2007. She established the Non Governmental Organization Committee of the International Law Section of the American Bar Association and the Committee on Multilateralism and the Accountability of International Organizations of the American Branch of the International Law Association.
Today, Hudes is trying very hard to expose the corrupt financial system that the global elite are using to control the wealth of the world. During an interview with the New American, she discussed how we are willingly allowing this group of elitists to totally dominate the resources of the planet…
A former insider at the World Bank, ex-Senior Counsel Karen Hudes, says the global financial system is dominated by a small group of corrupt, power-hungry figures centered around the privately owned U.S. Federal Reserve. The network has seized control of the media to cover up its crimes, too, she explained. In an interview with The New American, Hudes said that when she tried to blow the whistle on multiple problems at the World Bank, she was fired for her efforts. Now, along with a network of fellow whistleblowers, Hudes is determined to expose and end the corruption. And she is confident of success.
Citing an explosive 2011 Swiss study published in the PLOS ONE journal on the “network of global corporate control,” Hudes pointed out that a small group of entities — mostly financial institutions and especially central banks — exert a massive amount of influence over the international economy from behind the scenes. “What is really going on is that the world’s resources are being dominated by this group,” she explained, adding that the “corrupt power grabbers” have managed to dominate the media as well. “They’re being allowed to do it.”
Previously, I have written about the Swiss study that Hudes mentioned. It was conducted by a team of researchers at the Swiss Federal Institute of Technology in Zurich, Switzerland. They studied the relationships between 37 million companies and investors worldwide, and what they discovered is that there is a “super-entity” of just 147 very tightly knit mega-corporations that controls 40 percent of the entire global economy…
When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.
But the global elite don’t just control these mega-corporations. According to Hudes, they also dominate the unelected, unaccountable organizations that control the finances of virtually every nation on the face of the planet. The World Bank, the IMF and central banks such as the Federal Reserve literally control the creation and the flow of money worldwide.
At the apex of this system is the Bank for International Settlements. It is the central bank of central banks, and posted below is a video where you can watch Hudes tell Greg Hunter of USAWatchdog.com the following…
“We don’t have to wait for anybody to fire the Fed or Bank for International Settlements . . . some states have already started to recognize silver and gold, the precious metals, as currency”
Most people have never even heard of the Bank for International Settlements, but it is an extremely important organization. In a previous article, I described how this “central bank of the world” is literally immune to the laws of all national governments…
An immensely powerful international organization that most people have never even heard of secretly controls the money supply of the entire globe. It is called the Bank for International Settlements, and it is the central bank of central banks. It is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City. It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws. Even Wikipedia admits that “it is not accountable to any single national government.” The Bank for International Settlements was used to launder money for the Nazis during World War II, but these days the main purpose of the BIS is to guide and direct the centrally-planned global financial system. Today, 58 global central banks belong to the BIS, and it has far more power over how the U.S. economy (or any other economy for that matter) will perform over the course of the next year than any politician does. Every two months, the central bankers of the world gather in Basel for another “Global Economy Meeting”. During those meetings, decisions are made which affect every man, woman and child on the planet, and yet none of us have any say in what goes on. The Bank for International Settlements is an organization that was founded by the global elite and it operates for the benefit of the global elite, and it is intended to be one of the key cornerstones of the emerging one world economic system.
This system did not come into being by accident. In fact, the global elite have been developing this system for a very long time. In a previous article entitled “Who Runs The World? Solid Proof That A Core Group Of Wealthy Elitists Is Pulling The Strings“, I included a quote from Georgetown University history professor Carroll Quigley from a book that he authored all the way back in 1966 in which he discussed the big plans that the elite had for the Bank for International Settlements…
[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.
And that is exactly what we have today.
We have a system of “neo-feudalism” in which all of us and our national governments are enslaved to debt. This system is governed by the central banks and by the Bank for International Settlements, and it systematically transfers the wealth of the world out of our hands and into the hands of the global elite.
But most people have no idea that any of this is happening because the global elite also control what we see, hear and think about. Today, there are just six giant media corporations that control more than 90 percent of the news and entertainment that you watch on your television in the United States.
This is the insidious system that Karen Hudes is seeking to expose. For much more, you can listen to Joyce Riley of the Power Hour interview her for an entire hour right here.
So what do you think about what Hudes is saying? Please feel free to share your thoughts by posting a comment below…
 There is a reason why every fiat currency in the history of the world has eventually failed. At some point, those issuing fiat currencies always find themselves giving in to the temptation to wildly print more money. Sometimes, the motivation for doing this is good. When an economy is really struggling, those that have been entrusted with the management of that economy can easily fall for the lie that things would be better if people just had “more money”. Today, the Federal Reserve finds itself faced with a scenario that is very similar to what the Weimar Republic was facing nearly 100 years ago. Like the Weimar Republic, the U.S. economy is also struggling and like the Weimar Republic, the U.S. government is absolutely drowning in debt. Unfortunately, the Federal Reserve has decided to adopt the same solution that the Weimar Republic chose. The Federal Reserve is recklessly printing money out of thin air, and in the short-term some positive things have come out of it. But quantitative easing worked for the Weimar Republic for a little while too. At first, more money caused economic activity to increase and unemployment was low. But all of that money printing destroyed faith in German currency and in the German financial system and ultimately Germany experienced an economic meltdown that the world is still talking about today. This is the path that the Federal Reserve is taking America down, but most Americans have absolutely no idea what is happening.
It is really easy to start printing money, but it is incredibly hard to stop. Like any addict, the Fed is promising that they can quit at any time, but this month they refused to even start tapering their money printing a little bit. The behavior of the Fed is so shameful that even CNBC is comparing it to a drug addict at this point…
The danger with addictions is they tend to become increasingly compulsive. That might be one moral of this week’s events.
A few days ago, expectations were sky-high that the Federal Reserve was about to reduce its current $85 billion monthly bond purchases. But then the Fed blinked, partly because it is worried that markets have already over-reacted to the mere thought of a policy shift.
Faced with a choice of curbing the addiction or providing more hits of the QE drug, in other words, it chose the latter.
So why won’t the Fed cut back on the reckless money printing?
Well, as Peter Schiff recently noted, Fed officials seem to be convinced that any “tapering” could result in the bursting of the massive financial bubbles that they have created…
The Fed understands, as the market seems not to, that the current “recovery” could not survive without continuation of massive monetary stimulus. Mainstream economists have mistaken the symptoms of the Fed’s monetary expansion, most notably rising stock and real estate prices, as signs of real and sustainable growth. But the current asset price bubbles have nothing to do with the real economy. To the contrary, they are setting up for a painful correction that will likely be worse than the one we experienced five years ago.
As I have written about previously, the Federal Reserve is usually very careful not to do anything which will hurt the short-term interests of the financial markets and the big banks.
