The Beginning Of The End
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Inflation? Only If You Look At Food, Water, Gas, Electricity And Everything Else

Wheelbarrow of MoneyHave you noticed that prices are going up rapidly?  If so, you are certainly not alone.  But Federal Reserve chair Janet Yellen, the Obama administration and the mainstream media would have us believe that inflation is completely under control and exactly where it should be.  Perhaps if the highly manipulated numbers that they quote us were real, everything would be fine.  But of course the way that the inflation rate is calculated has been changed more than 20 times since the 1970s, and at this point it bears so little relation to reality that it is essentially meaningless.  Anyone that has to regularly pay for food, water, gas, electricity or anything else knows that inflation is too high.  In fact, if inflation was calculated the same way that it was back in 1980, the inflation rate would be close to 10 percent right now.

But you would never know that listening to Federal Reserve chair Janet Yellen.  In the video posted below, you can listen to her telling the media that there is absolutely nothing to be concerned about…

And it is really hard to get too upset with Janet Yellen.

After all, she reminds many people of a sweet little grandmother.

But the reality of the matter is that she is simply not telling us the truth.  Everywhere we look, prices are aggressively moving higher.

Just the other day, the Bureau of Labor Statistics announced that the price index for meat, poultry, fish, and eggs has just soared to a new all-time high.

This is something that I have repeatedly warned would happen.  Just check out this article and this article.

And it isn’t just meat prices that are going up.  One of the largest coffee producers in the entire world just announced that it is going to be raising coffee prices by 9 percent

It took the Fed long enough but finally even it succumbed to the reality of surging food prices when, as we reported previously, it hiked cafeteria prices at ground zero: the cafeteria of the Chicago Fed, stating that “prices continue to rise between 3% and 33%.” So with input costs rising across the board not just for the Fed, but certainly for food manufacturers everywhere, it was only a matter of time before the latter also threw in the towel and followed in the Fed’s footsteps. Which is what happened earlier today when J.M. Smucker Co. said it raised the prices on most of its coffee products by an average of 9% to reflect higher green-coffee costs.

Not that coffee isn’t expensive enough already.  It absolutely stuns me that some people are willing to pay 3 dollars for a cup of coffee.

I still remember the days when you could get a cup of coffee for 25 cents.

Also, I can’t get over how expensive groceries are becoming these days.  Earlier this month I took my wife over to the grocery store to do some shopping.  We are really ramping up our food storage this summer, and so we grabbed as much stuff on sale as we could find.  When we got our cart to the register, I was expecting the bill to be large, but I didn’t expect it to be over 300 dollars.

And remember, this was just for a single shopping cart and we had consciously tried to grab things that were significantly reduced from regular price.

I almost felt like asking the cashier which organ I should donate to pay the bill.

Sadly, this is just the beginning.  Food prices are eventually going to go much, much higher than this.

Also, you should get ready to pay substantially more for water as well.

According to CNBC, one recent report warned that “your water bill will likely increase” in the coming months…

U.S. water utilities face a critical economic squeeze, according to a new report—and that will likely mean higher prices at the water tap for consumers.

A survey by water-engineering firm Black & Veatch of 368 water utility companies across the country shows that 66 percent of them are not generating enough revenue to cover their costs.

To make up for the financial shortfall, prices for water are heading upward, said Michael Orth, one of the co-authors of the report and senior vice president at Black & Veatch.

“People will have to pay more for water to make up the falling revenues,” he said. “And that’s likely to be more than the rate of inflation.”

Of even greater concern is what is happening to gas prices.

According to Bloomberg, the price of gasoline hasn’t been this high at this time of the year for six years…

Gasoline in the U.S. climbed this week, boosted by a surge in oil, and is expected to reach the highest level for this time of year since 2008.

The pump price averaged $3.686 a gallon yesterday, up 1.2 cents from a week earlier, data posted on the Energy Information Administration’s website late yesterday show. Oil, which accounts for two-thirds of the retail price of gasoline, gained $2.49 a barrel on the New York Mercantile Exchange in the same period and $4.88 in the month ended yesterday.

The jump in crude, driven by concern that the crisis in Iraq will disrupt supplies, may boost pump prices by 10 cents a gallon at a time when they normally drop, according to forecasts including one from the EIA.

And the conflicts in Iraq, Ukraine and elsewhere could potentially send gas prices screaming far higher.

In fact, T. Boone Pickens recently told CNBC that if Baghdad falls to ISIS that the price of a barrel of oil could potentially hit $200.

Of course the big oil companies are not exactly complaining about this.  This week energy stocks are hitting record highs, and further escalation of the conflict in Iraq will probably send them even higher.

Meanwhile, a “bipartisan Senate proposal” (that means both Democrats and Republicans) would raise the gas tax by 12 cents a gallon over the next two years.

Our politicians have such good timing, don’t they?

Ugh.

