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March 2017: The End Of A 100 Year Global Debt Super Cycle Is Way Overdue

Global Debt Super Cycle - Public DomainFor more than 100 years global debt levels have been rising, and now we are potentially facing the greatest debt crisis in all of human history.  Never before have we seen such a level of debt saturation all over the planet, and pretty much everyone understands that this is going to end very, very badly at some point.  The only real question is when it will happen.  Many believe that the current global debt super cycle began when the Federal Reserve was established in 1913.  Central banks are designed to create debt, and since 1913 the U.S. national debt has gotten more than 6800 times larger.  But of course it is not just the United States that is in this sort of predicament.  At this point more than 99 percent of the population of the entire planet lives in a nation that has a debt-creating central bank, and as a result the whole world is drowning in debt.

When people tell me that things are going to “get better” in 2017 and beyond, I find it difficult not to roll my eyes.  The truth is that the only way we can even continue to maintain our current ridiculously high debt-fueled standard of living is to grow debt at a much faster pace than the economy is growing.  We may be able to do that for a brief period of time, but giant financial bubbles like this always end and we will not be any exception.

Barack Obama and his team understood what was happening, and they were able to keep us out of a horrifying economic depression by stealing more than nine trillion dollars from future generations of Americans and pumping that money into the U.S. economy.  As a result, the federal government is now 20 trillion dollars in debt, and that means that the eventual crash is going to be far, far worse than it would have been if we would have lived within our means all this time.

Corporations and households have been going into absolutely enormous amounts of debt as well.  Corporate debt has approximately doubled since the last financial crisis, and U.S. consumers are now more than 12 trillion dollars in debt.

When you add all forms of debt together, America’s debt to GDP ratio is now about 352 percent.  I think that the following illustration does a pretty good job of showing how absolutely insane that is

If your brother earns $100,000 in annual income and borrowed $10,000 on his credit card, he could consume $110,000 worth of stuff.  In this example, his debt to his personal GDP is just 10%.  But what if he could get more credit year after year and reached a point where his total debt reached $352,000 but his income remained the same.  His personal debt-to-GDP ratio would now be 352%.

If he could borrow at super low interest rates, maybe he could sustain the monthly loan payments. Maybe?  But how much more could he possibly borrow?  What lender would lend him more?  And what if those low rates began to rise?  How much debt can his $100,000 income cover?  Essentially, he has reached the end of his own debt cycle.

The United States is certainly not alone in this regard.  When you look all over the industrialized world, you see similar triple digit debt to GDP figures.

When this current debt super cycle ultimately ends, it is going to create economic pain on a scale that will be unlike anything that we have ever seen before.  The following comes from King World News

That is the inevitable consequence of 100 years of credit expansion from virtually nothing to $250 trillion, plus global unfunded liabilities of roughly $500 trillion, plus derivatives of $1.5 quadrillion. This is a staggering total of $2.25 quadrillion. Therefore, the question is not what could go wrong since it is guaranteed that all these liabilities will implode at some point. And when they do, it will bring misery to the world of a magnitude that no one could ever imagine. It is of course very difficult to forecast the end of a major cycle. As this is unlikely to be a mere 100-year cycle but possibly a 2000-year cycle. It is also impossible to forecast how long the decline will take. Will it be gradual like the Dark Ages, which took 500 years after the fall of the Roman Empire? Or will the fall be much faster this time due to the implosion of the biggest credit bubble in world history? The latter is more likely, especially since the bubble will become a lot bigger before it implodes.

And there are certainly lots of signs that a global slowdown is already beginning.  For example, global trade growth has fallen below 2 percent for only the third time since the year 2000.  On each of the other occasions, we witnessed a horrible recession take place.  For more signs that economic conditions are deteriorating, please see my previous article entitled “Recession 2017? Things Are Happening That Usually Never Happen Unless A New Recession Is Beginning“.

Of course much of the globe is already in the midst of a horrible economic crisis.  Brazil is in the middle of their worst recession ever, and people are literally starving in Venezuela.  A new round of debt problems has erupted in Europe, with Greece, Portugal and Italy being the latest flashpoints.

Just like in 2007, many are mocking the idea that the a major economic downturn is coming to the United States.  They believe that the ridiculously high stock market valuations of today can stick around indefinitely, and they are putting their faith in politicians.

But it won’t be too long before a new economic crisis begins in America and the kind of civil unrest that I portray in “The Beginning Of The End” erupts all across the country.

I just don’t understand why more people cannot see this.  Government debt, corporate debt and consumer debt have all been growing much, much faster than the overall economy.  Can someone please explain to me how that could possibly be sustainable in the long-term?

Someone that I considered to be a mentor but that has since passed away once said that things would seem like they would be getting better for a little while before the next crash comes.

And it turned out that he was precisely correct.  We are in a season of time when economic conditions have appeared to be getting a little bit better in the United States, and this has blinded so many people to the truth of what is about to happen to us.

Generation Snowflake: Percentage Of Young Adults Living With Their Parents Hasn’t Been This High Since 1940

snowflake-public-domainHave we failed this generation of young adults by not equipping them to be able to handle the harsh realities of the real world?  According to the Wall Street Journal, the percentage of Americans in the 18 to 34-year-old age bracket that are currently living with their parents hasn’t been this high in 75 years.  At this point nearly 40 percent of our young adults in that age range are living at home, and many are concerned that this could have some alarming implications for the future of our nation.

In the United States today, more than 60 million people live in multi-generational households, and it is a good thing to have a tight family.  But at some point young adults need to learn how to live their own independent lives, and in millions of cases this independence is being delayed or is never happening at all.

There are many factors involved in this trend.  First of all, there is truly a lack of good jobs despite what we are being told about an “economic recovery”.  Millions of young adults are graduating from college only to discover that there is a very limited number of good jobs available for our college graduates.  So some college graduates are able to secure the types of jobs that they were hoping for, but millions of others are not.