But at this point the Fed is caught in a trap. If it continues to pump, the financial bubbles that it has created will get even worse. If it stops, those bubbles will burst. But as Doug Kass noted recently, it is inevitable that these financial bubbles will burst at some point one way or another…
“Getting in was easy. Getting out—not so much. The Fed is trapped and can’t end tapering or else the bond and stock markets will blow up. The longer this continues the bigger the inevitable burst.”
In essence, we can have disaster now or disaster later.
But most Americans don’t care much about what is happening on Wall Street. They just want economic conditions to get better for them and for those around them. And to this day, the mainstream media continues to sell quantitative easing to the American people as an “economic stimulus” program by the Federal Reserve.
So has quantitative easing actually been good for the U.S. economy?
Not really.
For example, while the Fed has been recklessly printing money out of thin air, household incomes have actually been going down for five years in a row…
What about employment?
Don’t more Americans have jobs now?
Actually, that is not the case at all. Posted below is a chart that shows how the percentage of working age Americans with a job has changed since the year 2000. As you can see, the employment to population ratio fell from about 63 percent before the last recession down to underneath 59 percent at the end of 2009 and it has stayed there ever since…
So where is the “employment recovery”?
Can you point it out to me? Because I have been staring at this chart for a long time and I still can’t find it.
So if quantitative easing has not been good for average Americans, who has it been good for?
The wealthy, of course.
Just check out what billionaire hedge fund manager Stanley Druckenmiller told CNBC about quantitative easing the other day…
“This is fantastic for every rich person,” he said Thursday, a day after the Fed’s stunning decision to delay tightening its monetary policy. “This is the biggest redistribution of wealth from the middle class and the poor to the rich ever.”
“Who owns assets—the rich, the billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday.”
Druckenmiller, whose net worth is estimated at more than $2 billion, said that the implication of the Fed’s policy is that the rich will spend their wealth and create jobs—essentially betting on “trickle-down economics.”
“I mean, maybe this trickle-down monetary policy that gives money to billionaires and hopefully we go spend it is going to work,” he said. “But it hasn’t worked for five years.”
Sadly, Druckenmiller is exactly correct.
Since the end of the last recession, the Dow has been on an unprecedented tear…
Of course these stock prices have nothing to do with economic reality at this point, but for the moment those that are making giant piles of cash on Wall Street don’t really care.
Sadly, what very few people seem to understand is that what the Fed is doing is going to absolutely destroy confidence in our currency and in our financial system in the long-term. Yeah, many investors have been raking in huge gobs of cash right now, but in the long run this is going to be bad for everybody.
We have now entered a money printing spiral from which there is no easy exit. According to Graham Summers, the Fed has “crossed the Rubicon” and we are now “in the End Game”…
If tapering even $10-15 billion per month from $85 billion month QE programs would damage the economy, then we’re all up you know what creek without a paddle.
Put it this way… here we are, five years after 2008, and the Fed is stating point blank that the economy would absolutely collapse if it spent any less than $85 billion per month. This admission has proven just how long ago we crossed the Rubicon. We’re already in the End Game. Period.
Most Americans don’t really understand what quantitative easing is, and most don’t really try to understand it because “quantitative easing” sounds very complicated.
But it really isn’t that complicated.
The Federal Reserve is creating gigantic mountains of money out of thin air every month, and the Fed is using all of that newly created money to buy government debt and mortgage-backed securities. Over the past several years, the value of the financial securities that the Fed has accumulated is greater than the total amount of publicly held debt that the U.S. government accumulated from the presidency of George Washington though the end of the presidency of Bill Clinton…
The same day that the Federal Reserve’s Federal Open Market Committee announced last week that the Fed would continue to buy $40 billion in mortgage-backed securities (MBS) and $45 billion in U.S. Treasury securities per month, the Fed also released its latest weekly accounting sheet indicating that it had already accumulated more Treasuries and MBS than the total value of the publicly held U.S. government debt amassed by all U.S. presidents from George Washington though Bill Clinton.
To say that this is a desperate move by the Fed would be a massive understatement. We have never seen anything like this before in U.S. history.
And look at what all of this wild money printing has done to our money supply…
In many ways, the chart above is reminiscent of what the Weimar Republic did during the early years of their hyperinflationary spiral…
Just like the Weimar Republic, our money supply is beginning to grow at an exponential pace.
So far, complete and total disaster has not struck, so most people think that everything must be okay.
But it is not.
In a previous article, I included an outstanding illustration from Simon Black that I think would be extremely helpful here as well…
Let’s say you’re at a party in a small apartment that’s about 500 square feet in size. Then suddenly, at 11pm, a pipe bursts, starting a trickle into the living room.
Aside from the petty annoyance, would you feel like you were in danger? Probably not. This is a linear problem– the rate at which the water is leaking is more or less constant, so the guests can keep partying through the night without worry.
But let’s assume that it’s an exponential leak.
At first, there’s just one drop of water. But each minute, the rate doubles. So by 11:01pm, there’s 2 drops. By 11:02, 4 drops. And so forth.
By 11:27pm, there’s only six inches of standing water. Yet by 11:31pm, just four minutes later, the entire room is under nearly 8 feet of water. And the party’s over.
For nearly half an hour, it all seemed safe and manageable. People had all the time in the world to leave, right up until the bitter end. 11:27, 11:28, 11:29. Then it all went from benign to deadly in a matter of minutes.
Are you starting to get the picture?
What the Federal Reserve is doing is systematically destroying the U.S. dollar, and the rest of the world is starting to take notice.
Why should they continue to lend us trillions of dollars at super low interest rates when we are exploding the size of our money supply?
It is simply not rational for other nations to continue to lend us money at less than 3 percent a year when the real rate of inflation is somewhere around 8 to 10 percent and reckless money printing by the Fed threatens to greatly accelerate the devaluation of our currency.
When QE first started, the added demand for U.S. government debt by the Federal Reserve helped drive long-term interest rates down to record low levels.
But in the long-term, the only rational response by all other buyers of U.S. government debt will be to demand a much higher rate of return because of the rapid devaluation of U.S. currency.
So QE drives down long-term interest rates in the short-term, but in the long-term the only rational direction for long-term interest rates to go is much, much higher and in recent months we have already started to see this.
The only way that the Fed can stop this is by increasing the amount of quantitative easing.
Right now, the Fed is buying roughly half a trillion dollars worth of U.S. Treasuries a year, but the U.S. government issues close to a trillion dollars of new debt and must roll over about 3 trillion dollars of existing debt each year.
If the Federal Reserve eventually decides to buy all of the debt, then interest rates won’t be a major problem. But if the Fed goes that far our financial system would be regarded as a total joke by the remainder of the globe and we would reach hyperinflation much more rapidly.
If the Federal Reserve stops buying debt completely, the financial bubbles that they have created will burst and we will rapidly be facing a financial crisis even worse than what we experienced back in 2008.
But almost whatever the Fed does at this point, the rest of the world will probably continue to start to move away from the U.S. dollar as the de facto reserve currency of the planet. This move is just beginning, but it is going to have major implications for us in the years ahead. This is a topic that I will be addressing extensively in future articles.