And our electricity rates are going up too.  The electricity price index just set a brand new record high and there are no signs of relief on the horizon…

The electricity price index and the average price for a kilowatthour (KWH) of electricity both hit records for May, according to data released today by the Bureau of Labor Statistics.

The average price for a KWH hit 13.6 cents during the month, up about 3.8 percent from 13.1 cents in May 2013.

The seasonally adjusted electricity price index rose from 201.431 in May 2013 to 208.655 in May 2014—an increase of about 3.6 percent.

If our paychecks were increasing at the same rate as inflation, perhaps most families would be able to weather all of this.

Unfortunately, that is not the case at all.

As I wrote about recently, median household income in the U.S. is now about 7 percent lower than it was in the year 2000 after adjusting for inflation.

And if realistic inflation numbers were used instead of the government-manipulated ones, it would look a lot worse than that.

Inflation is a hidden tax that all of us pay, and it is systematically eviscerating the middle class.

So what are prices like in your neck of the woods?

Is your family feeling the pain of inflation?

Please feel free to share your thoughts by posting a comment below…

Obama Has Stolen $5.3 Trillion From Our Children In Order To Make Himself Look Good

Barack Obama has destroyed the future of America in order to improve his chances of winning the next election.  Under Obama, 5.3 trillion dollars has been ruthlessly stolen from our children and our grandchildren.  That money has been used to pump up the debt-fueled false prosperity that we have been experiencing.  When the U.S. government borrows money that it does not have from someone else (such as China) and spends that money into the economy it is going to make our economic numbers look better.  Even if the government spends that money on incredibly stupid things, it still gets into the hands of average Americans who in turn spend that money on food, gas, clothes, etc.  If we were to go back and take that extra 5.3 trillion dollars out of the U.S. economy, I guarantee you that we would be in a rip-roaring depression right now.  We would look a lot like Greece at this point.  For several years Greece has been raising taxes and cutting government spending in an attempt to balance the budget and these austerity measures have resulted in an unemployment rate of over 23 percent and an economy that has contracted by close to 25 percent.  Most Americans don’t want to go through pain like that so they are okay with continuing to financially rape our children and our grandchildren.  Just imagine how you would feel if your parents died tomorrow and you found out that they had left you with a million dollar debt that you were legally obligated to pay off.  How would you feel, knowing that you had just been sold into debt slavery for the rest of your life?  Well, that is how our children and our grandchildren are going to feel.  We are destroying the greatest economic machine the world has ever seen, we are accumulating the biggest mountain of debt in the history of the planet, and the coming economic collapse that we have caused is going to wipe out the promising future that our children and our grandchildren were supposed to have.  If they get the chance, future generations of Americans will curse us bitterly and will spit on our graves.  What we are doing to our children and our grandchildren is the kind of stuff that horror movies are made of.  You should be ashamed of yourself America.

The federal budget deficit for 2012 will be larger than the entire U.S. national debt was 30 years ago.  In 1982 Ronald Reagan was in the White House and the U.S. national debt was considered to be a tremendous national crisis.  But somehow we have allowed our national debt to grow from about a trillion dollars back then to approximately $16,000,000,000,000 today.

By the end of Obama’s first term, the U.S. national debt will have grown more than it did from the time that George Washington became president to the time that George W. Bush became president.

That is hard to believe.

Obama is going to outdo all the presidents from George Washington through Bill Clinton in just one term.

Amazing.

At this point, the U.S. national debt is more than 22 times larger than it was when Jimmy Carter became president.

This has allowed us to enjoy a standard of living far beyond what we deserved to.  We have stolen from the future to make the present more pleasant.

But hardly anybody wants the party to end.  Especially not our Congress critters – they are living like kings and queens at our expense.  Our “representatives” in Washington D.C. love to give speeches about being “financially responsible”, but most of them never take any serious action about the debt because the way things are working now has been incredibly good to them.

And the truth is that both political parties have been responsible.  In 2010, Republicans took control of the House of Representatives with a clear mandate to get government spending under control.  Not a single penny of government money can be spent without their permission.  But since they took control, the U.S. national debt has increased by another 1.8 trillion dollars.

At this point, this current Congress (controlled by both Republicans and Democrats) has added more to the national debt than the first 97 Congresses combined.

We expect this kind of nonsense from the Democrats, but the Republicans are supposed to know better.

Of course our entire financial system is designed to permanently entrap our federal government in an endless spiral of debt, but neither political party ever talks about that.

Sadly, the U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.

But we never hear about the link between the Federal Reserve and our national debt from either political party or on the mainstream news.

So most Americans do not even realize that our system is designed to create government debt.

It is absolutely disgusting.

We say that we care about our kids, and yet we are passing down a $16,000,000,000,000 debt to them.

Talk about child abuse.

Most people have a really hard time grasping how much money 16 trillion dollars actually is.

