$4.00 A Gallon Gasoline By The End Of 2010? How In The World Are Average Americans Going To Make Ends Meet If This Keeps Up?

Gas prices are on the rise again.  In many areas of the U.S. gas prices are already hovering around $3.00 a gallon.  In fact there are some areas where people are paying as much as $3.50 a gallon, and many experts are predicting that gasoline could hit $4.00 a gallon by the end of 2010.  If this nonsense keeps up, how in the world is the average American family supposed to make ends meet?  Not only is filling up our tanks going to cost a lot more, but the price of gasoline factors into so many other things.  The U.S. economy just cannot handle a major increase in transportation costs at this point.  These increasing gasoline prices come at a time when U.S. consumers are already stretched to the max.

But it isn’t just gasoline prices that are going up.  The price of food is really starting to rise as well.  Rising demand and reduced supply drove supermarket prices for 16 basic foods up 6.2% in the first quarter of 2010.

Now, for those Americans who are independently wealthy, a large increase in gasoline and food prices might not mean much.

But for the rest of us who are trying to get our incomes to stretch as far as possible each month, it means a whole lot.

In fact, a record number of working Americans are finding that their paychecks are just not making it and are turning to government assistance programs such as food stamps just to make it.

According to the U.S. Department of Agriculture, approximately 39.4 million Americans, a new all-time record, received food stamps in January.  This was up 22% from a year earlier.  In fact, the number of Americans on food stamps has hit all-time records for 14 consecutive months.

New all-time records for 14 months in a row?

How in the world can anyone claim that the U.S. economy is in good shape?

And it is just not people who are out of work or who are lazy who are applying for food stamps.  The truth is that a lot of hard working Americans who are doing everything they can to better themselves find themselves out of alternatives these days.

Some of those hard working Americans are readers of this site.  One of them recently left a comment that is very timely….

There are people on food stamps now, that you would never think they were. For example myself, I just went on food stamps last month. I am not a welfare mom, unemployed or declaring bankruptcy, I am educated and working as hard as I can to make ends meet.

I hold a Masters degree, and a part time job. I make minimum wage and if I were scheduled 40 hours a week my pay would just cover my expenses. Problem is, with retail the number of hours changes from week to week, and it hasn’t been near 40 since Christmas. Luckily I planned ahead and put money aside if I couldn’t find a job right out of school, or if I found one and lost it with today’s economy. I have been able to cover the bills my paycheck doesn’t, but the thing is, my savings has gotten low to that.

I honestly really didn’t want to go on food stamps, I just can’t find another job. Let that be a full time position, or even another part time one. I’m applying to everything I’m qualified for, remotely qualified for, and even over qualified for. But there really are that few of jobs out there.

I haven’t really told anyone I’m on food stamps, a good portion of my old friends are still in school and don’t understand why I can’t find a “real” job. Luckily at my new job there’s a whole store of people who know exactly what I’m going through and would never think of judging me for how much I make or where I live.

There are other people too. Once at work a mother with three kids came in, she had never used food stamps before and had no idea what to do at the register. She almost came to tears trying to explain she really didn’t want to use them, but her husband lost his job, and all that was left for the family was her part time job, and she was so ashamed they had them.

People really have no idea how many of their neighbors are on food stamps.

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Millions of Americans have done everything that the system has told them to do, and now the system is letting them down.

Why?

Because the system is failing.

The middle class is slowly being squeezed out of existence, and the years ahead are going to be very painful.

Already, it is getting extremely hard to live a middle class lifestyle.

If you haven’t read “It’s Impossible to Get By In the US” by Graham Summers of Phoenix Capital Research, you really need to.  In his article, Summers analyzes the expenses of a typical family making the median U.S. household income of $50,300 (he was using 2008 figures).  According to Summers, if a family making that much did everything right financially, they would maybe have a couple hundred bucks at the end of the month for discretionary spending.  But if they overpaid for their house or had any consumer debt then according to his calculations the typical American family would be operating in the red.

The truth is that the day is fast approaching when it will not be possible for the average American family to make it from month to month.

Even now record numbers of American families are failing financially.

In March 2010, there were 158,000 bankruptcy filings.  That was up 19% from March 2009’s number, and it was also up 35% from February 2010’s number.

Things are getting scary out there.