Most of the debate about quantitative easing has focused on the impact that it will have on the U.S. economy in the short-term.
That is a huge mistake.
Of much greatest importance is what quantitative easing means for the long-term.
The rest of the world is losing confidence in the U.S. dollar and in U.S. debt because of the reckless money printing that the Fed has been doing.
But we desperately need the rest of the world to use “the petrodollar” and to lend us the money that we need to pay our bills.
As the rest of the planet starts to reject the U.S. dollar and starts to demand a much higher rate of return to lend us money, the U.S. economy is going to experience a tremendous amount of pain.
It is hard to put into words how foolish the Federal Reserve has been. The Fed is systematically destroying what was once the strongest financial system in the world, and in the end we are all going to pay the price.
 Can the U.S. really afford to greatly anger the rest of the world when they are the ones that are paying our bills? What is going to happen if China, Russia and many other large nations stop buying our debt and start rapidly dumping U.S. debt that they already own? If the United States is not very careful, it is going to pay a tremendous economic price for taking military action in Syria. At this point, survey after survey has shown that the American people are overwhelmingly against an attack on Syria, people around the globe are overwhelmingly against an attack on Syria, and it looks like the U.S. Congress is even going to reject it. But Barack Obama is not backing down. In fact, ABC News is reporting that plans are now being made for a “significantly larger” strike on Syria than most experts had expected.
If Obama insists on going forward with this, it will be the greatest foreign policy disaster in modern American history.
Right now, both Russia and China are strongly warning Obama not to attack Syria. And Russia is not just warning Obama with words. According to Bloomberg, Russia has sent quite a collection of warships into the region…
Russia is sending three more ships to the eastern Mediterranean to bolster its fleet there as a U.S. Senate panel will consider President Barack Obama’s request for authority to conduct a military strike on Syria.
Russia is sending two destroyers, including the Nastoichivy, the flagship of the Baltic Fleet, and the Moskva missile cruiser to the region, Interfax reported today, citing an unidentified Navy official. That follows last week’s dispatch of a reconnaissance ship to the eastern Mediterranean, four days after the deployment of an anti-submarine ship and a missile cruiser to the area, which were reported by Interfax. Syria hosts Russia’s only military facility outside the former Soviet Union, at the port of Tartus.
China is also letting it be known that they absolutely do not want Obama to hit Syria. On Friday, China issued a warning about what military conflict in the Middle East could do to “the global economy”…
“Military action would have a negative impact on the global economy, especially on the oil price – it will cause a hike in the oil price.”
And according to Debka, China has also deployed “a number of warships” to the region…
Western naval sources reported Friday that a Chinese landing craft, the Jinggangshan, with a 1,000-strong marine battalion had reached the Red Sea en route for the Mediterranean off Syria. According to DEBKAfile, Beijing has already deployed a number of warships opposite Syria in secret. If the latest report is confirmed, this will be the largest Chinese deployment in the Middle East in its naval history.
If the U.S. attacks Syria, Russia and China probably will not take immediate military action against us.
But they could choose to hit us where it really hurts.
According to the U.S. Treasury, foreigners now hold approximately 5.6 trillion dollars of our debt. Over the past couple of decades, the proportion of our debt owned by foreigners has grown tremendously, and today we very heavily depend on nations such as China to buy our debt.
At this point, China owns approximately 1.275 trillion dollars of our debt, and Russia owns approximately 138 billion dollars of our debt.
So what would happen if China, Russia and other foreign buyers of our debt all of a sudden quit purchasing our debt and instead started dumping the debt that they already own back on to the market?
In a word, it would be disastrous.
As I have written about previously, the U.S. government will borrow about 4 trillion dollars this year.
Close to a trillion of that is new borrowing, and about three trillion of that is rolling over existing debt.
If China and other big foreign lenders quit buying our debt and started dumping what they already hold, that would send yields on U.S. Treasuries absolutely soaring.
And we have already seen bond yields rise dramatically in recent weeks. In fact, on Thursday the yield on 10 year U.S. Treasuries briefly broke the 3 percent barrier.
So what is going to happen if the yield on 10 year U.S. Treasuries continues to go up? The following are a few consequences of rising bond yields that I have discussed in previous articles…
-It will cost the federal government more to borrow money.
-It will cost state and local governments more to borrow money.
-As bond yields go up, bond values go down. In the end, rising bond yields could end up costing bond investors trillions of dollars.
-Rising bond yields will cause mortgage rates to skyrocket. In fact, we are already starting to see this happen. This week the average rate on a 30 year mortgage hit 4.57 percent.
-Higher interest rates will mean a slowdown in economic activity at a time when we definitely cannot afford it.
-As economic activity slows down, that will be very bad for stocks. When the next great stock market crash happens (and it is coming), equity investors could end up losing trillions of dollars of wealth.
-Of course the biggest threat of all is the 441 trillion dollar interest rate derivatives time bomb that is sitting out there. Rapidly rising interest rates could potentially bring down several of our “too big to fail” banks in rapid succession and throw us into the greatest financial crisis the nation has ever seen.
Are you starting to get the picture?
And the 3 percent mark is just the beginning. Brent Schutte, a market strategist for BMO Private Bank, told CNBC that he expects the yield on 10 year U.S. Treasuries to eventually go up to 6 or 7 percent…
“4 percent (on 10-year Treasurys) somewhere around the end of the year to early next year would be a good intermediate-term level. And if you look over the longer term, I don’t think that 6 or 7 percent is out of the question.”
If that happens, we will experience a full blown financial meltdown.
Of course it would greatly help if Obama would back down and not attack Syria. As Vladimir Putin noted at the G20 summit, large nations such as India, Brazil, South Africa and Indonesia are all strongly against the U.S. taking military action…
In reply to the question what other country in the world may theoretically be subjected to aggression similar to that Syria is facing, Putin said, “I do not want to think that any other country will be subjected to any external aggression.”
A military action against Syria will have a highly deplorable impact on international security at large, Putin emphasized.
He said he was surprised to see that ever more participants in the summit, including the leader of India, Brazil, the South African Republic, and Indonesia were speaking vehemently against a possible military operation in Syria.
Putin cited the words of the South African President, Jacob Zuma, who said many countries were feeling unprotected against such actions undertaken by stronger countries.
“Given the conditions as they, how would you convince the North Koreans, for example, to give up their nuclear program,” he said. “Just tell them to put everything into storage today and they’ll be pulled to bits tomorrow.”
He underlined the presence of only one method for maintaining stability – “an unconditional observance of international law norms.”
Can we really afford to have most of the international community turn on us and quit buying our debt?
Of course not.
Sadly, as I noted the other day, Obama appears to be locked into doing the bidding of Arab countries such as Saudi Arabia and Qatar.
In fact, as the Washington Post reported the other day, Secretary of State John Kerry has even admitted that they are even willing to pay all of the costs of a U.S. military campaign that would overthrow Assad…
Secretary of State John Kerry said at Wednesday’s hearing that Arab counties have offered to pay for the entirety of unseating President Bashar al-Assad if the United States took the lead militarily.