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

And it would take you more than half a million years to spend 16 trillion dollars.

This is a debt that is impossible to pay back.  Just look at how it has exploded over the past 40 years….

In a previous article I discussed the distressing rate at which our debt is growing….

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?

If we can’t even slow down the growth of our debt, how do we ever expect to repay a single penny?

The sad truth is that we aren’t ever going to start paying down our debt.  We have gotten to the point where if we take our foot off the debt accelerator we plunge directly into a depression and the entire system collapses.  It is like a really sick version of the movie “Speed”.

Where is Keanu Reeves when you need him?

Since Barack Obama entered the White House, he has approved a whole host of measures that have been good for the economy in the short-term.  TARP, the stimulus packages, the auto industry bailout and the payroll tax cut are just a few examples.

Barack Obama has wanted to do everything he possibly can to stimulate the economy in the short-term so that he can win again in 2012.

But what about the future?

Barack Obama could not care less about the future.  He is just like so many of our other politicians.  He is blinded by selfish ambition.

Since Barack Obama became president, the U.S. national debt has increased by an average of more than $64,000 per taxpayer.

Are you willing to write a check for your share?

No?

Oh, let’s just pass this horrific debt on to our children, right?

The path that we are on as a nation cannot go on too much longer.  The truth is that we are headed for financial oblivion.

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.

Of course we will never get to the point.  Our financial system will collapse long before then.

Sadly, the United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.

So why are we not like Greece or Spain yet?

Well, it is because we are still able to borrow huge piles of money very, very cheaply.

But at some point that will come to an end, and when it does the consequences are going to be nightmarish.

Historically, the interest rate on 10 year U.S. Treasuries has averaged 6.68 percent.  If the average rate of interest on U.S. debt rose to that level today, we would be paying more than a trillion dollars a year just in interest on the national debt.

And when you consider our future unfunded liabilities things get even more frightening.

According to Boston University economist Laurence Kotlikoff, the “fiscal gap” is “the present value difference between projected future spending and revenue”.  His calculations have led him to the conclusion that the United States is facing a fiscal gap of 222 trillion dollars.

And this gap is rising at a breathtaking pace.

The following is an excerpt from a recent article co-authored by Kotlikoff….

In 2007, the first year the CBO produced the Alternative Fiscal Scenario, the gap, by our reckoning, stood at $175 trillion. By 2009, when the CBO began reporting the AFS annually, the gap was $184 trillion. In 2010, it was $202 trillion, followed by $211 trillion in 2011 and $222 trillion in 2012.

But if we interrupt this debt cycle we immediately go into a depression.

We are a debt addict that will die without more debt.

Meanwhile, our national ability to produce wealth is going down the toilet.

All over the country businesses are shutting down, factories are being closed and millions of jobs are being sent overseas.

As I wrote about the other day, American families are steadily getting poorer.  The middle class is shrinking and the tax base is shriveling up.

Many Americans end up flat broke at the end of their lives these days.  In fact, one study found that nearly half of all retirees end up with $10,000 or less when they die.

So where is all of the money for servicing this gigantic national debt going to come from?

Even 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.

So what is the solution?

If we keep spending money like this we are doomed, but if we stop spending money like this we are doomed.

And debt is not just a problem that the federal government is facing.

Posted below is a chart that shows the growth of all forms of debt in the United States over the past several decades.  40 years ago, there was less than 2 trillion dollars of total debt owed in the United States.  Now there is nearly 55 trillion dollars of debt owed.  This generation has destroyed the future and has set the stage for an unprecedented economic collapse.  Shame on you America….

It Is Not Just Your Imagination – American Families ARE Getting Poorer

Did you know that median household income in the United States is lower today than it was when the last recession supposedly ended?  If we are in the middle of an “economic recovery”, how can this possibly be happening?  Stunning new statistics compiled by Sentier Research show that the U.S. economy is not nearly as healthy as we have been led to believe.  According to the study that Sentier Research has just released, median household income in the United States was sitting at $55,470 back in January 2000.  In December 2007, when the recession began, it was sitting at $54,916.  In June 2009, when the recession supposedly ended, it was sitting at $53,508.  Today, it is sitting at $50,964.  This is a long-term trend that is definitely going in the wrong direction.  The fact that median household income in the U.S. is now 4.8 percent lower than it was when the last recession ended is incredibly disturbing, especially since all of the things that we buy on a regular basis just keep going up in price.  Food, gas, electricity, car insurance and health insurance all cost a whole lot more today than they did back in the year 2000, and yet median household income has dropped 8.1 percent since that time.  So what does all of this mean?  It means that American families ARE getting poorer.

Yes, the stock market has been soaring, corporate profits have set all-time records in recent years and the big Wall Street banks that were showered with bailout money are absolutely thriving.

But there has been no economic recovery on “Main Street”.

