The Beginning Of The End
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The Chart That Proves That The Mainstream Media Is Lying To You About Unemployment

Employment-Population Ratio 2013The mainstream media is absolutely giddy that the U.S. unemployment rate has hit a “four-year low” of 7.7 percent.  But is unemployment in the United States actually going down?  After all, you would think that it should be.  The Obama administration has “borrowed” more than 6 trillion dollars from future generations of Americans, interest rates have been pushed to all-time lows, and the Federal Reserve has been wildly printing more money in a desperate attempt to “stimulate” the economy.  So have those efforts been successful?  Well, according to the mainstream media, the U.S. unemployment rate is falling steadily.  Headlines all over the nation boldly declared that “236,000 jobs” were added to the economy in February, but what they didn’t tell you was that the number of Americans “not in the labor force” rose by 296,000.  And that is how they are getting the unemployment rate to go down – by pretending that huge numbers of unemployed Americans don’t want jobs.  Sadly, as you will see below, the truth is that the percentage of working age Americans that have a job is just 0.1% higher than it was exactly three years ago.  And we have not even come close to getting back to where we were before the last economic crisis.  For example, more than 146 million Americans were employed back in 2007.  But today, only 142.2 million Americans have a job even though our population has grown steadily since then.  So where in the world is this “economic recovery” that they keep talking about?

At this point, the “unemployment rate” has become so meaningless that it really isn’t even worth paying much attention to.  If you really want to know what the employment picture looks like in the United States, you need to look at the employment-population ratio.

As Wikipedia tells us, many economists consider the employment-population ratio to be far superior to other measurements of employment…

The Organization for Economic Co-operation and Development defines the employment rate as the employment-to-population ratio. The employment-population ratio is many American economist’s favorite gauge of the American jobs picture. According to Paul Ashworth, chief North American economist for Capital Economics, “The employment population ratio is the best measure of labor market conditions.” This is a statistical ratio that measures the proportion of the country’s working-age population (ages 15 to 64 in most OECD countries) that is employed. This includes people that have stopped looking for work.

A chart of the employment-population ratio in the United States over the past several years is posted below…

Employment-Population Ratio 2013

As you can see, the percentage of Americans with a job fell from about 63 percent to below 59 percent during the last economic crisis.  Since that time, it has not risen back above 59 percent.  This is the first time in the post-World War II era that we have not seen the employment rate bounce back following a recession.  At this point, the employment-population ratio has been below 59 percent for 42 months in a row.

Yes, we should be thankful that things have stabilized, but as you can see there has been no recovery.  The percentage of Americans with a job is essentially exactly where it was three years ago.  Despite the trillions of dollars that the U.S. government has borrowed, and despite the reckless money printing that the Federal Reserve has been doing, the employment situation in the U.S. has not turned around.

Data for the employment-population ratio from the beginning of 2008 is posted below…

2008-01-01 62.9
2008-02-01 62.8
2008-03-01 62.7
2008-04-01 62.7
2008-05-01 62.5
2008-06-01 62.4
2008-07-01 62.2
2008-08-01 62.0
2008-09-01 61.9
2008-10-01 61.7
2008-11-01 61.4
2008-12-01 61.0
2009-01-01 60.6
2009-02-01 60.3
2009-03-01 59.9
2009-04-01 59.8
2009-05-01 59.6
2009-06-01 59.4
2009-07-01 59.3
2009-08-01 59.1
2009-09-01 58.7
2009-10-01 58.5
2009-11-01 58.6
2009-12-01 58.3
2010-01-01 58.5
2010-02-01 58.5
2010-03-01 58.5
2010-04-01 58.7
2010-05-01 58.6
2010-06-01 58.5
2010-07-01 58.5
2010-08-01 58.5
2010-09-01 58.5
2010-10-01 58.3
2010-11-01 58.2
2010-12-01 58.3
2011-01-01 58.3
2011-02-01 58.4
2011-03-01 58.4
2011-04-01 58.4
2011-05-01 58.4
2011-06-01 58.2
2011-07-01 58.2
2011-08-01 58.3
2011-09-01 58.4
2011-10-01 58.4
2011-11-01 58.5
2011-12-01 58.6
2012-01-01 58.5
2012-02-01 58.6
2012-03-01 58.5
2012-04-01 58.5
2012-05-01 58.6
2012-06-01 58.6
2012-07-01 58.5
2012-08-01 58.4
2012-09-01 58.7
2012-10-01 58.7
2012-11-01 58.7
2012-12-01 58.6
2013-01-01 58.6
2013-02-01 58.6

So is there anyone out there that still wants to insist that the employment picture in the United States is getting significantly better?

Anyone that wants to claim that “unemployment is going down” should at least wait until the unemployment-population ratio gets back up to 59 percent.  Otherwise they just look foolish.

Yes, the Dow is at an all-time high right now.  But a bubble is always the biggest right before it bursts.

Most Americans understand that the Dow has been pumped up with all of the funny money that the Fed has been printing.  Most Americans understand that the stock market really does not accurately reflect the health of the U.S. economy as a whole.