But if all of that wasn’t bad enough, now state and local governments across the United States are either implementing or are considering substantial tax increases.  State and local governments all over the U.S. are facing unprecedented shortfalls, and they are looking for new sources of revenue.  But you just can’t get blood out of a stone.  Unfortunately, they are likely to keep finding ways to impose new taxes on us anyway.

So is there any good news?

No, not really.

The United States is heading for a complete economic collapse and everyone is going to feel the pain one way or another.

Just make sure that you and your family are as prepared as possible for the years ahead.

“The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”
-Vladimir Lenin

My New Book - The Beginning Of The End

12 Reasons Why Millions Of Americans Are Incredibly Angry About The State Of The U.S. Economy

We have reached a very interesting turning point in American history.  More than at any other point in modern times, Americans are deeply angry about the state of the economy.  In fact, it is no stretch to say that millions of U.S. citizens are hopping mad about the economic situation.  Most of them don’t know exactly what is wrong, and even fewer of them have any idea about how to go about fixing things, but they do know one thing.  They know that they are mad.  As Americans, we were raised with the belief that our overwhelmingly powerful economic machine would always provide good jobs and prosperity for all of us as long as we worked hard.  But we have come to learn that is not true.  We have come to learn that our politicians and our leaders have squandered the great inheritance that our forefathers left for us.  We have come to learn that the financial future of our nation is beyond bleak.  We have come to learn that our government has piled up the biggest mountain of debt in the history of the world.  Now the foolish decisions of the past several decades are catching up with us.  The U.S. economy is experiencing structural failure, and the American people are angry.  They want answers.  They want someone to fix things.  They want things to go back to the way they used to be.

But that isn’t going to happen.  Once the American people truly start realizing that, the anger that will erupt will dwarf what we are seeing now.

Not that they are aren’t already incredibly steamed.  The following are 12 reasons why many Americans are absolutely furious about the state of the U.S. economy….

#1) There simply are not enough jobs for everyone.  The number of unemployed Americans per job opening has started to increase again, hitting 5.5 in February.  Even many of those who are able to get some work find themselves only able to obtain part-time employment.  Gallup’s underemployment measure hit 20.0% on March 15th.  This was up from 19.7% two weeks earlier and 19.5% at the start of the year.

#2) More Americans than ever find themselves having to rely on the U.S. government just to survive.  According to the U.S. Department of Agriculture, about 39.4 million Americans, a new all-time record, received food stamps in January.  This was up 22% from a year earlier.  In fact, the number of Americans on food stamps has hit all-time records for 14 consecutive months.

#3) Foreclosures continue to set records across the United States.  RealtyTrac, the California-based authority on property trends and valuations, projects that there will be 4.5 million home foreclosures before the end of this year.  If you figure 4 people per household, that is another 18 million people that will be forced out of their homes.

#4) As unemployment and foreclosures continue to soar, “tent slums” have started popping up all over the United States.  Is this why our founding fathers fought and died?  So we could all live in “tent slums” as the big fat cats on Wall Street roll around in their bailout cash?

#5) But even with all of these economic problems, the price of food is going up.  Rising demand and reduced supply drove supermarket prices for 16 basic foods up 6.2% in the first quarter of 2010.

#6) Due to the exploding government debt, the American people are going to be confronted with some tough choices.  According to Federal Reserve Chairman Ben Bernanke, the United States will soon have to make difficult choices between higher taxes and reduced social spending.  Either alternative will slow down the U.S. economy.

#7) Meanwhile, corruption in the financial system is running rampant.  The CEOs of bailed-out regional banks are actually getting big raises.  The guy who helped bring down AIG is going to get off scott-free and will be able to keep the millions in profits that he made in the process.

#8) But the biggest fraud is being committed by the boys at the top of the food chain.  A whistle blower has come forward with “smoking gun” evidence of price manipulation by major financial institutions in the precious metals markets.  The scope of this fraud is in the trillions of dollars.  The American people can’t stomach much more of this type of thing.

#9) Almost all financial experts agree that the era of super cheap money is over and that interest rates are about to rise significantly.  This is going to make it much more expensive for most Americans to borrow money to buy a home, to buy a car, to buy things with their credit cards or to borrow money for education.  Those who already have adjustable loans are going to find a much larger portion of their income going to pay interest.  Needless to say, this is going to cause the U.S. economy to experience a significant slowdown.