According to the Sentier Research report mentioned above, incomes have been declining in all geographic regions of the country and in all sectors of the economy….

-Median household income for the self-employed has fallen 9.4 percent since June 2009.

-Median household income for private sector employees has fallen 4.5 percent since June 2009.

-Median household income for government workers has fallen 3.5 percent since June 2009.

-Median household income for Americans living in the West has fallen 8.5 percent since June 2009.

-Median household income for Americans living in the Northeast has fallen 4.9 percent since June 2009.

-Median household income for Americans living in the South has also fallen 4.9 percent since June 2009.

-Median household income for Americans living in the Midwest has fallen 1.1 percent since June 2009.

Remember, the recession supposedly ended in June 2009.

Since that time we have supposedly been in a “recovery”.

So if it has seemed to you that American families have been getting poorer it has not just been your imagination.

In a previous article, I detailed 84 statistics that prove that the middle class in America is being systematically destroyed.  If you have not read it yet, I encourage you to go check it out.  At this point it is absolutely undeniable that the middle class in America is declining.  The following are just a couple of the numbers from my recent article….

1. According to the Pew Research Center, 61 percent of all Americans were “middle income” back in 1971.  Today, only 51 percent of all Americans are.

2. The Pew Research Center has also found that 85 percent of middle class Americans say that it is harder to maintain a middle class standard of living today compared with 10 years ago.

3. 62 percent of middle class Americans say that they have had to reduce household spending over the past year.

4. The average net worth of a middle class family in America was $129,582 in 2001.  By 2010 that figure had dropped to $93,150.

5. According to the Federal Reserve, the median net worth of all families in the United States declined “from $126,400 in 2007 to $77,300 in 2010“.

You can find 79 more statistics just like this right here.

At the same time that our incomes are going down, the cost of living just continues to rise steadily.

Thanks Ben Bernanke.

American families are being increasingly stretched financially, and if major changes are not made this is going to get even worse in the years ahead.

Another thing that we aren’t being told on the nightly news is that the percentage of working age Americans that have jobs is lower today than when the last recession ended.

So let’s summarize….

-A smaller percentage of Americans have jobs today compared to June 2009.

-Median household income has declined by 4.8 percent since June 2009.

-American families are far less wealthy than they were just a few years ago.

Are we sure that we are in an economic recovery?

Just look at what is happening to our cities.

The rest of the world once looked at Detroit in awe.

Now it is a global joke.

You can see some incredible photographs of the devastation in Detroit right here.

This kind of thing is happening on the east coast as well.  I have written many times about how horrible life has become in places such as Camden, New Jersey.

Well, now the entire Camden police force is being disbanded, and the policing of the city is going to be turned over to the county.

We are a mess, and it is time to admit that.

Sadly, most Americans simply have no idea how close our economic system really is to total system failure.

Only 24.6 percent of the jobs in this country are “good jobs” at this point, the velocity of money in our economy has plunged to a post-World War II low, unemployment is rampant, more than half of all Americans are at least partially financially dependent on the government and our national debt is crossing the 16 trillion dollar mark.

We don’t need someone to come in and “tweak” the economy.

We need radical reconstructive surgery.

But most Americans do not understand this.

Most Americans do not seem to grasp these things until economic hardship touches them personally.

After all, if you still have a good job and the mainstream media is telling you that everything is going to be okay it is really easy to pretend that we aren’t heading for an economic disaster of unimaginable proportions.

A massive problem that we are facing right now is something known as “normalcy bias”. This is how Wikipedia defines “normalcy bias”….

The normalcy bias, or normality bias, refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of governments to include the populace in its disaster preparations. The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred then it never will occur. It also results in the inability of people to cope with a disaster once it occurs. People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.

Doesn’t that sound exactly like the vast majority of Americans right now?

Most Americans just assume that since we have always recovered from every other economic downturn in the past that we will always be able to easily handle whatever the future throws at us.

If only that was true.

We are heading into a time that will be unlike anything any of us have ever experienced before, and many people that have blind faith in the system are going to be absolutely devastated when this coming crisis blindsides them.

Our economy has been collapsing, it is continuing to collapse, and the collapse is going to accelerate dramatically in the coming years.

You can have blind faith in the system, or you can get prepared for what is coming.

The choice is up to you.

If One Storm Can Turn D.C. Dark For Several Days, What Would A Massive EMP Burst Do?