“With respect to Arab countries offering to bear costs and to assess, the answer is profoundly yes,” Kerry said. “They have. That offer is on the table.”
Asked by Rep. Ileana Ros-Lehtinen (R-Fla.) about how much those countries would contribute, Kerry said they have offered to pay for all of a full invasion.
“In fact, some of them have said that if the United States is prepared to go do the whole thing the way we’ve done it previously in other places, they’ll carry that cost,” Kerry said. “That’s how dedicated they are at this. That’s not in the cards, and nobody’s talking about it, but they’re talking in serious ways about getting this done.”
Why aren’t we hearing more about this in the news?
Fortunately, despite the relentless propaganda coming from the mainstream media, a lot of members of Congress are choosing to take a stand against this war. For example, U.S. Representative Tom Marino recently shared the following about why he is voting against military action in Syria…
Secretary Hagel could not tell lawmakers who the U.S. could trust among the Syrian opposition, stating “that’s not my business to trust.” Like many Americans, I believe it is our duty as decision makers to be informed and confident when making choices – especially in those choices that could result in sending U.S. troops or money abroad. It is no wonder Secretary Hagel isn’t in the business to trust when more players are added daily to the growing list of ‘Syrian opposition’—many of them jihadist, terrorists, known Al Qaeda affiliates, members of the Muslim Brotherhood and enemies of the U.S. and our allies. To simplify, the Secretary of Defense was unable to tell us, after nearly three years of the Syrian Civil War, who the good guys are or if there are any at all.
And Marino is very right. There are no “good guys” in Syria. The “rebels” are murderous jihadist psychotics that would be even worse than Assad if they took power.
For much more on what the mainstream media is not telling you about the war in Syria, check out a stunning video report from investigative reporter Ben Swann that you can find right here.
The picture above comes from the official Facebook page of one of the “rebel groups” in Syria.
I am sure that you do not need me to point out that the White House is burning in the background of the picture.
These are the people that Obama wants to help?
According to NBC News, the rebels are also displaying images of the black flag of al-Qaeda on Facebook too…
The image is one of eight photos posted on the official Facebook page of the “Al-Aqsa Islamic Brigades,” a small armed Sunni rebel faction fighting with the Free Syrian Army, the main umbrella military organization of the opposition forces. Two other photos posted on the group’s page feature the widely recognized black flag of the al Qaeda in Iraq terrorist group, which operates freely in Syria.
Let’s assume for a moment that Obama is successful in Syria and that Assad is overthrown.
That would hand Syria over to al-Qaeda.
Once in power, the “rebels” would slaughter or force the conversion of millions of Christians, Jews and non-Sunni Muslims that have been living peacefully in Syria for centuries.
To those that would support this war, I would ask you this question…
Is that what you want?
Do you want the blood of millions of Christians, Jews and non-Sunni Muslims on your hands?
If you are a Christian that is supporting Obama on this, I would ask you to consider an excerpt from a letter from Christian nuns in Azeir, Syria that I have posted below…
We look at the people around us, our day workers who are all here as if suspended, stunned: “They’ve decided to attack us.” Today we went to Tartous…we felt the anger, the helplessness, the inability to formulate a sense to all this: the people trying their best to work and to live normally. You see the farmers watering their land, parents buying notebooks for the schools that are about to begin, unknowing children asking for a toy or an ice cream…you see the poor, so many of them, trying to scrape together a few coins. The streets are full of the “inner” refugees of Syria, who have come from all over to the only area left that is still relatively liveable…. You see the beauty of these hills, the smile on people’s faces, the good-natured gaze of a boy who is about to join the army and gives us the two or three peanuts he has in his pocket as a token of “togetherness”…. And then you remember that they have decided to bomb us tomorrow. … Just like that. Because “it’s time to do something,” as it is worded in the statements of the important men, who will be sipping their tea tomorrow as they watch TV to see how effective their humanitarian intervention will be….
You can read the rest of that letter right here.
Also consider the following shocking video of Senator John McCain being confronted by a very emotional woman that says that her 18-year-old cousin in Syria was just killed by rebels loyal to al-Qaeda…
Any American that supports this war is aiding al-Qaeda.
Any American that supports this war is choosing to ally themselves with radical jihadist Christian killers that want to conquer the entire Middle East in the name of Sunni Islam.
If Congress votes to approve this war, then we should do what one site has suggested and send those that vote yes to Syria.
They don’t even have to fight. We’ll just drop them off in the middle of the “rebel forces” and entrust them into the gentle hands of the al-Nusra Front.
But of course they would never go. The ones that will be endangered will be the precious sons and daughters of other Americans.
This is not a war that has a good outcome for America. Conservative voices and liberal voices all over the country are joining together to speak out against this war.
Hopefully Barack Obama will listen and cooler heads will prevail. If not, things could spin wildly out of control very rapidly.
 Barack Obama has been running around the country taking credit for an “economic recovery”, but the truth is that things have not gotten better under Obama. Compared to when he first took office, a smaller percentage of the working age population is employed, the quality of our jobs has declined substantially and the middle class has been absolutely shredded. If we are really in the middle of an “economic recovery”, why is the homeownership rate the lowest that it has been in 18 years? Why has the number of Americans on food stamps increased by nearly 50 percent while Obama has been in the White House? Why has the national debt gotten more than 6 trillion dollars larger during the Obama era? Obama should not be “taking credit” for anything when it comes to the economy. In fact, he should be deeply apologizing to the American people.
And of course Obama is being delusional if he thinks that he is actually “running the economy”. The Federal Reserve has far more power over the U.S. economy and the U.S. financial system than he does. But the mainstream media loves to fixate on the presidency, so presidents always get far too much credit or far too much blame for economic conditions.
But if you do want to focus on “the change” that has taken place since Barack Obama entered the White House, there is no way in the world that you can claim that things have actually gotten better during that time frame. The cold, hard reality of the matter is that the U.S. economy has been steadily declining for over a decade, and this decline has continued while Obama has been living at 1600 Pennsylvania Avenue.
It is getting very tiring listening to Obama supporters try to claim that Obama has improved the economy. That is a false claim that is not even remotely close to reality. The following are 33 shocking facts which show how badly the U.S. economy has tanked since Obama became president…
#1 When Barack Obama entered the White House, 60.6 percent of working age Americans had a job. Today, only 58.7 percent of working age Americans have a job.
#2 Since Obama has been president, seven out of every eight jobs that have been “created” in the U.S. economy have been part-time jobs.
#3 The number of full-time workers in the United States is still nearly 6 million below the old record that was set back in 2007.
#4 It is hard to believe, but an astounding 53 percent of all American workers now make less than $30,000 a year.
#5 40 percent of all workers in the United States actually make less than what a full-time minimum wage worker made back in 1968.
#6 When the Obama era began, the average duration of unemployment in this country was 19.8 weeks. Today, it is 36.6 weeks.