Normally when a recession ends, the percentage of young adults living with their parents starts to go back down.  But this has not happened this time around.  Instead, the percentage of young adults that live at home has just continued to rise

The trend runs counter to that of previous economic cycles, when after a recession-related spike, the number of younger Americans living with relatives declined as the economy improved.

The result is that there is far less demand for housing than would be expected for the millennial generation, now the largest in U.S. history. The number of adults under age 30 has increased by 5 million over the last decade, but the number of households for that age group grew by just 200,000 over the same period, according to the Harvard Joint Center for Housing Studies.

Another major factor in all of this is the fact that Americans are getting married later in life than ever before and they are having fewer kids than previous generations.

In the old days, people got married young and they set up their own households even if they were dirt poor.  But these days we have hordes of single young adults that are perfectly content to sit at home and sponge off of Mommy and Daddy.

There seems to be a real lack of toughness to this generation of young adults, and many that have perceived this lack of toughness have resorted to referring to them as “Generation Snowflake”.  Over the past 12 months this term has become so common that the Guardian has dubbed it “the defining insult of 2016″…

Until very recently, to call someone a snowflake would have involved the word “generation”, too, as it was typically used to describe, or insult, a person in their late teens or early 20s. At the start of November, the Collins English Dictionary added “snowflake generation” to its words of the year list, where it sits alongside other vogue-ish new additions such as “Brexit” and “hygge”. The Collins definition is as follows: “The young adults of the 2010s, viewed as being less resilient and more prone to taking offence than previous generations”. Depending on what you read, being part of the “snowflake generation” may be as benign as taking selfies or talking about feelings too much, or it may infer a sense of entitlement, an untamed narcissism, or a form of identity politics that is resistant to free speech.

The phrase came to prominence in the UK at the beginning of 2016, after Claire Fox, director of the thinktank Institute of Ideas, used it in her book I Find That Offensive to address a generation of young people whom she calls “easily offended and thin-skinned”.

Of course there are exceptions.  I have some close friends that are young adults in this age range, and they are extraordinary people.

But overall, we seem to have dramatically failed this generation.  Maybe it is because we tend to baby our children from a very early age, and we want to protect them from danger so much that we never allow them to be exposed to the challenges that they need to face in order to toughen up and mature.

And it certainly doesn’t help that many of our young adults enter “the real world” already drowning in tens of thousands of dollars of debt.  According to CNN, about 70 percent of all college graduates in the U.S. will leave school with student loan debt, and the average loan balance for those college graduates is approximately $28,950.  Paying off student loan debt can be extremely painful, and it can be financially crippling for young people that are just trying to start their new lives.

When our high school kids are looking toward the future, we very much encourage them to go to the very best schools that they can possibly get into, and we tell them to not even worry about the cost.  We promise them that there will be plenty of good jobs once they graduate, and we push them into these loans without even warning them to consider the future implications.

According to a stunning article in the Wall Street Journal, many Baby Boomers are actually having money taken out of their Social Security checks because of unpaid student loans.  So when you go into student loan debt, it can literally haunt you for the rest of your life…

The government has collected about $1.1 billion from Social Security recipients of all ages to go toward unpaid student loans since 2001, including $171 million last year, the Government Accountability Office said Tuesday. Most affected recipients in fiscal year 2015—114,000—were age 50 or older and receiving disability benefits, with the typical borrower losing about $140 a month. About 38,000 were above age 64.

The report highlights the sharp growth in baby boomers entering retirement with student debt, most of it borrowed years ago to cover their own educations but some used to pay for their children’s schooling. Overall, about seven million Americans age 50 and older owed about $205 billion in federal student debt last year. About 1 in 3 were in default, raising the likelihood that garnishments will increase as more boomers retire.

What we are doing is clearly not working, but I am not particularly optimistic that this system will be fixed any time soon.

If you are a young person, you need to have a solid plan before pursuing an expensive college education.  Many young people just major in anything that they want without even considering if it will lead to a good career.  And instead of working hard to graduate in four years, many decide that they want to stretch the “college experience” out for five or six years so that they can party as much as possible before entering the real world.

The real world is a cold, cruel place, and if you start your new life drowning in debt that is just going to make things even more difficult for you.

On a personal note, I want to thank everyone that has supported the growth of The Most Important News.  It is a central news hub where you can find all of my articles, posts by incredible guest authors and many of the key news stories from all over the globe all gathered in one place.  Some technical issues have forced the site to be down for extended periods of time lately, but now it is being migrated to a much more powerful server.  I will not be updating it during the migration, but I should resume a normal posting schedule again very soon.

And I would like to thank all of my readers for making 2016 an absolutely amazing year.  I love you all, and I wish you all the very best as we head into what should prove to be a very “interesting” 2017.

Drowning In Debt: 35 Percent Of All Americans Have Debt That Is At Least 180 Days Past Due

drowning-help-public-domainMore than a third of all Americans can’t pay their debts.  I don’t know about you, but to me that is a shocking figure.  As you will see below, 35 percent of the people living in this country have debt in collections.  When a debt is in  collections, it is at least 180 days past due.  And this is happening during the “economic recovery” that the mainstream media keeps touting, although the truth is that Barack Obama is going to be the only president in United States history to never have a single year when the economy grew by at least 3 percent.  But at least things are fairly stable for the moment, and if this many Americans are having trouble paying their bills right now, what are things going to look like when the economy becomes extremely unstable once again.

The 35 percent figure is a nugget that I discovered in a CNN article about Detroit that I was reading earlier today

And the city’s troubles have left a mark on the financial stability of its residents in a big way, according to a new report from the Urban Institute.

About 66% of residents have debt in collections — meaning more than 180 days past due — at a median amount of $1,847. Across the U.S., 35% of Americans have debt in collections.