Sometimes we all get a little reminder of just how completely and totally dependent we are on the power grid.  Massive thunderstorms that ripped through Ohio, West Virginia, Maryland, Washington D.C. and Virginia left millions without power over the weekend.  At this point it is being projected that some people may not get power back until the end of the week.  The “super derecho” storm that pounded the Washington D.C. area on Friday night with hurricane-force winds is being called unprecedented.  But the truth is that there are other events that could happen that would be far more damaging to our power grid.  For example, a substantial EMP burst over a major U.S. city would fry virtually all of the electronics in the city and take the power grid in the area down indefinitely.  A gigantic EMP burst over the entire country (caused by a massive solar storm or a very large nuclear explosion high in the atmosphere) could theoretically take down the entire national power grid.  Just try to imagine a world where nobody has any electricity, nobody can pump gas, nobody can use their credit cards or get any more money, where most vehicles won’t start, where nobody has the Internet, where all cell phones are dead and where nobody can heat or cool their homes.  That is how serious an EMP burst could potentially be.  We are talking about an event that could be millions of times worse than 9/11.

Hopefully this latest storm has reminded Americans about how vulnerable our power grid really is and about how close we really are to being knocked back to the late 1800s.

Let’s review some of the damage that this “super derecho” storm caused to the D.C. area….

-Thousands of businesses have been forced to close temporarily because they cannot operate without electricity

-Many federal agencies were closed on Monday because there was no power

-Many 911 call centers throughout Northern Virginia were down over the weekend and could not respond to emergencies

-Without electricity, many families have not been able to cook warm meals

-Without warm water, many families have not been able to take hot showers

-A “boil water advisory” was put into effect for several areas of northern Virginia

-Many families that still do not have power are in danger of losing much of the food in their refrigerators and freezers

-Many gas stations were not able to operate because of a lack of electricity and so this has made filling up the gas tank a major hassle for many families

-Hundreds of traffic lights are still out and this is making commuting a major problem in some areas

-Without air conditioning many families are absolutely sweltering as high temperatures remain well above 90 degrees

-During the power outage some people have been without cell phone service because many cell phone towers were inoperable

-Without electricity, thousands upon thousands of people have not been able to use their computers for several days and this is causing a lot of frustration

-Several major websites were totally knocked offline by the storms as Robert McMillan of Wired Magazine explained….

Hurricane-like storms knocked an Amazon data center in Ashburn, Virginia, offline last night, and a chunk of the internet felt it. The six-hour incident temporarily cut off a number of popular internet services, including Netflix, Pinterest, Heroku, and Instagram.

But to be honest this was not a major disaster.

After a few days the damage will be fixed and people will start to forget what just happened.

Well, what if the damage was permanent and the entire nation had to go without electricity for the foreseeable future?  The following is from a USA Today article by Dan Vergano….

The sky erupts. Cities darken, food spoils and homes fall silent. Civilization collapses.

End-of-the-world novel? A video game? Or could such a scenario loom in America’s future?

There is talk of catastrophe ahead, depending on whom you believe, because of the threat of an electromagnetic pulse triggered by either a supersized solar storm or terrorist A-bomb, both capable of disabling the electric grid that powers modern life.

As I have written about previously, an EMP attack could fundamentally change life in America in a single instant.

What would you do if such a scenario happened?

Would you try to go somewhere?  Even if the electronics in your car were not totally fried, you would not be able to pump more gas anywhere.

Would you try to call someone?  Most phones would be totally dead and all normal communications networks would be down.  So who would you call?

Would you bunker down and try to survive on what you have at home?  Most of the food in your refrigerator and freezer would rapidly go bad and most Americans only have enough food to last a few days or a few weeks.  In addition, most Americans would no longer be able to heat or cool their homes, so extreme cold and extreme heat would become huge problems very quickly.

How in the world would any of us survive in a world without electricity?

In past centuries our forefathers knew how to survive in such a world, but most of us do not have the same skills or resources that they had.

The following is how an article in the Wall Street Journal once described what a massive EMP burst would do to this nation….

No American would necessarily die in the initial attack, but what comes next is potentially catastrophic. The pulse would wipe out most electronics and telecommunications, including the power grid. Millions could die for want of modern medical care or even of starvation since farmers wouldn’t be able to harvest crops and distributors wouldn’t be able to get food to supermarkets. Commissioner Lowell Wood calls EMP attack a “giant continental time machine” that would move us back more than a century in technology to the late 1800s.

What would you do if you were suddenly cut off from all electricity, all money, all modern forms of communication, all modern forms of transportation and all modern forms of shopping?

Don’t think that it can’t happen.

Scientists tell us that massive EMP bursts generated by gigantic solar storms have hit our planet in the past and that it is inevitable that it will happen again.

In addition, nations all over the planet are aware of what an EMP burst can do and have been developing “Super-EMP” weapons that can take power grids down in a single strike.

The following is a short excerpt from a statement by Dr. Peter Vincent Pry to the United States Senate Subcommittee on Terrorism, Technology and Homeland Security on March 8th, 2005….

Russian and Chinese military scientists in open source writings describe the basic principles of nuclear weapons designed specifically to generate an enhanced-EMP effect, that they term “Super-EMP” weapons. “Super-EMP” weapons, according to these foreign open source writings, can destroy even the best protected U.S. military and civilian electronic systems.

That doesn’t sound good.