#7 During the first four years of Obama, the number of Americans “not in the labor force” soared by an astounding 8,332,000. That far exceeds any previous four year total.
#8 According to the U.S. Census Bureau, the middle class is taking home a smaller share of the overall income pie than has ever been recorded before.
#9 When Obama was elected, the homeownership rate in the United States was 67.5 percent. Today, it is 65.0 percent. That is the lowest that it has been in 18 years.
#10 When Obama entered the White House, the mortgage delinquency rate was 7.85 percent. Today, it is 9.72 percent.
#11 In 2008, the U.S. trade deficit with China was 268 billion dollars. Last year, it was 315 billion dollars.
#12 When Obama first became president, 12.5 million Americans had manufacturing jobs. Today, only 11.9 million Americans have manufacturing jobs.
#13 Median household income in America has fallen for four consecutive years. Overall, it has declined by over $4000 during that time span.
#14 The poverty rate has shot up to 16.1 percent. That is actually higher than when the War on Poverty began in 1965.
#15 During Obama’s first term, the number of Americans on food stamps increased by an average of about 11,000 per day.
#16 When Barack Obama entered the White House, there were about 32 million Americans on food stamps. Today, there are more than 47 million Americans on food stamps.
#17 At this point, more than a million public school students in the United States are homeless. This is the first time that has ever happened in our history. That number has risen by 57 percent since the 2006-2007 school year.
#18 When Barack Obama took office, the average price of a gallon of regular gasoline was $1.85. Today, it is $3.53.
#19 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.
#20 Health insurance costs have risen by 29 percent since Barack Obama became president, and Obamacare is going to make things far worse.
#21 The United States has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.
#22 According to economist Tim Kane, the following is how the number of startup jobs per 1000 Americans breaks down by presidential administration…
Bush Sr.: 11.3
Clinton: 11.2
Bush Jr.: 10.8
Obama: 7.8
#23 In 2008, that total amount of student loan debt in this country was 440 billion dollars. At this point, it has shot up to about a trillion dollars.
#24 According to one recent survey, 76 percent of all Americans are living paycheck to paycheck.
#25 During Obama’s first term, the number of Americans collecting federal disability insurance rose by more than 18 percent.
#26 The total amount of money that the federal government gives directly to the American people has grown by 32 percent since Barack Obama became president.
#27 According to the Survey of Income and Program Participation conducted by the U.S. Census, well over 100 million Americans are enrolled in at least one welfare program run by the federal government.
#28 As I wrote about the other day, American households are now receiving more money directly from the federal government than they are paying to the government in taxes.
#29 Under Barack Obama, the velocity of money (a very important indicator of economic health) has plunged to a post-World War II low.
#30 At the end of 2008, the Federal Reserve held $475.9 billion worth of U.S. Treasury bonds. Today, Fed holdings of U.S. Treasury bonds have skyrocketed past the 2 trillion dollar mark.
#31 When Barack Obama was first elected, the U.S. debt to GDP ratio was under 70 percent. Today, it is up to 101 percent.
#32 During Obama’s first term, the federal government accumulated more new debt than it did under the first 42 U.S presidents combined.
#33 When you break it down, the amount of new debt accumulated by the U.S. government during Obama’s first term comes to approximately $50,521 for every single household in the United States. Are you able to pay your share?
 The next great economic crisis is rapidly approaching, and most people are going to be totally blindsided by it. Even though the warning signs are glaringly obvious, most Americans continue to believe that our “leaders” know what they are doing and that everything will be just fine. But what will happen when the next great financial crash happens and trillions of dollars of “paper wealth” disappear into thin air? What will happen when the coming credit crunch causes economic activity to dramatically slow down and millions upon millions of people lose their jobs? This shouldn’t sound far-fetched to you. Remember, this is exactly the kind of thing that we saw back in 2008, and the next great financial crisis is likely going to be significantly worse. Our economy is in far worse shape than it was back in 2008, and government dependence is now at an all-time high even though most Americans are still enjoying debt-fueled false prosperity. We are living in the largest debt bubble in the history of the planet, and when it bursts we are going to experience a crippling “adjustment” to our standard of loving. Some people understand this and are busy preparing for what is ahead. It has been estimated that there are approximately 3 million “preppers” in the United States, and that number is growing all the time. Unfortunately, most Americans are not preparing for the coming economic depression and they are going to bitterly regret it.
So what does preparing for the coming economic depression look like?
Well, it doesn’t have to be complicated. Most of the things that you should do are just common sense.
But there are some people that take things to extremes. For example, a new National Geographic series is featuring a family that is actually constructing a “Doomsday Castle“. The former U.S. Army officer that is building this unusual home is trying to prepare for virtually every type of disaster that he can imagine…
Meet Brent Sr., the leader of the six-person family. Brent is a former Army Infantry Training Officer who is heading up the project to build an “EMP (electromagnetic pulse)-proof medieval castle in the woods of the Carolinas.”
According to National Geographic, Brent is teaching five of his 10 children survival skills.
The unfinished, fortified castle that Brent Sr. is building — an idea he got during the Y2K prep craze — will be able to sustain an EMP-event that could wipe out a power grid, but will also survive natural disasters like hurricanes.
He even plans to train his family members to use crossbows and a catapult to defend against potential home invaders.
Not many people out there are going to take “prepping” to such extremes.
But even if you don’t plan to build a “Doomsday Castle”, that doesn’t mean that you should be doing nothing.
Sadly, most Americans are quite ill-prepared for a major economic downturn at this point. In fact, most Americans seem to be doing almost nothing to prepare.
Just consider the following statistics. Most of these numbers come from one of my previous articles…
-According to a survey that was recently released, 76 percent of all Americans are living paycheck to paycheck.
–46 percent of all Americans have less than $800 in savings.
–27 percent of all Americans do not have even a single penny saved up.
-Less than one out of every four Americans has enough money stored away to cover six months of expenses.
-Each year, 12 million Americans take out high interest payday loans.
-In 1989, the debt to income ratio of the average American family was about 58 percent. Today it is up to 154 percent.
-It is estimated that less than 10 percent of the U.S. population owns any gold or silver for investment purposes.
–44 percent of all Americans do not have first-aid kits in their homes.
–48 percent of all Americans do not have any emergency supplies stored up.
–53 percent of all Americans do not have a 3 day supply of nonperishable food and water in their homes.
–One survey asked Americans how long they thought they would survive if the electrical grid went down for an extended period of time. Incredibly, 21 percent said that they would survive for less than a week, an additional 28 percent said that they would survive for less than two weeks, and nearly 75 percent said that they would be dead before the two month mark.
Those numbers are absolutely appalling.
When the system fails, most people are going to be completely blindsided by it and millions upon millions of people are going to absolutely freak out.
Don’t let that happen to you.
So what are some basic things that you can do to get prepared for the great economic storm that is coming?