It is hard to believe that 66 percent of the residents of one of our largest cities could have debt in collections, but without a doubt the city of Detroit is a complete and utter economic wasteland at this point.

But to me, the 35 percent figure for the nation as a whole is a much greater concern.

And much of the debt that is in collections is credit card debt.

In the immediate aftermath of the last financial crisis, many Americans started getting out of debt, and that was a very good thing.

Unfortunately, that trend has completely reversed itself over the past few years, and now credit card balances are rising at a pace that is quite alarming

Using data from the U.S. Census Bureau and the Federal Reserve, ValuePenguin found that the average credit card debt for households that carry a balance is a shocking $16,048 — a figure that has risen by 10% over the past three years. At the average variable credit card interest rate of 16.1%, this translates to nearly $2,600 in credit card interest alone. And many credit cards have interest rates much higher than the average.

Even scarier, consider that based on the average interest rate and a minimum payment of 1.5% of the balance, it would take nearly 14 years for the typical indebted household to pay off its existing credit card debt, at a staggering cost of more than $40,200. Keep in mind that this assumes no additional credit card debt is added to the tab along the way.

Those that have been there know exactly how it feels to be drowning in credit card debt.

You know, they don’t teach you about credit cards in high school or in college.  At least they didn’t in my day.  So once I got out into the “real world” and discovered the joy of instantly getting whatever I wanted with a credit card, I didn’t understand how painful it would be to pay that money back someday.

If you have credit card balances that are out of control, they can keep you up late into the night.  The worry and the fear can eat away at you like a cancer, and many people play a game of moving balances from one card to another in a desperate attempt to stay afloat.

Fortunately I learned my hard lessons at an early enough age to get things turned around.  Now I warn others about the danger of credit card debt through my writing, and my hope is that the things that I share on my websites are doing some good for others that may be struggling financially.

When you are deep in debt, it is exceedingly difficult to build up any wealth of your own.  This is one of the primary reasons why 69 percent of all Americans have less than $1,000 in savings today.

In essence, more than two-thirds of the country is living paycheck to paycheck, and that is a recipe for disaster when the next major economic downturn in the U.S. strikes.

Overall, household debt in America has now reached a grand total of 12.3 trillion dollars.  When you break that down, it comes to $38,557 for every man, woman and child in the entire nation.

So for a family of five, your share of that total would be $192,785.

And remember, that is just household debt.  That total does not include any form of business debt or any form of government debt.

We truly are a “buy now, pay later” society.  We were the wealthiest and most prosperous nation on the entire planet, and previous generations handed us the keys to the greatest economic machine in world history, but that wasn’t good enough for us.

We always had to have more, more, more – and now we have accumulated more debt than any society in the history of the globe.

It is inevitable that this giant debt bubble is going to burst.  Anyone with an ounce of common sense can see that.

What we experienced in 2008 was just a preview of the hard times that are coming.  The next recession is going to be even worse, and most economists are convinced that it will happen within the next four years no matter who is elected president in November.  The following comes from the Wall Street Journal via the Calculated Risk blog

Economists in The Wall Street Journal’s latest monthly survey of economists put the odds of the next downturn happening within the next four years at nearly 60%.

Just like the last time around, millions of those that are “living on the edge” financially will fall out of the middle class and into poverty when they lose their jobs.

Hopefully most of you that have been reading my work for an extended period of time have already been getting out of debt and have been building up a financial cushion.

Sadly, most of the country continues to act as if they are living in a pre-2008 world, and the economic wake up call that is coming is going to be incredibly painful for those that thought they could get away with being exceedingly reckless financially.

The Total Amount Of Debt In The World Just Hit A Record $152,000,000,000,000 (152 Trillion)

globe-on-the-brink-of-disaster-public-domainIf anyone ever asks you how much debt there is in the world, now you will know the answer.  According to the IMF, the total amount of debt around the globe has now hit a staggering 152 trillion dollars.  That is an amount of money that is almost unimaginable, and the IMF says that it is equivalent to 225 percent of global GDP.  It is the biggest debt bubble in the history of the planet, and it is rising at an extremely alarming pace.  Experts all over the world agree that when this debt bubble finally bursts, it is going to create an economic crisis on a scale that humanity has never seen before.

When I first saw this number I was absolutely astounded at how reckless we all have become, and I was also amazed that there was hardly anything about this announcement in the mainstream media in the United States.  The following excerpt comes from a story in a major British news source

The International Monetary Fund has urged governments to take action to tackle a record $152tn debt mountain before it triggers a fresh global financial and economic crisis.

Warning that debt levels were not just high but rising, the IMF said it was vital to intervene early in order to mitigate the risks of a repeat of the damaging events that began with the collapse of the US sub-prime housing bubble almost a decade ago.

It said that new research in its half-yearly fiscal monitor covering 113 countries had shown that debt was currently 225% of global GDP, with the private sector responsible for two-thirds of the total.

Right now the mainstream media in the United States is so obsessed with Trump and Clinton that almost every other important story is pushed to the side, but it boggles my mind how this cannot be major front page news.

When we borrow money, consumption is transferred from the future to the present.  For example, if you put a 70 inch television on your credit card today, the quality of your lifestyle will immediately go up, but you won’t have that money to spend at some point in the future.  In fact, you are ultimately going to pay back significantly more money than you originally spent for the television.

So when we go into debt, we are literally destroying the future one dollar at a time.

On a national scale, what we are doing to our children, our grandchildren and all future generations of Americans is beyond criminal.  Thomas Jefferson and other founding fathers warned that government debt was simply thievery from future generations, and they were exactly right.  If future generations get the chance, they will look back and curse us for what we have done to them.

Earlier today I looked up our national debt, and it is currently sitting at $19,688,773,606,117.54.  That means that Barack Obama has officially become “the 9 trillion dollar man”.