But perhaps even more troubling is that North Korea has been reportedly developing this type of weapon.  In fact, it has been reported that North Korea may have tested a “Super-EMP” weapon all the way back in 2009….

North Korea’s last round of tests, conducted in May 2009, appear to have included a “super-EMP” weapon, capable of emitting enough gamma rays to disable the electric power grid across most of the lower 48 states

In time, these kinds of weapons will get into more and more hands.

Will someone try to use this kind of weapon at some point?

Frank Gaffney, the president of the Center for Security Policy, believes that a single EMP burst could potentially end up killing the vast majority of the population of the United States….

“Within a year of that attack, nine out of 10 Americans would be dead, because we can’t support a population of the present size in urban centers and the like without electricity”

Once you understand these kinds of threats, it makes it a lot easier to understand why preppers are so busy preparing for the future.

Our world is becoming incredibly unstable.  Another major economic crisis could hit us at any time, war in the Middle East could erupt without warning, earthquakes and other natural disasters are becoming more frequent and society seems to get a little crazier with each passing day.

The era of tremendous peace and prosperity that we have all been enjoying is rapidly coming to an end.  In a world filled with instability and chaos, it only seems prudent to take some precautions.

You might want to get prepared while you still have time.

The Price Of Gas Is Outrageous – And It Is Going To Go Even Higher

Does it cost you hundreds of dollars just to get to work each month?  If it does, you are certainly not alone.  There are millions of other Americans in the exact same boat.  In recent years, the price of gas in the United States has gotten so outrageous that it has played a major factor in where millions of American families have decided to live and in what kind of vehicles they have decided to purchase.  Many Americans that have very long commutes to work end up spending thousands of dollars on gas a year.  So when the price of gas starts going up to record levels, people like that really start to feel it.  But the price of gas doesn’t just affect those that drive a lot.  The truth is that the price of gas impacts each and every one of us.  Almost everything that we buy has to be transported, and when the price of gasoline goes up the cost of shipping goods also rises.  The U.S. economy has been structured around cheap oil.  It was assumed that we would always be able to transport massive quantities of goods over vast distances very inexpensively.  Once that paradigm totally breaks down, we are going to be in a huge amount of trouble.  For the moment, the big concern is the stress that higher gas prices are going to put on the budgets of ordinary American families.  Unfortunately, almost everyone agrees that in the short-term the price of gas is going to go even higher.

When you are on a really tight budget and you are already spending several hundred dollars on gas each month, you certainly do not want to hear that gas prices are going to increase even more.

A lot of Americans are moving or are getting different vehicles just because of these outrageous gas prices.  The following comes from a recent Mercury News article….

Katherine Zak, of South San Jose, is searching for an apartment near her new job at Facebook in Palo Alto, partly to cut down the cost of driving. Jeff Benson, of Raymond in the Sierra foothills, typically drives 60,000 to 70,000 miles a year and has traded in his 19 mpg Ford Taurus for a Fusion that gets 33 mpg. And David Thomas says his commute from San Jose to San Francisco is getting so expensive that he and his fiancee are hunting for a house near a BART station in the San Mateo-San Bruno area to shorten his commute and lower his $400-a-month gas bill.

The price of gas is going even higher even though energy consumption is sharply declining in the United States.  Just check out the charts in this article by Charles Hugh Smith.  Americans are using less gasoline and less energy and yet the price of gas continues to go up.

That is not a good sign.

Certainly any decrease that we are seeing in the U.S. is being more than offset by rising demand in places such as China and India.  As emerging economies all over the globe continue to develop this is going to continue to put pressure on gas prices.

So just how bad are gas prices in the U.S. right now?

Just consider the following facts….

-The average price of a gallon of gasoline in the United States is now $3.53.

-The average price of a gallon of gasoline is already higher than $3.70 in Connecticut, Washington D.C. and New York.

-In California, the average price of a gallon of gasoline is $3.96 and there are quite a few cities where it is now above 4 dollars.

-In mid-January 2009, the average price of a gallon of gasoline in the United States was just $1.85.

-The average price of a gallon of gasoline in the United States has risen 25 cents since the beginning of 2012.

-Never before in U.S. history has the price of gasoline been this high so early in the year.

-The Oil Price Information Service is projecting that the price of gas could reach an average of $4.25 a gallon by the end of April.

-The price of oil just keeps going up.  The price for West Texas Intermediate is about 19 percent higher than it was one year ago.

-The price of gasoline is also reaching record highs in many areas of Europe as well.  For example, the price of diesel fuel in the UK recently set a brand new record.

-In 2011, U.S. households spent a whopping 8.4% of their incomes on gasoline.  That percentage has approximately doubled over the past ten years.

But the price of gas is not the only thing making driving much more expensive these days.

All over the country, our politicians have been putting up toll booths.  Most of the time these toll booths are going up on roads that have already been paid for.