Just consider these numbers…

-The number of homeless people sleeping in homeless shelters in New York City has increased by 19 percent over the past year.

-The number of Americans on food stamps has risen from 32 million to 47 million while Barack Obama has been in the White House.

-According to the U.S. Census Bureau, more than 146 million Americans are either “poor” or “low income” at this point.

-Median household income in the United States has fallen for four consecutive years.

No, the truth is that everything is most definitely not fine.

If everything is fine, then why did the Federal Reserve inject another 100 billion dollars into foreign banks during the last full week of February?

The U.S. government and the Federal Reserve are desperately trying to prop up the entire global economy.  Unfortunately, the global financial system has been built on a foundation of sand and the tide is coming in.

Back in 2008, a derivatives crisis was one of the primary causes of the worst financial panic since the Great Depression.

So did we learn our lesson?

No, the boys on Wall Street are back at it again as a recent article by Jim Armitage described…

Historically, stock markets, being driven by humans, have tended to have a similar length memory of catastrophes, before making the same dumb mistakes again.

But it hasn’t even been five years since derivatives (on that occasion based on daft mortgages) blew up the world, and yet these exotic creatures have already returned. With a vengeance.

Research from Thomson Reuters declared that banks were creating more derivatives known as asset-backed securities than at any time since before the Lehman Brothers crash. Of those, 22 percent were made up of – and forgive me the alphabet soup here – CDOs and CLOs. The very type of derivatives that exploded last time. At this stage last year, only 6 percent fell into those categories.

In other words, banks are creating more of the riskiest types of the riskiest products.

At some point, we will have another derivatives crisis even worse than the last one.

When that happens, financial markets all over the globe will crash, economic activity will grind to a standstill and unemployment will go skyrocketing once again.

But as you saw above, we have never even come close to recovering from the last crisis.

So you can believe the mind-numbing propaganda that the mainstream media is trying to feed you if you want.  Unfortunately, the reality of the matter is that we have not recovered from the last major economic crisis, and another one is rapidly approaching.

I hope that you are getting ready.

Government Dependents Outnumber Those With Private Sector Jobs In 11 U.S. States

The Number Of People On Welfare Exceeds The Number Of People With Jobs In 11 StatesAmerica is rapidly becoming a nation of takers.  An increasing number of Americans expect the government to take care of them from the cradle to the grave, and they expect the government to dig into the pockets of others in order to pay for it all.  This philosophy can be very seductive, but what happens when the number of takers eventually outnumbers the number of producers?  In 11 different U.S. states, the number of government dependents exceeds the number of private sector workers.  This list of states includes some of the biggest states in the country: California, New York, Illinois, Ohio, Maine, Kentucky, South Carolina, Mississippi, Alabama, New Mexico and Hawaii.  It is interesting to note that seven of those states were won by Barack Obama on election night.  In California, there are 139 “takers” for every 100 private sector workers.  That is crazy!  The American people have become absolutely addicted to government money, and it gets worse with each passing year.  If you can believe it, entitlements accounted for 62 percent of all federal spending in fiscal year 2012.  It would be one thing if we could afford all of this spending, but unfortunately we simply cannot.  We are drowning in debt, and we are stealing more than a hundred million more dollars from future generations with each passing hour.  No bank robber in history can match that kind of theft.

Yes, we will always need a safety net.  There are many people out there that simply cannot take care of themselves.  We certainly don’t want to see anyone sleeping in the streets or starving to death.

But if the number of people jumping on to the safety net continues to grow at the current pace, the net will break and it will not be available for any of us.

For example, the number of Americans on food stamps grew from about 17 million in 2000 to more than 47 million today.  It nearly tripled in just 12 years.

What will happen if it nearly triples again over the next 12 years?

The federal government even has a website (benefits.gov) that guides people through the process of figuring out what welfare programs they can take advantage of.

Overall, the federal government runs nearly 80 different “means-tested welfare programs” and more than 100 million Americans are already enrolled in at least one of those programs.

Yes, I realize that figure is very hard to believe.  I had a hard time believing it when I first came across it.

And it is even more shocking when you realize that the figure of 100 million Americans does not even include those who only receive Social Security or Medicare.

Today, there are 56.76 million Americans on Social Security.

To support all of those Americans on Social Security, there are only about 94.75 million full-time private sector workers.

So there are just 1.67 full-time private sector workers to support each American that is on Social Security.

Medicare is also growing like crazy.  As I wrote about the other day, the number of Americans on Medicare is expected to grow from 50.7 million in 2012 to 73.2 million in 2025.

How much farther can we push things before the entire system collapses?

In order to support this exploding entitlement system, we need a lot more Americans to be working good paying jobs.

Unfortunately, millions of good paying jobs continue to be shipped overseas and they aren’t coming back.

We are even losing good jobs to our own prisoners.  The United States has the largest prison population in the world by far, and the exploitation of that low wage labor pool has become a boom industry in America.  Even Microsoft and Boeing are using prison labor now.  Just check out this video.

Meanwhile, there are millions upon millions of law-abiding Americans that cannot find jobs and that cannot take care of their families.