When Barack Obama entered the White House, the U.S. government was 10.6 trillion dollars in debt, and now we are 19.6 trillion dollars in debt, and there is a very good chance that we could hit 20 trillion dollars by the time he leaves the White House on January 20th, 2017.

In a just society, the politicians that have done this to future generations of Americans would be going to jail, but instead we put them up on pedestals.

It is truly hard to grasp how much money “a trillion dollars” represents.

For instance, if you were alive when Jesus Christ was born, and you had spent a million dollars every single day since that time, you still would not have spent a trillion dollars by now.

Since Barack Obama entered the White House, we have been stealing more than 100 million dollars from future generations of Americans every single hour of every single day, and as Obama’s second term draws to a close the pace of that theft is accelerating according to Simon Black

In fact, for the 2016 fiscal year that ends in just ten more days, the US government’s debt growth of $1.36 trillion is on track to be the third biggest annual increase ever.

The only two years in all of US history that posted higher US debt growth were 2010 and 2011– the peak of the financial crisis.

Even more acutely, last month the US federal debt grew by $151.5 billion.

Not counting the financial crisis, and a few anomalous months following a debt ceiling reset, August 2016 was the single biggest expansion of US debt EVER.

How could we do this?

And I know that I have pointed the finger at Barack Obama a lot in this article, but the truth is that Republicans are highly to blame as well.

The Tea Party revolution of 2010 gave the Republicans control of the House of Representatives, and since that time they have also gained control of the Senate.  Without Republican approval, Barack Obama would not be able to spend a single penny.  The American people were counting on the Republicans to put a lid on the wild spending of Barack Obama and the Democrats, and the Republicans in Congress have completely failed.

Nobody wants to end the party.  Because without a doubt, cutting back on our wild borrowing and spending would seriously damage the economy in the present, and nobody wants to be responsible for that.

So now the only thing to do is to keep the party going for as long as possible until it ends in a horrible, fiery crash.

Overall, the total amount of debt in the United States is now roughly equivalent to 350 percent of U.S. GDP, and a day of reckoning is rapidly approaching.  Just consider what Charles Schwab’s chief investment strategist, Liz Ann Sonders, recently told Business Insider

Sonders noted that total debt — public, private, nonfinancial, and financial — had become 350% of gross domestic product, and that is already causing problems for the economy.

The question I get all the time is: When are we going to hit the wall? When are we going to hit the debt wall?” Sonders said. “I think we hit the debt wall in ’08, which unleashed a big round one of what I think will be a rolling set of crises — and not just in the US but globally.

And I very much agree with her.

We definitely “hit a wall” in 2008, but it was just “round one” of our problems.

The coming rounds are going to be even more painful, but most Americans don’t understand this.

Most Americans seem to believe that our debt-fueled standard of living can be sustained indefinitely and that there is nothing to be concerned about.

Unfortunately, the laws of economics cannot be defied forever, and eventually the American people are going to experience economic and financial pain on a scale that we have never seen before in our entire history.

During The Coming Economic Crisis Two-Thirds Of The Country Will Be Out Of Cash Almost Immediately

money-one-dollar-bills-public-domainDid you know that almost 70 percent of the U.S. population is essentially living paycheck to paycheck?  As you will see below, a brand new survey has found that 69 percent of all Americans have less than $1,000 in savings.  Of course one of the primary reasons for this is that most of us are absolutely drowning in debt.  In fact, the total amount of household debt in the United States now exceeds 12 trillion dollars.  So many Americans are so busy just trying to pay off their existing debts that they can’t even think about saving anything for the future.  If economic conditions remain relatively stable, the fact that so many of us are living on the edge probably won’t kill us.  But the moment the economy plunges into another 2008-style crisis (or worse), we could be facing a situation where two-thirds of the country is in imminent danger of running out of cash.

If you are living paycheck to paycheck, you live under the constant threat of your life being totally turned upside down if that paycheck ever goes away.  During the last crisis, millions of Americans lost their jobs very rapidly, and because so many of them were living paycheck to paycheck all of a sudden large numbers of people couldn’t pay their mortgages.  As a result, multitudes of American families went through the extremely painful process of foreclosure.

Unfortunately, it appears that we have not learned anything from the last go around.  According to the brand new survey that I mentioned above, 69 percent of all Americans have less than $1,000 in savings…

Last year, GoBankingRates surveyed more than 5,000 Americans only to uncover that 62% of them had less than $1,000 in savings. Last month GoBankingRates again posed the question to Americans of how much they had in their savings account, only this time it asked 7,052 people. The result? Nearly seven in 10 Americans (69%) had less than $1,000 in their savings account.

Breaking the survey data down a bit further, we find that 34% of Americans don’t have a dime in their savings account, while another 35% have less than $1,000. Of the remaining survey-takers, 11% have between $1,000 and $4,999, 4% have between $5,000 and $9,999, and 15% have more than $10,000.

Perhaps the most alarming fact from this survey is that 62 percent of all Americans had less than $1,000 in savings last year.  So that means that this number has gotten 7 percent worse over the last 12 months.

How did that happen?  I thought the mainstream media was telling us that the economy was getting better…

Look, if you don’t have an emergency fund you are in danger of losing everything.  This is a point that I have been making over and over again for years, and in an article about this new survey USA Today made this point very strongly as well…

This data is particularly worrisome since the recommendation is for Americans to have six months in expenses saved in case of an emergency, such as a large medical expense, car repair bill, or losing your job. Without this emergency fund to fall back on, millions of Americans could be risking financial disaster.

As the publisher of The Economic Collapse Blog, people are constantly asking me what they should do to get prepared for what is coming.

The number one thing that I always suggest is to build up an emergency fund.

In a chaotic situation it is always hard to anticipate accurately what is going to happen, but without a doubt we are all going to need to continue to pay our bills and to buy things for our families during the next crisis.

Yes, someday the U.S. dollar will become rather worthless, but until that happens you are going to need to continue to put a roof over the heads of your family and to put food on the table.