#10) One of the biggest things that the American people are upset about is the “health care reform” bill that was just rammed down their throats.  It turns out that “health care reform” is actually going to be the biggest tax increase in American history.  Not only that, but because of taxes and mandates imposed upon health insurance companies by the legislation, health insurance premiums are also about to increase substantially.  So where will the average American family get the money to pay for these increases?

#11) In addition, the new health care law that was supposed to give all of us much better health care is actually going to force the cancellation of at least 60 doctor-owned hospitals that were scheduled to be opened according to the executive director of Physician Hospitals of America.  Why?  Well, it turns out that the new law singles out physician-owned hospitals, making new physician-owned projects ineligible to receive payments for Medicare and Medicaid patients.

#12) The reality is that Americans are increasingly becoming disenchanted with the lack of leadership in both political parties.  Approval ratings for leaders in both parties are extremely low, and anger at politicians is at an all-time high.  The Tea Party movement is just one symptom of the seething anger many Americans are feeling.  While many Americans are gathering together at large protest rallies to demonstrate against the policies of the government, others are expressing their displeasure on blogs and websites.  There has never been a moment in modern times when Americans have been so disenchanted with their political leadership.

This anger is not going to go away.  It could be soothed a bit if the U.S. economy was fully fixed and things went back to the way they used to be.  But as noted previously, that just is not going to happen.  Harder times are ahead.  Americans are going to get angrier and angrier.

But there is not much that can be done to prevent that anger.  The politicians who are in office when things really hit the fan are going to take the brunt of the anger, but it won’t be their fault.  The truth is that this economic collapse has been building for decades.  The American people are just not going to understand that the financial system cannot be fixed overnight.

Dark times are coming.  It is not going to be pretty.  There is going to be a lot of anger and a lot of hate.  But all of these economic problems could be seen well ahead of time and there have been those who have been screaming and yelling about them for decades.

But very few people wanted to listen.

Austin Coins

If The Money Supply Is Exploding Why Are We Not Seeing Rampant Inflation?

The U.S. money supply has been expanding at an absolutely unprecedented rate.  So why are we not experiencing rampant inflation?  Why is the U.S. dollar not falling through the floor?  Well, the truth is that all of this new money has gotten into the U.S. financial system but it is not getting into the hands of U.S. businesses and consumers.  In fact, even though the money supply is exploding, U.S. banks have dramatically decreased lending.  This has brought us to a very bizarre financial situation as a nation.

What we have seen is the U.S. government shovel massive amounts of cash into the U.S. financial system and then watch as the big banks sit on that cash and refuse to lend it. The biggest banks in the U.S. reduced their collective small business lending balance by another 1 billion dollars in November 2009.  That drop was the seventh monthly decline in a row.  In fact, in 2009 as a whole U.S. banks posted their sharpest decline in lending since 1942.

So all of this money that the U.S. government pumped into the financial system has been doing American businesses and consumers very little good.  That is why we can have a vastly increased money supply (as you can see from the chart below) and very little inflation.

So if the banks are not lending the money to the American people, what are they doing with it?  One of the things they are doing with it is buying U.S. government debt.  As you can see from the chart below, U.S. banks have cut business lending by approximately 350 billion dollars since early 2009 and they have purchased approximately 300 billion dollars worth of U.S. Treasury securities.

So instead of loaning money to American businesses and consumers who desperately need it, a ton of this new money is being used to pump up yet another bubble.  This time the bubble is in U.S. Treasuries.  Asia Times recently described how this trillion-dollar carry trade in U.S. government securities works….

Remarkably, the most aggressive buyers of US government debt during the past several months have been global banks domiciled in London and the Cayman Islands. They borrow at 20 basis points (a fifth of a percentage point) and buy Treasury securities paying 1% to 3%, depending on maturity.

This is the famous “carry trade”, by which banks or hedge funds borrow short-term at a very low rate and lend medium- or long-term at a higher rate. This works as long as short-tem rates remain extremely low. The moment that borrowing costs begin to rise, the trillion-dollar carry trade in US government securities will collapse.

So what happens when this bubble collapses?

Nobody knows for sure.  But anyone who has dealt with carry trades in the past knows that when carry trades unwind they can do so very, very quickly and the results can be nightmarish.

The truth is that the U.S. financial system is a house of cards that could fall at any time.  A lot of economic pain is on the horizon – it is only a matter of when it comes and how bad it is going to get.  Trends forecaster Gerald Celente is predicting that it could be as soon as this year….

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