So poverty and dependence on the government are absolutely exploding.  We have a system that is so messed up that it is hard to even put it into words.  The middle class is being viciously shredded, and most Americans just continue to applaud the politicians from both parties that are doing this to us.

Our economy is being gutted at the same time that the welfare state is experiencing unprecedented growth.  Instead of giving us real answers, our “leaders” just continue to borrow, spend and print more money.  We are about to hit the debt limit again, and the Obama administration is saying that we should just do away with the debt limit permanently.

Most of our politicians don’t seem to understand that they are systematically destroying our economy and the bright futures that our children and our grandchildren were supposed to have.

But there are some politicians out there that get it.  Unfortunately, many of them live in other countries.  For example, Canadian MP Pierre Poilievre seems to have a firm grasp on what debt is doing to the United States.  The following are some excerpts from one of his speeches…

“By 2020, the US Government will be spending more annually on debt interest than the total combined military budgets of China, Britain, France, Russia, Japan, Germany, Saudi Arabia, India, Italy, South Korea, Brazil, Canada, Australia, Spain, Turkey, and Israel.”

“Through government spending the indulgence of one is the burden of another; through government borrowing, the excess of one generation becomes the yoke of the next; through international bailouts, one nation’s extravagance becomes another nation’s debt”

“Everyone takes, nobody makes, work doesn’t pay, indulgence doesn’t cost, money is free, and money is worthless.”

You can see his entire speech right here.

And if we continue down this path it is most definitely true that our money will eventually become worthless at some point.  Just today I was down at the grocery store, and a can of chili that I was able to get on sale for 75 cents a couple of years ago now has a “sale price” of $1.69.  If the Federal Reserve keeps recklessly printing dollars, eventually we will be fortunate to get a can of chili for 10 bucks.  Things cost too much already, and the Fed seems absolutely determined to cut the legs out from under the U.S. dollar.

Unfortunately, printing money is the only way that we are going to be able to service the gigantic amounts of debt that we are accumulating.

According to Chris Cox and Bill Archer, two men who served on Bill Clinton’s Bipartisan Commission on Entitlement and Tax Reform, there is no way in the world that we could raise taxes high enough to pay for all of the obligations that we are currently taking on.  They say that even if we taxed all corporations and all individuals at a 100% tax rate on all income over $66,193,  “it wouldn’t be nearly enough to fund the over $8 trillion per year in the growth of U.S. liabilities.

Are you starting to get an idea of how much trouble we are in?

We don’t have enough money to pay for all of this.

We are broke.

Our current economy is a debt-induced illusion, and we will soon be waking up to a tremendous amount of pain.

Are you ready?

Are You Ready?

What In The World Are Barack Obama And John Boehner Thinking?

What In The World Are Barack Obama And John Boehner Thinking?Barack Obama and John Boehner both seem absolutely determined to drive U.S. government finances off a cliff.  The mainstream media would have you believe that there are vast ideological differences between the two of them and that they are bitter enemies, but that is simply not the case.  Both of them say that tax increases are “necessary”, but they disagree over the details.  Both are seeking about a trillion dollars of spending cuts and about a trillion dollars of new “revenue”, but they don’t see eye to eye on how to get there.  But overall, they are both definitely playing in the same ballpark.  And those numbers certainly do sound impressive until you realize that they are talking about a time span of ten years.  Personally, I would love to see federal spending cut by a trillion dollars this year.  But that will never happen.  A trillion dollars over the course of a decade breaks down to about 100 billion dollars per year.  That still sounds like a lot of money until you put it up next to the trillion dollar deficits that we have been running for four years in a row.  Even if somehow those spending cuts turned out to be real (which they aren’t), they would still only put a very small dent in our yearly budget deficits.  Obama and Boehner both want to continue to have a gigantic federal government that showers people with government money, and both of them want to continue to pass much of the burden for paying for this gigantic government on to future generations.  And both of them want to continue to steal more than 100 million dollars an hour from our children and our grandchildren in order to maintain the false bubble of debt-fueled prosperity that we are enjoying right now.  This is incredibly foolish and they are leading us down a path that will lead to national ruin.

Sadly, even the pathetically small “budget cut” and “new revenue” figures that they are floating around turn out to be quite hollow when you inspect them more closely.

For example, the “new revenue” figures that both Obama and Boehner are talking about rely on extremely unrealistic assumptions about U.S. economic growth.  In order to meet their revenue projections, the U.S. economy would need to grow significantly faster than it is right now and we would need to get through the entire decade without having a single recession.

What do you think the chance of that happening is?

But that is the way that things work in Washington D.C. – our politicians function in a world where it is assumed that everything will work out just perfectly in the future.

For example, if the figures put out at the beginning of the Bush administration were to be believed, we should be absolutely swimming in government surpluses by now.

That didn’t work out too well, did it?

The “spending cuts” are even more illusory.

Obama is projecting that we will save 130 billion dollars by manipulating the way that inflation is calculated for annual increases in Social Security benefits.