The following are a few of the things that Nicole Foss suggests…
1) Hold no debt (for most people this means renting)
2) Hold cash and cash equivalents (short term treasuries) under your own control
3) Don’t trust the banking system, deposit insurance or no deposit insurance
4) Sell equities, real estate, most bonds, commodities, collectibles (or short if you can afford to gamble)
5) Gain some control over the necessities of your own existence if you can afford it
6) Be prepared to work with others as that will give you far greater scope for resilience and security
7) If you have done all that and still have spare resources, consider precious metals as an insurance policy
8) Be worth more to your employer than he is paying you
9) Look after your health!
I think all of those are great pieces of advice.
In addition, below I have posted some of the things that I personally recommend. The following is an excerpt from one of my previous articles entitled “25 Things That You Should Do To Get Prepared For The Coming Economic Collapse“…
#1 An Emergency Fund
Do you remember what happened when the financial system almost collapsed back in 2008? Millions of Americans suddenly lost their jobs, and because many of them were living paycheck to paycheck, many of them also got behind on their mortgages and lost their homes. You don’t want to lose everything that you have worked for during this next major economic downturn. It is imperative that you have an emergency fund. It should be enough to cover all of your expenses for at least six months, but I would encourage you to have an emergency fund that is even larger than that.
#2 Don’t Put All Of Your Eggs Into One Basket
If the wealth confiscation in Cyprus has taught us anything, it is that we should not put all of our eggs in one basket. If all of your money is in one single bank account, it would be easy to wipe out. But if you have your money scattered around a number of different places it will give you a little bit more security.
#3 Keep Some Cash At Home
This goes along with the previous point. While it is not wise to keep all of your money at home, you do want to keep some cash on hand. If there is an extended bank holiday or if a giant burst from the sun causes the ATM machines to go down, you want to be able to have enough cash to buy the things that your family needs. Just ask the people of Cyprus how crippling a bank holiday can be. One way to keep your cash secure at home is by storing it in a concealed safe.
#4 Get Out Of Debt
A lot of people seem to assume that an economic collapse would wipe out all debts, but that will probably not be the case. In fact, if you are in a tremendous amount of debt you will be very vulnerable if the economy collapses and you are not able to find a job. Just ask the people who were overextended and lost their jobs during the last recession. So please get out of debt. Many debt collectors are becoming increasingly ruthless. In many areas of the country they are now routinely putting debtors into prison. You do not want to be a slave to debt when the next wave of the economic collapse strikes.
#5 Gold And Silver
In the long-term, the U.S. dollar is going to lose a tremendous amount of value and inflation is going to absolutely skyrocket. That is one reason why so many people are investing very heavily in gold, silver and other precious metals. All over the globe, the central banks of the world are recklessly printing money. Everyone knows that this is going to end very badly. In fact, there is already a push in more than a dozen U.S. states to allow gold and silver coins to be used as legal tender. Someday you will be glad that you invested in gold and silver now while their prices were still low.
#6 Reduce Your Expenses
A lot of people claim that they can’t put any money toward prepping, but the truth is that we all have room to reduce our expenses. We all spend money on things that we do not really need. Those that are “lean and mean” will tend to do much better during the times that are coming.
#7 Start A Side Business
If you do not have much money, a great way to increase your income is by starting a side business. And it does not take a lot of money – there are many side businesses that you can start for next to nothing. And starting a side business will allow you to become less dependent on your job. In this economic environment, a job could disappear at literally any time.
#8 Move Away From The Big Cities If Possible
For many people, this is simply not possible. Many Americans are still completely and totally dependent on their jobs. But if you are able, now is a good time to move away from the big cities. When the next major economic downturn strikes, there will be rioting and a dramatic rise in crime in the major cities. If you are able to move to a more rural area you will probably be in much better shape.
#9 Store Food
Global food reserves have reached their lowest level in nearly 40 years. As the economy gets even worse and global weather patterns become even more unstable, the price of food will go much higher and global food supplies will become much tighter. In the long run, you will be glad for the money that you put into long-term food storage now.
#10 Learn To Grow Your Own Food
This is a skill that most Americans possessed in the past, but that most Americans today have forgotten. Growing your own food is a way to become more independent of the system, and it is a way to get prepared for what is ahead.
#11 Nobody Can Survive Without Water
Without water, you would not even make it a few days in an emergency situation. It is imperative that you have a plan to provide clean drinking water for your family when disaster strikes.
#12 Have A Plan For When The Grid Goes Down
What would you do if the grid went down and you suddenly did not have power for an extended period of time? Anyone that has spent more than a few hours without power knows how frustrating this can be. You need to have a plan for how you are going to provide power to your home that is independent of the power company.
#13 Have Blankets And Warm Clothing On Hand
This is more for emergency situations or for a complete meltdown of society. During any major crisis, blankets and warm clothing are in great demand. They also could potentially make great barter items.
#14 Store Personal Hygiene Supplies
A lot of preppers store up huge amounts of food, but they forget all about personal hygiene supplies. During a long crisis, these are items that you would greatly miss if you do not have them stored up. These types of supplies would also be great for barter.
#15 Store Medicine And Medical Supplies
You will also want to store up medical supplies and any medicine that you may need. In an emergency situation, you definitely would not want to be without bandages and a first-aid kit. Over the course of a long crisis, you do not want to run out of any medicines that are critical for your health.
#16 Stock Up On Vitamins
A lot of preppers do not think about this either, but it is very important. These days, it is becoming increasingly difficult to get adequate nutrition from the foods that we eat. That is why it is very important to have an adequate store of vitamins and other supplements.
#17 Make A List Of Other Supplies That You Will Need
During any crisis, there will be a lot of other things that you will need in addition to food and water. The following are just a few basic things that it would be wise to have on hand…
– an axe
– a can opener
– flashlights
– battery-powered radio
– extra batteries
– lighters or matches
– fire extinguisher
– sewing kit
– tools
This list could be much, much longer, but hopefully this will get you started.
#18 Don’t Forget The Special Needs Of Your Babies And Your Pets
Young children and pets have special needs. As you store supplies, don’t forget about the things that they will need as well.
#19 Entertainment
This may sound trivial, but the truth is that our entertainment-addicted society would become very bored and very frustrated if the grid suddenly went down for an extended period of time. Card games and other basic forms of entertainment can make enduring a crisis much easier.
#20 Self-Defense
In the years ahead, being able to defend your home and your family is going to become increasingly important. When the economy crashes, people are going to start to become very desperate. And desperate people do desperate things.
#21 Get Your Ammunition While You Still Can
Your firearms will not do you much good if you do not have ammunition for them. Already there are widespread reports of huge ammunition shortages. The following is from a recent CNS News article…
“The run on ammunition has manufacturers scrambling to accommodate demand and reassure customers, as many new and seasoned gun owners stock up over fears of new firearms regulations at both the state and federal levels.”
Don’t just assume that you will always be able to purchase large amounts of ammunition whenever you want. Get it now while you still can.