After paying an outrageous amount for gas and after paying the outrageous tolls on many of these toll roads, many Americans wonder if it is even worth it to get up in the morning and go to work.

Unfortunately, a couple of new bills in Congress right now would reportedly allow even more highways to be made into toll roads.

It is almost as if they want to force us all to stop driving our cars.

America used to be the land of the open road, but that era is rapidly coming to an end.

Another thing that could put upward pressure on the price of gas is the situation in the Middle East.

Iran has already stopped selling oil to companies in the UK and France, and there is the potential that war could erupt in the Middle East at any time.

If war does erupt, or if commercial traffic through the Strait of Hormuz was interrupted for even a brief time, that would send the global price of oil through the roof.

Approximately 20 percent of all oil sold in the world passes through the Strait of Hormuz.  If the flow of oil was halted, that would change the global economy almost overnight.

So is there any good news?

Well, there is one thing that would likely bring down the price of gas substantially.

A global recession.

Remember what happened back in 2008.

Just like we are seeing right now, the price of gas really spiked early in that year.

Eventually, the price of oil hit an all-time record of $147 a barrel in mid-2008.

But then the financial crisis struck and the price of oil fell like a rock as you can see from the chart below….

So could that happen again?

Certainly.

There are a ton of other parallels between 2008 and 2012.

In both years, we saw global shipping start to slow down dramatically.

In both years, the U.S. was getting ready to hold a presidential election.

In both years, many economists were warning that a great financial crisis was about to strike.

Back in 2008, the epicenter of the financial crisis was on Wall Street.

This time, the epicenter of the financial crisis will probably be in Europe.

Keep your eye on Europe.  A disorderly default by Greece (and potentially even an exit from the eurozone) is looking increasingly likely.

But the problems in Europe are not going to end with Greece.  The entire eurozone is going to be greatly shaken by the time this thing is over.

So yes, if we see another major global recession that will be great news for the price of gas, but it will be really bad news for the millions of people that lose their jobs and their homes.

Unfortunately, we live at a time when the world is becoming extremely unstable.  The great era of peace and prosperity that we have been enjoying is coming to an end.  The global financial system is going to experience a tremendous amount of chaos in the years ahead and that is something we will all need to prepare for.

For now, the price of gas is a major concern for millions upon millions of American families.

Someday, however, we will wish desperately that we could go back to these days.

5 Dollar Gas? Get Ready To Pay An Arm And A Leg For Gasoline

One of the quickest ways to bring down the U.S. economy would be to dramatically increase the price of oil. Oil is the lifeblood of our economic system. Without it, our entire economy would come to a grinding halt. Almost every type of economic activity in this country depends on oil, and even a small rise in the price of oil can have a dramatic impact on economic growth.  That is why so many economists are incredibly alarmed about what is happening in the Middle East right now.  The revolution in Libya caused the price of WTI crude to soar more than 7 dollars on Tuesday alone.  It closed at $93.57 on Tuesday and Brent crude actually hit $108.57 a barrel before settling back to $105.78 at the end of the day.  Some analysts are warning that we could even see 5 dollar gas in the United States by the end of the year if rioting spreads to other oil producing nations such as Saudi Arabia.  With the Middle East in such a state of chaos right now it is hard to know exactly what is going to happen, but almost everyone agrees that if oil prices continue to rise at a rapid pace over the next several months it is going to have a devastating impact on economic growth all over the globe.

Right now the eyes of the world are on Libya.  Libya is the 17th largest oil producer on the globe and it has the biggest proven oil reserves on the continent of Africa.

Libya only produces 2 percent of the oil in the world, but with global supplies so tight at the moment even a minor production disruption can have a dramatic impact on the price of oil.

Before this crisis, Libya was producing approximately 1.6 million barrels of oil per day.  Now the rest of the world is wondering what may happen if revolution spreads to other major oil producing nations such as Kuwait (2.5 million barrels of oil per day) or Saudi Arabia.

Saudi Arabia produces 8.4 million barrels of oil a day.  It produces more oil than anyone else in OPEC.

If revolution strikes in Saudi Arabia and a major production disruption happens it could be catastrophic for the global economy.

David Rosenberg, the chief economist at Gluskin Sheff & Associates, is warning that if there is major civil unrest in Saudi Arabia we could end up seeing oil go up to $200 a barrel….

“If Libya can spark a $10-a-barrel response, imagine what a similar uprising in Saudi Arabia could unleash. Do the math: we’d be talking about $200 oil.”

200 dollar oil?

Don’t laugh – it could happen.

In fact, if it does happen the global economy would probably go into cardiac arrest.

The truth is that if the flow of oil from Saudi Arabia gets disrupted there is not enough spare capacity from the rest of the globe to make up for it.

Paul Horsnell, the head of oil research at Barclays Capital, recently said that the world does not currently have enough spare capacity to be able to guarantee that an oil “price shock” will not happen….