But our politicians are already pretending that there is hardly any inflation when any rational person can see that prices are soaring.

So can they really manipulate the numbers to make them look even smaller?

By doing so, they would be cheating elderly Americans out of 130 billion dollars.  But I guess this is more convenient for our politicians than going after real government waste.

Obama also plans to save $290 billion by having lower interest payments on U.S. government debt.

Try not to laugh.

The average rate of interest on U.S. government debt was 2.534 percent at the end of November.  That is ridiculously low.  The only place it is going to go in future years is up.

Back in the year 2000, the average rate of interest on U.S. government debt was 6.638 percent.  If the average rate of interest on U.S. government debt rose back to that level, we would be paying out more than a trillion dollars a year just in interest on the national debt.

So Obama’s projection that we are going to save 290 billion dollars over the next ten years by forcing interest rates on U.S. government debt even lower is insanely optimistic.  Only a delusional person would make such an assumption.

And most of the savings from the “projected spending cuts” that Obama and Boehner are proposing would not happen until later in the decade.

After all, they don’t want to “hurt the economy” right now.

In fact, Obama is actually proposing that we should increase spending by $80 billion this year so that we can encourage economic activity.

So don’t let anyone fool you with any nonsense about how Obama and Boehner are working on a plan that would get U.S. government finances in order.

No matter how their “negotiations” turn out, we will continue to run trillion dollars deficits year after year with no end in sight.

If Americans want a monstrous federal government that passes out government checks like candy, then they should pay for it.  Personally, I think that taxes are already way, way too high and that the government already brings in more than enough money.

If Americans don’t want to pay much higher taxes, then they should tell the government to quit spending money that we don’t have.

But all of this trying to have it both ways has got to stop.  We are destroying the future for our children and our grandchildren.  We have already run up 16 trillion dollars in debt and we can’t even seem to slow down our reckless debt binge.  If they get the chance, someday future generations will curse us for what we did to them.

The funny thing is that John Boehner was supposed to be a “conservative” that was going to do something about all of this debt.  But since John Boehner has been Speaker of the House, the U.S. House of Representatives has approved legislation that has increased the size of our national debt by approximately $18,944 per household.

Thanks John.

Meanwhile, our economy continues to unravel, good jobs are becoming even more scarce, and poverty continues to explode.

For example, did you know that there are now more than one million homeless students in America?  Sadly, it’s true…

The number of homeless students in America topped one million for the first time last year as a result of the economic recession, a number that has risen 57 percent since 2007.

The US Department of Education found that of these 1,065,794 children, many lived in abandoned homes, cheap hotels, stations, church basements and hospitals. Some spent their time sleeping over at the houses of various friends whenever they could. Others fell victim to drugs and sexual abuse, in some cases trading sexual acts for food, clothing and shelter or selling illegal drugs.

Even in the midst of our debt-fueled prosperity, the number of Americans that are dependent on the government just continues to rise.

According to one recent survey, 55 percent of all Americans have received money from a safety net program run by the federal government at some point in their lives.

So how bad will things get when we eventually quit borrowing so much money and we start living within our means?

Nobody is looking forward to that day.  Certainly not our politicians.  They don’t want to be blamed for all of the painful adjustments that will happen once the party ends.

So they just keep borrowing and spending.  But at some point the music will stop and the house of cards will come crashing down.

It won’t happen this week or this month, but it will happen soon enough.

I hope that you are ready.

Obama And Boehner

27 Things That Every American Should Know About The National Debt

The U.S. government has stolen $15,876,457,645,132.66 from future generations of Americans, and we continue to add well over a hundred million dollars to that total every single day day.  The 15 trillion dollar binge that we have been on over the past 30 years has fueled the greatest standard of living the world has ever seen, but this wonderful prosperity that we have been enjoying has been a lie.  It isn’t real.  We have been living way above our means for so long that we do not have any idea of what “normal” actually is anymore.  But every debt addict hits “the wall” eventually, and the same thing is going to happen to us as a nation.  At some point the weight of our national debt is going to cause our financial system to implode, and every American will feel the pain of that collapse.  Under our current system, there is no mathematical way that this debt can ever be paid back.  The road that we are on will either lead to default or to hyperinflation.  We have piled up the biggest debt in the history of the world, and if there are future generations of Americans they will look back and curse us for what we did to them.  We like to think of ourselves as much wiser than previous generations of Americans, but the truth is that we have been so foolish that it is hard to put it into words.

Whenever I do an article about the national debt, Democrats leave comments blaming the Republicans and Republicans leave comments blaming the Democrats.

Well you know what?

Both parties are to blame.  Both of them get a failing grade.

If the Republicans really wanted to stop the federal government from running up all this debt they could have done it.

If the Democrats really wanted to stop the federal government from running up all this debt they could have done it.

So let’s not pretend that one of the political parties is “the hero” in this little drama.

The damage has been done, and both parties will go down in history as being grossly negligent on fiscal issues during this period of American history.

Sadly, neither party is showing any signs of changing their ways.