And you are going to need money to do those things.

Some time ago, the Federal Reserve also found that a large percentage of Americans are living on the edge of financial disaster.  They discovered that 47 percent of all Americans could not even come up with $400 to pay for an unexpected emergency room visit without borrowing the money or selling something that they own.

If you can’t even come up with $400 you are really hurting, but that is the status of about half the country these days.

We are continually being told that the economy is strong, but that is simply not the truth.

In fact, it turns out that the period from 2005 to 2015 was the worst period for per capita real GDP growth in modern American history.  The following comes from Zero Hedge

  1. Growth was unusually strong in the 1960s and early 1970s. In every year from 1966 through 1973, per-capita income was up between 30 percent and 40 percent from a decade earlier. Thus, it’s not surprising that many Americans recall this as a great period for the nation’s economy.
  2. In every year from 1984 to 2007 — a period that economists call the Great Moderation, because of the way both growth and interest rates stabilized — per-person income was up between 20 percent and 30 percent from a decade earlier. That’s ample reason for Americans to view this as a good period for the economy.
  3. Cumulative per-person growth from 2005 to 2015 was lower than in any prior decade in the sample. That certainly helps explain why many Americans are unhappy with the nation’s recent economic performance.

And as I repeat over and over, Barack Obama is on track to be the one and only president in all of American history to never have a single year when the economy grew by at least 3 percent, and he has had eight years to try to accomplish that feat.

Why doesn’t Donald Trump ever bring up that amazing fact?  I would think that he could get a lot of mileage out of that number.

At this point, nobody can deny that the middle class is shrinking.  61 percent of all Americans lived in middle class households in 1971, but now the middle class makes up a minority of the population for the very first time in our history.

Back in 1970, the middle class brought home approximately 62 percent of all income, but today that figure has plummeted to just 43 percent.

Those that are still doing well often dismiss those that are struggling by barking out such phrases as “get a job”, but the truth is that getting a good job is not so easy these days.

The most recent statistics show that there are 7.9 million Americans that are considered to be officially unemployed.  When you add that number to the 94.1 million working age Americans that are considered to be “not in the labor force”, you get a grand total of 102 million working age Americans that do not have a job right now.

And just because you do have a job does not mean that everything is okay.  As I have discussed previously, 51 percent of all U.S. workers make less than $30,000 a year according to the Social Security Administration.

Everywhere you look things seem to be getting worse and not better.  Not too long ago I documented the explosion of tent cities all over the country as poverty continues to rise, and I discussed how one study found that some young women in our impoverished inner cities are so desperate that they are actually trading sex for food.

Sadly, it isn’t just a few hard cases that we are talking about.  Even in areas of the country that are supposed to be “doing well” we are seeing record-setting poverty numbers.  For example, it was recently reported that the number of New Yorkers sleeping in homeless shelters just set a brand new all-time high, and the number of New York families permanently living in homeless shelters is up 60 percent over the past five years.

If things are this bad during an “economic recovery”, what are they going to look like once the economy really starts imploding?

And considering the fact that almost 70 percent of the population has virtually no savings, could our nation handle an extended economic downturn that may be even worse than what we experienced in 2008 and 2009?

As a nation we truly are living on the edge, and it isn’t going to take very much at all to push us into oblivion.

26 Incredible Facts About The Economy That Every American Should Know For The Trump-Clinton Debate

donald-trump-hillary-clinton-debate-photo-by-vectoropenstockAre you ready for the most anticipated presidential debate in decades?  It is being projected that Monday’s debate between Donald Trump and Hillary Clinton could potentially break the all-time record of 80 million viewers that watched Ronald Reagan and Jimmy Carter debate back in 1980.  Many Americans probably hope to see some personal fireworks between the two nominees, but the two candidates have both expressed a desire to focus on substantive issues.  There will likely be quite a few questions about the economy, and without a doubt this is an area where Trump and Clinton have some very sharp differences.  The mainstream media would have us believe that the U.S. economy is in pretty good shape, and if that was true that would seem to favor Clinton.  But is it actually true?  The following are 26 incredible facts about the economy that every American should know for the Trump-Clinton debate…

#1 When Barack Obama entered the White House, the U.S. government was 10.6 trillion dollars in debt.  Today, the U.S. government is 19.5 trillion dollars in debt, and Obama still has several months to go until the end of his second term.  That means that an average of more than 1.1 trillion dollars a year will be added to the national debt during his presidency.  We are stealing a tremendous amount of consumption from the future to make the economy look much, much better than it otherwise would be, and we are systematically destroying the future in the process.

#2 As Obama prepares to leave office, the rate at which we are adding to the national debt is actually increasing.  During the fiscal year that is just ending, the U.S. government has added another 1.36 trillion dollars to the national debt.

#3 It isn’t just the federal government that is on a massive debt binge.  Total U.S. corporate debt has nearly doubled since the end of 2007.

#4 Default rates on U.S. corporate debt are the highest that they have been since the last financial crisis.

#5 Corporate profits have fallen for five quarters in a row, and it is being projected that it will be six in a row once the final numbers for the third quarter come in.

#6 During the month of August, commercial bankruptcy filings were up 29 percent compared to the same period a year ago.

#7 The rate of new business formation in the United States dropped dramatically during the last recession and has hovered at that new lower level ever since.

#8 The Wall Street Journal says that this is the weakest “economic recovery” since 1949.

#9 Barack Obama is on track to be the only president in all of U.S. history to never have a single year when the U.S. economy grew by at least 3 percent.

#10 In August, the Cass Freight Index dipped to the lowest level that we have seen for that month since 2010.  What this means is that the total amount of stuff being shipped around the country by air, by rail and by truck is really dropping, and this is a clear sign that real economic activity is slowing down in a major way.

#11 Capital expenditure growth has turned negative, and history has shown that this is almost always followed by a new recession.