#22 If You Have To Go…
Have a plan for what you and your family will do if you are forced to leave your home. If you do have to go, the following are some items that you will want to have on hand…
– a map of the area
– a compass
– backpacks for every member of the family
– sleeping bags
– warm clothing
– comfortable shoes or hiking boots
#23 Community
One of the most important assets in any crisis situation is community. If you have friends or neighbors that you can depend upon, that is invaluable. The time spent building those bonds now will pay off greatly during a major crisis.
#24 Have A Back-Up Plan And Be Flexible
Mike Tyson once said the following…
“Everyone has a plan until they get punched in the mouth.”
No plan ever unfolds perfectly. When your plan is disrupted, what will you do?
It will be imperative for all of us to have a back-up plan and to be flexible during the years ahead.
#25 Keep Your Prepping To Yourself
Do not go around and tell everyone in the area where you live about your prepping. If you do, then you may find yourself overwhelmed with “visitors” when everything falls apart.
And please do not go on television and brag about your prepping to a national audience.
Prepping is something that you want to keep to yourself, unless you want hordes of desperate people banging on your door in the future.
*****
For much more on prepping, I would encourage you to check out the dozens of excellent websites out there that teach people advanced prepping techniques for free.
So what do you think about all of this?
Are you getting prepared for the coming economic depression?
Please feel free to share your perspective on prepping by posting a comment below…
 If you want to track how close we are to the next financial collapse, there is one number that you need to be watching above all others. The number that I am talking about is the yield on 10 year U.S. Treasuries, because it affects thousands of other interest rates in our financial system. When the yield on 10 year U.S. Treasuries goes up, that is bad for the U.S. economy because it pushes long-term interest rates up. When interest rates rise, it constricts the flow of credit, and a healthy flow of credit is absolutely essential to the debt-based system that we live in. Just imagine someone squeezing a tube that has water flowing through it. The higher interest rates go, the more economic activity will be squeezed. If interest rates continue to rise rapidly, it will be more expensive for the U.S. government to borrow money, it will be more expensive for state and local governments to borrow money, the housing market may crash again, consumer debt will become more expensive, junk bond investors will be in for a world of hurt, the stock market will experience a tremendous amount of pain and there is a good chance that we could see the 441 trillion dollar interest rate derivatives bubble implode. And that is just for starters.
So yes, we all need to be carefully watching the yield on 10 year U.S. Treasuries. On Friday, it opened at 2.76% and hit a high of 2.86% before closing at 2.83%. The yield on 10 year U.S. Treasuries is up nearly 120 basis points since the beginning of May, and almost everyone on Wall Street seems convinced that it is going to go much higher.
We are truly moving into unprecedented territory, because we have been in a bull market for U.S. Treasuries for the last 30 years. Many investors don’t even know that it is possible to lose money on U.S. Treasuries. They have been described as “risk-free” investments, but that is far from the truth.
In fact, we could see bond investors of all types end up losing trillions of dollars before it is all said and done.
And those in the stock market will lose lots of money too. Low interest rates are good for economic activity which is good for the stock market. The chart posted below shows that stock prices have generally risen as the yield on 10 year U.S. Treasuries has steadily declined over the past 30 years…
When interest rates rise, that is bad for economic activity and bad for stocks. That is why so many stock analysts are alarmed that interest rates are going up so rapidly right now.
And as I wrote about the other day, we have just witnessed the largest cluster of Hindenburg Omens that we have seen since before the last financial crisis. The stock market already seems ripe for a huge “adjustment”, and rising interest rates could give it a huge extra push in a negative direction.
By the time it is all said and done, stock market investors could end up losing trillions of dollars in the next stock market crash.
In addition, rising interest rates could easily precipitate another housing crash. As the Wall Street Journal discussed on Friday, as the yield on 10 year U.S. Treasuries goes up it will also cause mortgage rates to rise…
Higher yields will push up long-term borrowing cost for U.S. consumers and businesses. Mortgage rates will rise, and investors are keeping a close eye on whether this may derail the recovery of the housing market, which has shown signs of turning a corner this year.
In one of my previous articles, I included an example that shows just how powerful rising mortgage rates can be…
A year ago, the 30 year rate was sitting at 3.66 percent. The monthly payment on a 30 year, $300,000 mortgage at that rate would be $1374.07.
If the 30 year rate rises to 8 percent, the monthly payment on a 30 year, $300,000 mortgage at that rate would be $2201.29.
Does 8 percent sound crazy to you?
It shouldn’t. 8 percent was considered to be normal back in the year 2000.
If you own a $300,000 house today, do you think it will be easier to sell it or harder to sell it if mortgage rates skyrocket?
Yes, of course it will be much harder. In fact, there is a good chance that you will have to reduce your selling price significantly so that prospective buyers can afford the payments.
Let us hope that the yield on 10 year U.S. Treasuries levels off for a while. If it says at this current level, the damage will probably not be too bad.
But if it crosses the 3 percent mark and keeps soaring, things could get messy pretty quickly. In fact, according to a Bank of America Merrill Lynch investor survey, the 3.5 percent mark is when the collapse of the bond market is likely to become “disorderly”…
Our latest Credit Investor Survey, conducted July 8-11, showed that 3.5% on the 10-year is most commonly thought of as the trigger of a disorderly rotation – i.e. higher interest rates leading to outflows and wider credit spreads – among high grade investors.
Put differently, 3.0% on the 10-year will not lead to overall wider credit spreads if there is enough buying interest from institutional investors (though note that the 10s/30s spread curve would flatten further, as mutual fund/ETF holdings are concentrated in the belly of the curve, whereas institutional demand is disproportional in the long end of the curve). However, if the probability of a further move higher in interest rates to 3.5% is high – which will be the perception if interest rate volatility is high – certain institutional investors will choose to remain on the sidelines.
Thus there may not be enough institutional buying interest to mitigate retail fund outflows and contain overall high grade spread levels.
So what is causing this?
Well, there are a number of factors of course, but one very disturbing sign is that foreigners are selling off U.S. Treasuries at a pace that we have not seen since 2007…
One of the biggest fears in the financial markets is that foreign investors will stop buying U.S. Treasury securities, causing borrowing rates to surge.
Not that this is the beginning of a frightening trend, but new data from the Treasury Department shows that foreigners were net sellers in June. In fact, this is the largest net sale of U.S. securities since August 2007.
Do you remember all of the warnings that we have received over the years about what would take place when foreign countries started dumping U.S. debt?
Well, it looks like it may be starting to happen.
Unfortunately, there is no way that the party that the U.S. government has been throwing can continue without foreigners buying our debt. We have added more than 11 trillion dollars to the national debt since the year 2000, and according to Boston University economist Laurence Kotlikoff we are facing unfunded liabilities in future years that are in excess of 200 trillion dollars.
Even with foreigners continuing to loan us gigantic mountains of super cheap money, it would still take a doubling of our taxes to put us on a fiscally sustainable course…
Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”
This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling.
Prof. Kotlikoff says: “The IMF is saying that, to close this fiscal gap [by taxation] would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.
“America’s fiscal gap is enormous – so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems – as well as military and other discretionary spending cuts.”