Neither Barack Obama nor Mitt Romney is promising to eliminate the federal budget deficit in 2013.  They both talk about how the budget will be balanced “someday”, but as we have seen so many times in the past, “someday” never comes.

I didn’t mean to get all political in this article, but the truth is that the national debt threatens to destroy everything that previous generations have built, and our politicians continue to give us nothing but excuses.

The following are 27 things that every American should know about the national debt….

#1 It took more than 200 years for the U.S. national debt to reach 1 trillion dollars.  In 1986, the U.S. national debt reached 2 trillion dollars.  In 1992, the U.S. national debt reached 4 trillion dollars.  In 2005, the U.S. national debt doubled again and reached 8 trillion dollars.  Now the U.S. national debt is about to cross the 16 trillion dollar mark.  How long can this kind of exponential growth go on?

#2 If the average interest rate on U.S. government debt rises to just 7 percent, the U.S. government will find itself spending more than a trillion dollars per year just on interest on the national debt.

#3 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

#4 Since Barack Obama entered the White House, the U.S. national debt has increased by an average of more than $64,000 per taxpayer.

#5 Barack Obama will become the first president to run deficits of more than a trillion dollars during each of his first four years in office.

#6 If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.

#7 The U.S. national debt has increased by more than 1.6 trillion dollars since the Republicans took control of the U.S. House of Representatives.  So far, this Congress has added more to the national debt than the first 97 Congresses combined.

#8 During the Obama administration, the U.S. government has accumulated more new debt than it did from the time that George Washington became president to the time that Bill Clinton became president.

#9 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.

#10 As Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.

#11 Today, the government debt to GDP ratio in the United States is well over 100 percent.

#12 A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.

#13 The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.

#14 At this point, the United States government is responsible for more than a third of all the government debt in the entire world.

#15 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.

#16 The U.S. national debt is now more than 22 times larger than it was when Jimmy Carter became president.

#17 It is being projected that the U.S. national debt will surpass 23 trillion dollars in 2015.

#18 Mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011.  That was not supposed to happen until 50 years from now.

#19 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.

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

#21 U.S. households are now actually receiving more money directly from the U.S. government than they are paying to the government in taxes.

#22 The U.S. government is wasting your money on some of the stupidest things imaginable.  For example, in 2011 the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.

#23 If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for last year would have been 5 trillion dollars instead of 1.3 trillion dollars.

#24 The Federal Reserve purchased approximately 61 percent of all government debt issued by the U.S. Treasury Department during 2011.

#25 At this point, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

#26 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 480,000 years to completely pay off the national debt.

#27 The official government debt figure does not even account for massive unfunded liabilities that the U.S. government will be hit with in the years ahead.  According to Professor Laurence J. Kotlikoff, the U.S. government is facing a future “fiscal gap” of more than 200 trillion dollars.

As the U.S. economy continues to crumble, even more Americans are going to become financially dependent on the federal government.

For example, spending on food stamps has doubled since 2008.  Millions of Americans have lost their jobs and have needed some assistance from the government.  Since Obama became president the number of Americans on food stamps has gone from 32 million to 46 million.

But the Obama administration believes that a lot more Americans should be enrolled in the food stamp program.  The Obama administration is now spending millions of dollars on ads that urge even more people to sign up for food stamps.  In fact, their efforts to get even more Americans to sign up for food stamps have become very creative….

The government has been targeting Spanish speakers with radio “novelas” promoting food stamp usage as part of a stated mission to increase participation in the Supplemental Nutrition Assistance Program (SNAP), or food stamps.

Each novela, comprising a 10-part series called “PARQUE ALEGRIA,” or “HOPE PARK,” presents a semi-dramatic scenario involving characters convincing others to get on food stamps, or explaining how much healthier it is to be on food stamps.

I’m all for helping those that cannot feed themselves, but do we really need to run ads urging more people to become dependent on the government?

Of course Obamacare is going to cause our debt to balloon in size as well.  It is being projected that Obamacare will add more than 2.6 trillion dollars to the U.S. national debt over the first decade alone.

So where are we going to get all this money?

We can’t keep spending money that we do not have.  We have got to prioritize.  Every single category of government spending needs to be cut.

But instead we feel like we can keep ripping off future generations of Americans and that we will always be able to get away with it.

What we have done to our children and our grandchildren is beyond criminal.

The truth is that we should have listened to the warnings of our founding fathers about government debt.  For example, Thomas Jefferson once said that if he could add just one more amendment to the U.S. Constitution it would be a complete ban on all borrowing by the federal government….

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

Where would we be today if we had taken the advice of Thomas Jefferson?

That is something to think about.

Obama’s Five Trillion Dollar Lie

Why isn’t the U.S. economy in a depression right now?  The number one reason is because the federal government has stolen more than five trillion dollars from future generations since Barack Obama was elected and has used that money to pump up our grossly inflated standard of living.  Whether the federal government spends money wisely or foolishly, the truth is that the vast majority of it still ends up in the pockets of the American people who then use it to buy the things they need for their daily lives.  If the U.S. government had not borrowed and spent an extra five trillion dollars that we did not have over the past several years, we would be in the middle of a rip-roaring economic depression right now.  So any talk that Barack Obama is “improving the economy” is a total farce.  It is a five trillion dollar lie.  The reality is that Barack Obama and the U.S. Congress have been stealing trillions of dollars from future generations in order to make things tolerable in the present.  If the federal government adopted a balanced budget next year, the debt-fueled prosperity that we are currently enjoying would start disappearing very rapidly and all hell would break loose in America.