#12 The percentage of Americans with a full-time job has been sitting at about 48 percent since 2010.  You have to go back to 1983 to find a time when full-time employment in this country was so low.

#13 The labor force participation rate peaked back in 1997 and has been steadily falling ever since.

#14 The “inactivity rate” for men in their prime working years is actually higher today than it was during the last recession.

#15 The United States has lost more than five million manufacturing jobs since the year 2000 even though our population has become much larger over that time frame.

#16 If you can believe it, the total number of government employees now outnumbers the total number of manufacturing employees in the United States by almost 10 million.

#17 One study found that median incomes have fallen in more than 80 percent of the major metropolitan areas in this country since the year 2000.

#18 According to the Social Security Administration, 51 percent of all American workers make less than $30,000 a year.

#19 The rate of homeownership in the U.S. has fallen every single year while Barack Obama has been in the White House.

#20 Approximately one out of every five young adults are currently living with their parents.

#21 The auto loan debt bubble recently surpassed the one trillion dollar mark for the first time ever.

#22 Auto loan delinquencies are at the highest level that we have seen since the last recession.

#23 In 1971, 61 percent of all Americans were considered to be “middle class”, but now middle class Americans have actually become a minority in this nation.

#24 One recent survey discovered that 62 percent of all Americans have less than $1,000 in savings.

#25 According to the Federal Reserve, 47 percent of all Americans could not even pay an unexpected $400 emergency room bill without borrowing the money from somewhere or selling something.

#26 The number of New Yorkers sleeping in homeless shelters just set a brand new record high, and the number of families permanently living in homeless shelters is up a whopping 60 percent over the past five years.

Despite all of the facts that you just read, the truth is that there is one particular group of people that have been doing quite well during the Obama years.  I really like how Charles Hugh Smith made this point in one of his recent articles

The top 5% of households that dominate government, Corporate America, finance, the Deep State and the media have been doing extraordinarily well during the past eight years of stock market bubble (oops, I mean boom) and “recovery,” and so they report that the economy is doing splendidly because they’ve done splendidly.

By recklessly creating money out of thin air and pumping it into the financial markets, the Federal Reserve has greatly enriched the elite, but they have also dramatically increased the gap between the very wealthy and the rest of us.  Since he has been in the White House during this time, Barack Obama has gotten the credit for this temporary stock market bubble, and most of the elite love Obama anyway.

But in the process the stage has been set for the greatest economic and financial implosion in U.S. history, and the pain that is coming is going to affect every man, woman and child in this country.

During the debate, Trump and Clinton will talk a lot about tinkering with tax rates and regulations, but those measures are essentially going to be meaningless when compared to the massive economic tsunami that is coming.  The next president is going to inherit the biggest economic problems that this nation has ever faced, and it is going to take a miracle of Biblical proportions to turn the U.S. economy in the right direction.

The One Trillion Dollar Consumer Auto Loan Bubble Is Beginning To Burst

Soap Bubble - Public DomainDo you remember the subprime mortgage meltdown from the last financial crisis?  Well, this time around we are facing a subprime auto loan meltdown.  In recent years, auto lenders have become more and more aggressive, and they have been increasingly willing to lend money to people that should not be borrowing money to buy a new vehicle under any circumstances.  Just like with subprime mortgages, this strategy seemed to pay off at first, but now economic reality is beginning to be felt in a major way.  Delinquency rates are up by double digit percentages, and major auto lenders are bracing for hundreds of millions of dollars of losses.  We are a nation that is absolutely drowning in debt, and we are most definitely going to reap what we have sown.

The size of this market is larger than you may imagine.  Earlier this year, the auto loan bubble surpassed the one trillion dollar mark for the first time ever

Americans are borrowing more than ever for new and used vehicles, and 30- and 60-day delinquency rates rose in the second quarter, according to the automotive arm of one of the nation’s largest credit bureaus.

The total balance of all outstanding auto loans reached $1.027 trillion between April 1 and June 30, the second consecutive quarter that it surpassed the $1-trillion mark, reports Experian Automotive.

The average size of an auto loan is also at a record high.  At $29,880, it is now just a shade under $30,000.

In order to try to help people afford the payments, auto lenders are now stretching loans out for six or even seven years.  At this point it is almost like getting a mortgage.

But even with those stretched out loans, the average monthly auto loan payment is now up to a record 499 dollars.

That is the average loan size.  To me, this is absolutely infuriating, because only a very small percentage of wealthy Americans are able to afford a $499 monthly payment on a single vehicle.

Many middle class American families are only bringing in three or four thousand dollars a month (before taxes).  How in the world do they think that they can afford a five hundred dollar monthly auto loan payment on just one vehicle?

Just like with subprime mortgages, people are being taken advantage of severely, and the end result is going to be catastrophic for the U.S. financial system.

Already, auto loan delinquencies are rising to very frightening levels.  In July, 60 day subprime loan delinquencies were up 13 percent on a month-over-month basis and were up 17 percent compared to the same month last year.

Prime delinquencies were up 12 percent on a month-over-month basis and were up 21 percent compared to the same month last year.

We have a huge crisis on our hands, and major auto lenders are setting aside massive amounts of cash in order to try to cover these losses.  The following comes from USA Today

In a quarterly filing with the Securities and Exchange Commission, Ford reported in the first half of this year it allowed $449 million for credit losses, a 34% increase from the first half of 2015.

General Motors reported in a similar filing that it set aside $864 million for credit losses in that same period of 2016, up 14% from a year earlier.

Meanwhile, other big corporations are also alarmed about the economic health of average U.S. consumers.  Just check out what Dollar General CEO Todd Vasos had to say about this just the other day

I know that when we look at globally the overall U.S. population, it seems like things are getting better. But when you really start breaking it down and you look at that core consumer that we serve on the lower economic scale that’s out there, that demographic, things have not gotten any better for her, and arguably, they’re worse. And they’re worse, because rents are accelerating, healthcare is accelerating on her at a very, very rapid clip.