“The world has only 4.5m barrels-per-day (bpd) of spare capacity, which is not comfortable.”

Horsnell also said that even in the midst of potential supply problems, the global demand for oil continues to grow at a very robust pace….

“In just two years, the world has grown so fast as to consume additional volume equal to the output of Iraq and Kuwait combined.”

For now, Saudi officials are saying all the right things.  They say that there will be no revolution in Saudi Arabia and that there are not going to be any supply problems.

For example, Saudi Arabian Oil Minister Ali al-Naimi recently announced that the rest of the world should not worry because his country is definitely going to be able to make up for any shortage in the global supply of oil….

“What I would like you to convey to the market: right now there is absolutely no shortage of supply.”

But what happens if revolution comes to Saudi Arabia?

Suddenly the whole game would change.

But even with a peaceful Saudi Arabia the price of gasoline in the United States is already rising to alarming levels.

The average price of gasoline in the United States reached $3.14 a gallon last week.  This closely mirrors what happened back in 2008.  Three years ago at this time the average price of gasoline was right around $3.13 a gallon.

Let’s certainly hope that we don’t see a repeat of what happened to oil prices back in mid-2008.  The price of oil reached an all-time record of $147 a barrel and gas prices in the United States absolutely skyrocketed.

So how high will the price of gas in the U.S. go in 2011?

We haven’t even come close to 4 dollar gas yet, but a large number of analysts believe that it is coming this summer.

Is there even a possibility that we could see 5 dollar gas in America at some point in the next couple of years?

Well, there are some in the oil industry that are convinced that it could actually happen.  Just consider the following quotes….

Darin Newsom, senior analyst at energy tracker DTN….

“If this thing escalates and there’s a good chance that there’d be a shift in supplies, $5 gas isn’t out of the question.”

Peter Beutel, president of energy adviser Cameron Hanover….

“If you are looking at the disruption of movement and production in countries such as Saudi Arabia and the UAE, you’re easily talking $5 gas.”

John Hofmeister, the former president of Shell Oil, on his belief that we could see 5 dollar gas by 2012….

“I’m predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices.”

So why is everyone so concerned about gas prices?

Well, because it affects the price of almost everything else in the economy.

David Wyss, the chief economist at Standard & Poor’s, says that every extra dollar that is spent on gasoline is a dollar that will not be spent somewhere else….

“The money that you spend filling up your car is money you don’t have to spend at the shopping mall.”

Not only that, but when gasoline costs more it has a negative effect on economic growth.  Almost all economic activities involve the use of oil in one form or another.  When the price of oil starts getting really high it motivates people to start cutting back on many of those activities.

The truth is that our whole economic system is based on the ability to use massive amounts of very cheap oil.  Now that the price of oil is rapidly rising again, many economists are becoming very alarmed.

Nobuo Tanaka, the Executive Director of the International Energy Agency, recently told CNBC that his organization is extremely concerned about what high oil prices could do to the global economy….

“That is our concern, regardless of the margins of disruption, if the $100 per barrel of oil is continued in 2011, the burden of oil to the global economy is as bad as 2008.”

So what was so bad about 2008?  Well, the price of oil soared to $147 a barrel in mid-2008 and this was a huge factor in the financial collapse that happened a few months later.  Now oil prices are returning to levels that we have not seen since 2008….

So if the price of oil breaks the all-time record this year will we see another global financial crisis?

It is hard to say.  But what almost everyone agrees on is that it will not be good for the global economy at all.

In addition, a higher price for oil will also have a huge impact on the trade deficit.  Because oil prices were at such a high level back in 2008, oil imports actually made up almost 50 percent of the U.S. trade deficit that year.

In 2010, the U.S. trade deficit was just a whisker under $500 billion.  If the price of oil gets up to 140 or 150 dollars a barrel we could easily see the U.S. trade deficit explode to 700 or 800 billion dollars in 2011.

That would be really, really bad for the U.S. economy.

So where are oil prices going next?

Well, if you could predict that with 100 percent certainty you could make a whole lot of money.  Nobody knows for sure.

But almost everyone believes that the price of oil is going to go up.  In fact, a lot number of investors have been making some very large bets that the price of oil is going to go up very significantly this year.

Recently, large numbers of investors have been betting that the price of oil will rise to $125 a barrel by May.  Shockingly, some investors have even been betting that the price of oil will rise to $250 a barrel by next December.

Let us hope that the price of oil does not rise that rapidly, but as the past couple of months have demonstrated, the world is becoming a very unstable place.   Just about anything is possible at this point.

If the price of oil rises significantly above $100 a barrel and it stays there for an extended period of time, it is going to be absolutely devastating for the U.S. economy.

So what do you all think is going to happen to the price of oil in 2011?  Please feel free to leave a comment with your thoughts below….

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