At this point, the U.S. national debt is over 15.7 trillion dollars.

When Ronald Reagan took office it was less than a trillion dollars.

If you were to divide the national debt up equally, it would come to more than $50,000 for every man, woman and child in the United States.

So the share of the national debt for an average family of four would be about $200,000.

When the government borrows and spends money that it does not have, that increases the amount of dollars in circulation and it causes GDP to go up.

That is one of the reasons why our politicians like to borrow and spend money that we do not have.  It makes the economic statistics look good.  They can point to those economic statistics as a reason to send them back for another term.

This is a major flaw in our system.  Most of our politicians do not care about how they are raping future generations financially.  Most of them just care about getting elected again.

If you will notice carefully, neither Mitt Romney nor Barack Obama are promising to balance the budget any time soon.  Like so many politicians in the past, they promise to do it “eventually”, but “eventually” never arrives.

According to a recent article in the Washington Times, Mitt Romney declared during a recent campaign appearance that he has no plans to balance the federal budget in his first year….

“My job is to get America back on track to have a balanced budget. Now I’m not going to cut $1 trillion in the first year”

Why would he say that?

Why wouldn’t he want to balance the budget?

He went on to explain that….

“The reason,” he explained, “is taking a trillion dollars out of a $15 trillion economy would cause our economy to shrink [and] would put a lot of people out of work.”

Romney is right about this.  Taking a trillion dollars out of a 15 trillion dollar economy would plunge us into an economic nightmare.

And that would make him look bad.

Of course if Obama wins the election we can just expect more of the same from him as well.

For example, just check out what White House Chief of Staff Jack Lew had to say about balancing the budget recently….

“The time for austerity is not today,” Lew told NBC News “Meet the Press.” “If we were to put in austerity measures right now, it would take the economy in the wrong way.”

Why is the time for austerity not today?

It is because the 2012 election is coming up and Obama wants the economic statistics to look good.

But can you blame our politicians for being cowardly?

Just look at what is happening in Greece.  After several years of austerity they are in the midst of a full-blown economic depression and they still have not balanced their budget.

Do we want to end up like Greece?

Most Americans do not realize this, but the U.S. already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.

So why haven’t we collapsed yet?

Well, because we continue to borrow larger and larger amounts of money.

It took from the founding of America until 1995 for the federal government to accumulate 5 trillion dollars of debt.

Under Obama, we have accumulated more than 5 trillion dollars of new debt in just over 3 years.

Amazingly, Obama has added more to the national debt than George W. Bush did during his entire 8 year term.

And let there be no mistake – George W. Bush was a wild spender.  A fiscal conservative he most certainly was not.

But Barack Obama does not seem troubled by any of this.

Barack Obama is prancing about the countryside touting his great “economic plan”, but the truth is that the only reason the economy has not totally collapsed is because he is stealing 150 million dollars an hour from our children and our grandchildren.

Sadly, most Americans don’t understand that the current level of prosperity that we are enjoying is a grand illusion.  Most Americans still expect things to return to the way that they used to be, and they are increasingly becoming angry that it is taking so long to get back there.

In fact, a whole host of recent surveys have shown that Americans are very dissatisfied with the direction the economy is heading in….

Four recent surveys have found that on average only 28% of Americans are satisfied with the condition of the country, while 70% are dissatisfied. Three recent surveys have found that between 69% and 83% of Americans believe that the country is still in recession (it isn’t), and only half believe that a recovery is under way.

What they don’t realize is that if we were not massively ripping off our kids and our grandkids things would be much, much worse.

Thomas Jefferson understood that government borrowing is essentially the same as theft from future generations.

He once made the following statement….

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

What we are doing to our children and our grandchildren is so immoral that it is hard to put into words.

We are running up trillions upon trillions of dollars of debt in their name just so that our lives can be more comfortable right now.

How could we be so selfish?

The sad thing is that even with all of this reckless spending our economy is still not in great shape.

In fact, the middle class continues to shrink at an alarming rate.  The following are just a few statistics from a recent article I did about this phenomenon….

-Today, approximately 48 percent of all Americans are currently either considered to be “low income” or are living in poverty.

-Back in 1960, social welfare benefits made up approximately 10 percent of all salaries and wages.  In the year 2000, social welfare benefits made up approximately 21 percent of all salaries and wages.  Today, social welfare benefits make up approximately 35 percent of all salaries and wages.

-The United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.

-Every year now, we see millions of Americans fall out of the middle class.  In 2010, 2.6 million more Americans descended into poverty.  That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

-At this point, approximately 22 percent of all American children are living in poverty.