The stock market may seem to be saying that everything is fine (for the moment), but the hard economic numbers are telling a completely different story.  What we are experiencing right now looks so similar to 2008, and this includes big institutions just dropping dead seemingly out of the blue.  On Tuesday, we learned that ITT Technical Institute is immediately shutting down and permanently closing all locations.  This is from a Los Angeles Times report

The company that operates the for-profit chain, one of the country’s largest, announced that it was permanently closing all its campuses nationwide. It blamed the shutdown on the recent move by the U.S. Education Department to ban ITT from enrolling new students who use federal financial aid.

“Two quarters ago there were rumors about the school having problems, but they told us that anyone who was already a student would be allowed to finish,” said Wiggins, who works as the assistant manager for a family-run auto parts business and went to ITT to open new opportunities.

“Am I angry?” he said. “I’m like angry times 10 million.”

As a result of this shutdown, 35,000 students are suddenly left out in the cold and approximately 8,000 employees have lost their jobs.

This is what happens during a major economic downturn.  Large institutions that may have been struggling under the surface for quite a while suddenly give up and drop a bomb on those that were depending on them.  In the months ahead, there will be a lot more examples of this.

Already, some of the biggest corporate names in America have been laying off thousands of workers in 2016.  Mass layoffs are usually an early warning sign that big trouble is ahead, so keep a close eye on those companies.

The pace of the economic decline has been a bit slower than many (including myself) originally anticipated, but without a doubt it has continued.

And it is undeniable that the stage is set for a crisis that will absolutely dwarf 2008.  Our national debt has nearly doubled since the beginning of the last crisis, corporate debt has doubled, student loan debt has crossed the trillion dollar mark, auto loan debt has crossed the trillion dollar mark, and total household debt has crossed the 12 trillion dollar mark.

We are living in the greatest debt bubble in world history, and there are signs that this giant bubble is now starting to burst.  And when it does, the pain is going to be greater than most people would dare to imagine.

Dozens Shot Over Memorial Day Weekend As The Collapse Of Chicago Accelerates

Gang Violence - Public DomainChaos and violence threaten to spiral out of control in America’s third largest city, and nobody seems to have any idea how to solve the problem.  After decades of control by the radical left, many parts of the “Windy City” have become rotting, decaying, gang-infested hellholes.  Just like Detroit, the city of Chicago is rapidly becoming a joke to the rest of the world, but a horribly corrupt political culture likely stands in the way of any type of major reform any time soon.  And just like much of the rest of the nation, a spirit of violence and civil unrest is rising in Chicago.  So far this year, the number of shootings in Chicago is up 50 percent compared to the same time period last year, and that was before we even got to Memorial Day weekend.  As of Sunday morning, at least 40 people had already been shot, and authorities were bracing for even more violence as the holiday weekend stretched on…

A string of nearly two dozen shootings on the West Side has pushed the number of people shot during the Memorial Day weekend to at least 40, with two more days to go.

As of early Sunday morning, the toll stood at four dead and 36 wounded across the city, including a 15-year-girl shot to death as she rode in a Jeep on Lake Shore Drive near Fullerton Avenue, police said.

The cries to fix what is wrong with Chicago are becoming increasingly desperate, but at this point the city is drowning in debt and is pretty much flat broke.

So the options for doing anything about this growing crisis are quite limited.

But that isn’t stopping prominent city leaders from speaking out.  According to the New York Times, Rev. Corey Brooks believes that “we could be looking at a blood bath” this summer if nothing changes…

“If something doesn’t change, if we don’t get jobs for these kids, if we don’t change the economic situation, I’m worried that we could be looking at a blood bath,” said the Rev. Corey Brooks, a pastor on the city’s South Side, a mostly African-American area where some of the shootings have been concentrated. “If something doesn’t happen, I fear that we’re potentially looking at one of the worst summers we’ve ever had.”

As of Friday morning, homicides in Chicago were up 52 percent in 2016, compared with the same period a year ago, and shootings had increased by 50 percent, though the pace of violence had slowed in recent weeks, the police said.

I believe that Rev. Brooks is correct, but he isn’t identifying the core of the problem.

Thanks in large part to unchecked illegal immigration, gang membership has been surging in Chicago.  Back in 2012, the Chicago Crime Commission estimated that there were 150,000 gang members living in the city, but of course by now that number is likely far higher.

No city in the United States has a higher population of gang members than Chicago does, and hundreds of factions are constantly battling for turf.  The police in Chicago insist that they have the situation under control, but everyone can see that they do not.

And how could they?  There are only 13,318 law enforcement officers of all types in the city of Chicago.  They are outnumbered by the gangs by much more than a 10 to 1 margin.  There is no way in the world that they are ever going to be able to stop the gang violence.  All they can do is hope to contain it.

Sadly, they are fighting a losing battle, because with each passing month thousands more gang members cross our southern border illegally and head directly for our major cities where they are warmly received by their gang brothers.

Perhaps this helps to explain why 3,000 millionaires left the city of Chicago last year.

Do you want to know somewhere else that has been controlled by the radical left for decades and that is now seeing chaos and violence spin out of control?

In Venezuela, we get to see what it looks like when an entire country starts to shut down.  The following comes from the New York Times

The courts? Closed most days. The bureau to start a business? Same thing. The public defender’s office? That’s been converted into a food bank for government employees.

Step by step, Venezuela has been shutting down.

This country has long been accustomed to painful shortages, even of basic foods. But Venezuela keeps drifting further into uncharted territory.

At this point, more than 80 percent of all basic consumer products are in short supply, and some people have become so desperate that they are actually hunting cats and dogs for food.  My wife and I had a lot more to say about the rapidly deteriorating situation down in Venezuela during a recent episode of our new television show.  It is so important to watch what is going on down there right now, because eventually the same things will be happening here in America too.