Can you afford to pay twice as much in taxes to the federal government?
Very few Americans could.
But that is how serious the financial problems of the federal government are.
And all of the above assumes that interest payments on U.S. government debt will remain at current levels. If the average rate of interest on U.S. government debt rises to just 6 percent, the U.S. government will be paying out a trillion dollars a year just in interest on the national debt.
Also, all of the above assumes that we will have a healthy financial system that does not need to be bailed out again.
But if rapidly rising interest rates cause the 441 trillion dollar interest rate derivatives bubble to implode, the bailout that the “too big to fail” banks will need will likely be far, far larger than last time.
In fact, once that bubble bursts there probably will not be enough money in the entire world to fix it.
If the picture that I have painted above sounds bleak, that is because it is bleak.
Sometimes I get frustrated with myself because I don’t feel I am communicating the tremendous danger that we are facing accurately enough.
We are heading for the worst financial crisis in modern human history, and the debt-fueled prosperity that we are enjoying today is going to go away and it is never going to come back.
You can dismiss that as “doom and gloom” and stick your head in the sand if you want, but that isn’t going to help anything. Instead of ignoring reality you should be working hard to prepare your family for what is coming and warning others that they should be getting prepared too.
When a hurricane is approaching landfall, you don’t take your family out for a picnic at the beach. That would be foolish. Unfortunately, way too many Americans are acting as if nothing like the financial crisis of 2008 could ever possibly happen again.
If you deceive yourself into thinking that all of this is going to have a happy ending somehow, you are going to get blindsided by the coming storm.
But if you make preparations now, you might just be okay.
There is hope in understanding what is happening and there is hope in getting prepared.
So watch the yield on 10 year U.S. Treasuries. The higher it goes, the later in the game we are.
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Power Mad Obama Offers Two Choices: Unconditional Surrender Or Default
Why is Obama doing this? Why is Obama willing to bring the country to the brink of financial disaster?
It isn’t hard to figure out. Just check out what one senior Obama administration official said last week…
This is all about a political victory and crushing the Republicans. Obama doesn’t really care how long this crisis lasts because he believes that he is getting the end result that he wants.
According to Obama, the Republican Party is just supposed to roll over and give him the exact spending bill that he wants and also give him another trillion dollar increase in the debt limit.
If the Republicans do not give him that, he is willing to plunge us into financial oblivion.
The funny thing is that most Americans do not want the debt limit increased. According to one new poll, 58 percent of all Americans do not even want the debt ceiling to be increased by a single penny.
And recent polls show that Americans are against Obamacare by an average margin of about 10 percent.
But the pathetic Republican Party is actually willing to hand Obama a trillion dollar debt ceiling increase and fully fund Obamacare if Obama will at least give them something.
Unfortunately, Obama won’t even give them the time of day.
So don’t blame the Republicans for what is happening. The Republicans have already compromised themselves to the point of utter disgrace. If Obama had been willing to even compromise a couple of inches this entire crisis would already be over.
And nobody should be claiming that the Republicans won’t vote to end this shutdown. They have already voted to end it. The following is from a recent article by Thomas Sowell…
Once again, the Republicans have already indicated that they are willing to fund Obamacare. They just want Obama to throw them a bone.
And Obama will not do it.
So either the Republicans are going to cave in completely (a very real possibility) or we are going to pass the “debt ceiling deadline”.
What happens then?
Well, we would have more of a “real government shutdown” than the fake shutdown that we are having right now.
Once the federal government cannot borrow any more money, it will only be able to spend what it actually has on hand. That means that a lot more government functions will have to shut down.
Money will still be coming in to the government, but it won’t be enough to fund everything. According to the Wall Street Journal, the federal government will still have enough money to pay interest on the debt, make Social Security payments, make Medicare payments, make Medicaid payments, provide food stamp benefits and pay the military if they cut almost everything else out.
The other day, I suggested that the federal government could potentially start defaulting on interest payments on the debt as early as November. But that would only happen if the federal government manages their money foolishly.
If the federal government managed their money smartly and saved cash for the interest payments as they came due, they would not have to miss any.
But when was the last time the federal government ever did anything “smartly”?
For the sake of argument, however, let’s assume that the federal government can manage money wisely and can save up enough cash ahead of time for large interest payments as they come due.
If that could somehow be managed, then according to Paul Mampilly the government would never need to actually default…
And according to the Washington Post, Moody’s has just issued a memo that also indicates that the federal government should be able to make all interest payments even if the debt limit is not increased…
Of course the federal government would have to stop throwing money around like a drunk gambler at a casino in Las Vegas in order for this to work.
On the very first day of the government shutdown, the feds gave $445 million to the Corporation for Public Broadcasting. Apparently Elmo is considered to be “essential personnel” by the Obama administration.
And according to CNS News, the U.S. Army has committed more than $47,000 to buy a mechanical bull during this “shutdown”…
So needless to say, there is some serious doubt about whether the federal government would be able to manage their money effectively in the event that the debt ceiling deadline passes.
And if the U.S. did start defaulting on debt payments, it would be absolutely disastrous for the global economy as I discussed in a previous article…
Other nations that we depend upon to lend us money would stop lending to us and would start dumping U.S. debt instead.
Could you imagine what would happen if China started dumping a large portion of the 1.3 trillion dollars in U.S. debt that they are holding?
It would be a total nightmare. The collapse of Lehman Brothers would pale in comparison.
And already some banks are stuffing their ATM machines with extra cash just in case the general public starts to panic.
But none of this has to happen.
If Obama decides to negotiate with the Republicans, this crisis will likely end very rapidly.
If not, and we pass the “debt ceiling deadline”, the federal government will still have enough money to make interest payments on the debt as long as they manage their money correctly.
Unfortunately, Obama seems far more interested in playing political games than he is in solving our problems.
In fact, Park Service rangers have been ordered to “make life as difficult for people as we can” during this government shutdown. Obama has apparently decided to punish the American people in order to get leverage on the Republicans. Just check out the following example from a new Weekly Standard article…
The hypocrisy that Obama has demonstrated during this “government shutdown” has been astounding.
He has barricaded open air war memorials to keep military veterans from visiting them, but he temporarily reopened the National Mall so that a huge pro-immigration rally that would benefit him politically could be held.
He has continued to fund al-Qaeda rebels in Syria that are trying to overthrow the Syrian government, but he has been withholding death benefits from families of fallen U.S. soldiers.
The conduct of the Obama administration during this shutdown has been so egregious that is hard to put into words. Obama has chosen to purposely harm the American people in order to score political points.
But this is how our politicians view us these days. As Monty Pelerin recently explained, most of our politicians have absolutely no problem with exploiting us for their own purposes…
Is there anyone out there that still does not believe that our system is broken?
Hopefully cooler heads will prevail and power mad Obama will decide to toss the Republicans a few crumbs and this crisis will be resolved.
Because if this crisis is not resolved soon, it could have consequences that are far beyond what any of us could possibly imagine.