-When Barack Obama took office, there were 32 million Americans on food stamps.  Now, there are more than 46 million Americans on food stamps.

So how much worse would things be if a trillion dollars of federal spending was suddenly removed from the economy?

Are you starting to get the picture?

As bad as things are right now, they are about to get a whole lot worse.

So why can’t we just keep on borrowing and spending forever?

Well, just like Greece found out, debt always catches up with you eventually.

During fiscal 2011, the U.S. government spent over 454 billion dollars just on interest on the national debt.

But just like we are seeing in Europe, if confidence in U.S. government debt starts to disappear the U.S. government could end up facing much higher interest rates to borrow money.

If the average rate on U.S. government debt only rose to 7 percent (in the past it has actually been much higher than that), then the U.S. government would be spending about 1.1 trillion dollars a year just on interest on the national debt.

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

So if we were spending 1.1 trillion dollars just on interest, that would be close to half of all the revenue the federal government brings in.

Right now, the Federal Reserve is manipulating the system in a desperate attempt to keep interest rates down.  During 2011, the Federal Reserve bought up approximately 61 percent of all government debt issued by the U.S. Treasury Department.

But most Americans have no idea how fragile our financial system is.

Most Americans just assume that we will always be the greatest economy on the planet and that there is nothing to be worried about.

Sadly, one way or another this debt bubble is going to burst and then our debt-fueled false prosperity is going to disappear.

Most Americans are not going to understand what is happening and they are going to go absolutely nuts.

The 15 Trillion Dollar Party

If you knew that you could live in luxury for the rest of your life but that by doing so it would absolutely destroy the future for your children, your grandchildren and your great-grandchildren would you do it?  Well, that is exactly what we are doing as a nation.  Over the past several decades, we have stolen 15 trillion dollars from future generations so that we could enjoy a dramatically inflated level of prosperity.  Our 15 trillion dollar party has been a lot of fun, but what we have done to our children and our grandchildren has been beyond criminal.  We ran up the greatest mountain of debt in the history of the planet and we are sticking them with the bill.  Sadly, both political parties have been responsible for the big spending that has been going on.  Both Democrats and Republicans have run up huge budget deficits when in power.  But instead of learning the hard lessons of the past, both political parties continue to vote for even more debt.  They would rather continue to steal trillions of dollars from future generations than have the party end and have to face the consequences.

And the consequences will be dramatic when the party ends.  During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars.  That means that the U.S. government spent about 1.3 trillion dollars that it did not have.  It is important to understand that even if the U.S. government spent that 1.3 trillion dollars on really stupid things, that money still got into the pockets of ordinary Americans who then spent it on things like food, gas, housing, etc.  In turn, most of those that received money from providing those goods and services would spend it on other things.

So extra government spending can definitely stimulate the economy.  The problem is that we have been doing it permanently.  Since 1975, we have added more than 15 trillion dollars to the national debt.  This has fueled a false prosperity that was way beyond what we could afford.

If the U.S. government tried to go to a balanced budget now, our standard of living would crash and there would be riots in the streets.  The American people have been enjoying false prosperity for so long that they have lost any notion of what “normal” actually is.

Think of it this way.  If your family makes $40,000 this year and you spend an extra $20,000 on your credit cards, your family would be enjoying a false sense of prosperity.

You could do that year after year as long as the credit card companies keep loaning you more money.

But debt always catches up with you in the end.

It is the same thing with the United States.

We have been running up our national credit card balance and the interest payments have become quite painful.

The U.S. government spent over 454 billion dollars just on interest on the national debt during fiscal 2011.

That is 454 billion dollars that the people of the United States do not receive anything in return for.

So in order to keep up with interest on the national debt and to enjoy a standard of living that is beyond our means we now have to run deficits that are in excess of a trillion dollars every single year.

And a trillion dollars is a staggering amount of money.

If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

Since Barack Obama was elected, the U.S. government has added about 5 trillion more dollars to the national debt.

That kind of debt is a recipe for national financial suicide.

How are we supposed to explain to our children that we are passing a debt of $15,579,852,946,457.64 down to them?

At this point, the United States government is responsible for more than a third of all the government debt in the entire world.

The 15 trillion dollar party that we have been enjoying has been amazing, but all of that debt is soon going to bring us a tremendous amount of pain.

And there is really no way out under our current financial system.  As our population ages, government budget deficits are projected to spiral wildly out of control in future years.

Already, entitlement programs are starting to cause massive problems.  For example, mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011.  That was not supposed to happen until 50 years from now.

If the federal government used GAAP (Generally Accepted Accounting Principles) like all publicly-traded corporations are required to do, the situation would be much worse.

The truth is that the U.S. government never had a “balanced budget” during the end of the Clinton administration.  The federal government was borrowing gigantic amounts of money from the Social Security trust fund to finance regular government operations.  It was a big fraud.  Under GAAP, there would have been huge budget deficits during those years.

And even under the non-GAAP numbers used by the U.S. Treasury Department, the U.S. national debt still increased every single year during the Clinton administration.

So let’s get real.

Our national financial situation has always been much worse than we have been told.