When society breaks down, people become very desperate, and crime spirals out of control.  The mafia and the gangs are having a field day at the moment, and the police are so overwhelmed that they can’t do much to stop them.

And if you need medical treatment down in Venezuela right now, you might as well forget it

The Luis Razetti Hospital in the portal city of Barcelona looks like a war zone.

Patients can be seen balancing themselves on half-broken beds with days-old blood on their bodies.

They’re the lucky ones; most are curled up on the floor, blood streaming, limbs blackening.

Children lie among dirty cardboard boxes in the hallways without food, water or medication.

Without electricity or functioning machines, medics have had to create their own solutions. Two men who had surgery on their legs have their limbs elevated by makeshift slings made out of water bottles.

Most Americans would scoff at the suggestion that we could ever see scenes like that in the United States, but just a few years ago most Venezuelans would have probably said the exact same thing.

For so long, watchmen all over America have been endlessly warning people to get prepared.

But at some point, time runs out.

In fact, down in Venezuela time has already run out.  Store shelves all over the country are empty, there are chronic shortages of basic supplies, some people are hunting dogs and cats for food, and there has been an almost total breakdown of public services.

I wish that I could say that these kinds of conditions are only going to be limited to Venezuela.  But I cannot say that.  Great suffering is going to eventually spread all over the world, and that is going to include our own nation.

I hope that you are using this short period of relative stability wisely, because it will be gone way too soon.

Business Debt Delinquencies Are Now Higher Than When Lehman Brothers Collapsed In 2008

Insolvent - Public DomainYou are about to see more very clear evidence that a new economic crisis has already begun.  During economic recoveries, business debt delinquencies generally fall, and during times of economic recession business debt delinquencies generally rise.  In fact, you will see below that business debt delinquencies shot up dramatically just prior to the last two recessions, and the exact same thing is happening again right now.  In 2008, business debt delinquencies increased at a very frightening pace just before Lehman Brothers collapsed, and this was a very clear sign that big trouble was ahead.  Unfortunately for us, in 2016 business debt delinquencies have already shot up above the level they were sitting at just before the collapse of Lehman Brothers, and every time debt delinquencies have ever gotten this high the U.S. economy has always fallen into recession.

In article after article, I have shown that key indicators for the U.S. economy started falling in either late 2014 or at some point during 2015.  Well, business debt delinquencies are another example of this phenomenon.  According to Wolf Richter, business debt delinquencies have shot up an astounding 137 percent since the fourth quarter of 2014…

Delinquencies of commercial and industrial loans at all banks, after hitting a low point in Q4 2014 of $11.7 billion, have begun to balloon (they’re delinquent when they’re 30 days or more past due). Initially, this was due to the oil & gas fiasco, but increasingly it’s due to trouble in many other sectors, including retail.

Between Q4 2014 and Q1 2016, delinquencies spiked 137% to $27.8 billion.

And we never see this kind of rise unless the U.S. economy is heading into a recession.  Here is more from Wolf Richter

Note how, in this chart by the Board of Governors of the Fed, delinquencies of C&I loans start rising before recessions (shaded areas). I added the red marks to point out where we stand in relationship to the Lehman moment:

Delinquencies-commercial-industrial-loans-2016-q1

Business loan delinquencies are a leading indicator of big economic trouble.

To me, this couldn’t be any clearer.

Just like the U.S. government and just like U.S. consumers, U.S. businesses are absolutely drowning in debt.

In fact, a report that was just released found that debt at U.S. companies has been growing at a pace that is 50 times faster than the rate that cash has been growing.

Just imagine what it would mean for your family if your debt was growing 50 times faster than your bank account.  Needless to say, this is an extremely troubling development

Well, American companies may just have a mountain’s worth of problems, according to a new report from Andrew Chang and David Tesher of S&P Global Ratings.

“At the same time, the imbalance between cash and debt outstanding we reported on last year has gotten even worse: Debt outstanding increased 50x that of cash in 2015,” wrote Chang and Tesher.

“Total debt rose by roughly $850 billion to $6.6 trillion last year, dwarfing the 1% cash growth ($17 billion).”

And the really bad news is that banks all across the country are starting to tighten credit to businesses.

In other words, they are beginning to become much more reluctant to loan money to businesses because debts are going bad at such an alarming rate.

When the flow of credit to the business community starts to slow down, it is inevitable that the overall economy slows down as well.  It is just basic economics.  So the deterioration of the U.S. economy that we have witnessed so far is just the beginning of a process that is going to take quite a while to play out.

And let us not forget that most of the rest of the world is already is much worse shape than we are.  Most global financial markets are officially in bear market territory right now, and some nations are already experiencing full-blown economic depression.

Now that the early chapters of the “next crisis” are here, most American families find themselves ill-equipped to deal with another major downturn.  In fact, USA Today is reporting that approximately two-thirds of the country is currently living paycheck to paycheck…

Two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency, according to an exclusive poll, a signal that despite years after the Great Recession, Americans’ finances remain precarious as ever.

These difficulties span all incomes, according to the poll conducted by The Associated Press-NORC Center for Public Affairs Research. Three-quarters of people in households making less than $50,000 a year and two-thirds of those making between $50,000 and $100,000 would have difficulty coming up with $1,000 to cover an unexpected bill.

What are these people going to do when they lose their jobs or their businesses go under?

If you have any doubt that the U.S. economy is already in recession mode, just look at this chart over and over.

For months, I have been warning that the same patterns that immediately preceded previous recessions were happening once again, and this rise in debt delinquencies is another striking example of this phenomenon.

This stuff isn’t complicated.  Anyone that is willing to be honest with themselves should be able to see it.  As a society, we have been making very, very bad decisions for a very, very long period of time, and what we are watching unfold right now are the inevitable consequences of those decisions.

*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*

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