It has been estimated that our current budget deficits would be in the neighborhood of 4 to 5 trillion dollars under GAAP.

And looking down the road a bit, we are facing a tsunami of unfunded liabilities that is absolutely nightmarish.

In other words, we have committed ourselves to tens of trillions of dollars of expenses that we don’t have any money for.

According to Professor Laurence J. Kotlikoff, the U.S. is facing a “fiscal gap” of over 200 trillion dollars in the coming years.  The following is a brief excerpt from a recent article that he did for CNN….

The government’s total indebtedness — its fiscal gap — now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations — including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt — and all projected future taxes.

And it just keeps getting worse.  Recently it was revealed that Obamacare will add 17 trillion dollars more to our long-term unfunded obligations.

Basically what we have done is we have committed future generations to a life of endless debt slavery to pay for our debts and for the financial promises that we have made.

How could we be so stupid?

Of course this entire fraudulent system is going to completely collapse before we get too much farther down the road anyway.  Right now the whole thing is essentially being held together by chicken wire and duct tape.

Most Americans do not realize this, but the Federal Reserve bought approximately 61 percent of all government debt issued by the U.S. Treasury Department in 2011.

Normally, the Federal Reserve is not supposed to be doing this.

But right now there are not nearly enough buyers of U.S. government debt at the super low interest rates that the U.S. government wants to pay.  A recent Money News article explained that foreigners have been increasingly shying away from U.S. debt….

“In 2009, such foreign purchases of U.S. debt amounted to 6 percent of GDP and has since falled by over eighty percent to a paltry 0.9 percent.”

Instead of interest rates on U.S. Treasuries rising to attract additional investors, the U.S. Federal Reserve has been intervening to make up the difference.

This is essentially “monetizing the debt” and it is something that Ben Bernanke promised that he would never do.

But he is doing it.

If the Federal Reserve was not buying up all this debt, interest rates on U.S. debt would soar and so would U.S. government interest payments.

Yes, this is a giant Ponzi scheme and it cannot last for long.

Of course all of this could have been avoided if our politicians had not been running up such massive amounts of debt all these years.

Some have suggested that our problems could be solved by simply increasing taxes on the wealthy.

Well, the truth is that the top 5 percent of all income earners already pay nearly 50 percent of all federal taxes and soaking them even more will not even come close to solving the federal budget crisis.

For example, if Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.

And as Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.

So taxing the wealthy will certainly not solve all of our problems.

In fact, when you tax the wealthy and the “somewhat wealthy” it slows economic growth in a number of different ways.

Number one, they have less money to spend into the economy.

Number two, they have less money to invest in business activities.

Number three, it gives wealthy individuals and corporations more of an incentive to move out of the United States.  As I have written about previously, the global elite are already hiding about 18 trillion dollars in offshore banks.  The U.S. government keeps trying to tap into all of that offshore wealth, but the elite always seem to be a few steps ahead of the game.

Yes, we should try to close loopholes in the tax system, but the truth is that the root cause of our problem is that the federal government is simply spending way, way too much money.

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

But our politicians always want to put off spending cuts for another day because they know that immediate spending cuts would really hurt the economy.

For example, just check out this recent quote from White House Chief of Staff Jack Lew….

“The time for austerity is not today,” Lew told NBC News “Meet the Press.” “If we were to put in austerity measures right now, it would take the economy in the wrong way.”

Yes, the Obama administration definitely does not want to hurt the economy with an election coming up in a few months.

So when will it be time to seriously cut government spending?

The day never seems to arrive.

But even though the federal government has been pumping more than a trillion extra dollars into the economy every year, the economy has not shown much improvement.  The percentage of working age Americans that have jobs has barely budged for over two years.

Yes, the policies of the Obama administration have stabilized the U.S. economy for the moment, but if he was actually going to tell the truth he would say something like this….

“By mortgaging the future of our children and our grand-children I have stabilized our economic statistics for the short-term.   Unfortunately, I am going to have to continue to financially abuse future generations to keep us from falling into another Great Depression.  Meanwhile, I am making our long-term financial problems far, far worse.  But the most important thing is that I win re-election so that I can continue to be president.  Thank you for being so selfish and so willing to destroy the future of your children.  Vote for me in 2012 and let the party continue!”

Unfortunately, the party is going to come crashing to an end at some point.

Right now, the global financial system is based on the U.S. dollar and on U.S. government debt.

There will come a time when the rest of the world is going to get sick and tired of watching this Ponzi scheme play out and they are going to completely lose faith in the U.S. dollar and in U.S. government debt.  In fact, there are already signs that this is starting to happen.

When faith in our currency and our debt is completely gone, it will be nearly impossible to get back and the game will be over.

The false prosperity that we are experiencing right now is about as good as things are going to get.

Enjoy it while you still can, because when it is gone that will be the end of it.

Both the Democrats and the Republicans have failed us.  They played fast and loose with our future and they never planned for the long-term.

Now we are facing a collapse of unprecedented magnitude that most Americans will never even see coming.

A horrifying economic collapse is coming.

You better get ready for it.

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