The Federal Reserve Is Increasing The Pace Of Interest Rate Hikes Just In Time For The 2018 Mid-Term Elections

If the Federal Reserve really wanted to hurt the U.S. economy, the quickest way that it could do that would be by aggressively raising interest rates.  Lower interest rates make it less expensive to borrow money, and therefore economic activity tends to expand in a low interest rate environment.  Alternatively, higher interest rates make it more expensive to borrow money, and economic activity tends to slow down in a high interest rate environment.  Since 1913, the Federal Reserve has engaged in 18 previous rate hiking cycles, and every single one of them resulted in a huge stock market decline and/or a recession.  It will be the same this time around as well, and the “experts” at the Federal Reserve know exactly what they are doing.  Interest rates are being aggressively jacked up just in time for the 2018 mid-term elections, and that is very bad news for the Republican Party and the Trump administration.

On Wednesday, the Federal Reserve announced an interest rate hike for the 2nd time this year

The Federal Reserve increased a key interest rate again Wednesday, which will trigger higher rates on credit cards, home equity lines and other kinds of borrowing.

Wednesday’s action, which was widely expected, was the second Fed rate hike this year — and the seventh since it began boosting them in 2015. The latest increase puts the federal funds rate in a range between 1.75 and 2 percent. The Fed previously nudged rates up in March.

Because so much is based on what the Federal Reserve does, now interest rates will be going up throughout our economy.

For example, we should expect the average rate on a 30-year fixed mortgage to surpass the 4.66 percent mark that we witnessed earlier this year

Mortgage rates have been climbing. The average rate on a 30-year fixed rate mortgage climbed to 4.66% this year in May, the highest in seven years, before falling slightly in recent weeks.

Home mortgage rates tend to move with the bond market, but rates can also rise because of a higher federal funds rate. A higher rate makes it more expensive for banks to borrow money, which can translate into higher borrowing rates for consumers.

Needless to say, this is going to have a huge impact on the housing market.

Interest rates will also be going up on credit cards, auto loans and just about every other kind of debt that you can imagine.

This will inevitably slow down economic activity, and it will make the party that is in power in Washington (the Republicans) look bad.

Originally, it was anticipated that the Federal Reserve would raise rates only three times in 2018, but now they are indicating that rates will be raised a total of four times this year.  The following comes from NPR

The Fed also signaled that it will raise rates more this year than previously expected — four times rather than three.

This is economic sabotage, but nobody in the mainstream media will ever admit this.

Most people do not understand that the Federal Reserve has far more power over the performance of the U.S. economy than anyone else does.  It was the Fed’s ultra-low interest rates and easy money policies that fueled the relative economic improvement that we have witnessed early in Trump’s presidency, and it will be the Fed’s policy of aggressively raising rates that will inevitably cause huge economic turmoil in the coming months.

So why would the Federal Reserve do this?

According to Federal Reserve Chair Jerome Powell, the Fed decided to raise interest rates to keep the economy from overheating

The decision reflected an economy that’s getting even stronger. Unemployment is 3.8%, the lowest since 2000, and inflation is creeping higher. The Fed is raising rates gradually to keep the economy from overheating.

“The main takeaway is that the economy is doing very well,” Fed Chairman Jerome Powell said at a news conference. “Most people who want to find jobs are finding them, and unemployment and inflation are low.”

Of course that is a load of nonsense.

As I discussed yesterday, if honest numbers were being used our unemployment rate would be at 21.5 percent, inflation would be at about 10 percent, and GDP growth would be negative.

The U.S. economy is definitely not “overheating”.  In fact, it needs as much help as possible to pull out of the deep slump that it has been in for many, many years.

Fed Chair Jerome Powell is supposed to be a Republican, and I suppose that it is possible that he actually believes that he is doing the right thing for the country by aggressively raising interest rates.

But any sort of an economic slowdown will be extremely favorable for the Democrats.  American voters are notorious for “voting their pocketbooks”, and when things get bad they always blame whoever is in power at the time.

In this case, it will be Donald Trump and the Republicans in Congress that get the blame for what the Federal Reserve has done.

We know that some among the elite are already discussing the possibility of “a crashing economy” as a way to “get rid of Trump”.  In the short-term, however, the best way to neuter Trump politically would be to have Democrats do extremely well in the 2018 mid-term elections.

If the Democrats take back control of either the House or the Senate in November, Trump’s agenda will come to a crashing halt, and thanks to the Federal Reserve that scenario has just become much more likely.

Michael Snyder is a nationally syndicated writer, media personality and political activist. He is the author of four books including The Beginning Of The End and Living A Life That Really Matters.

18 Times The Fed Has Gone Through A Rate Hiking Cycle, And 18 Times It Has Caused A Huge Stock Market Decline And/Or A Recession

Since 1913, the Federal Reserve has engaged in 18 distinct interest rate hiking campaigns, and in every single one of those instances the end result was a large stock market decline, a recession, or both.  Now we are in the 19th rate tightening cycle since 1913, but many of the experts are insisting that things will somehow be different this time.  They assure us that the U.S. economy will continue to grow and that stock prices will continue to soar.  Of course the truth is that if something happens 18 times in a row, there is a really, really good chance that it will happen on the 19th time too.  For years I have been trying to get people to understand that our country has been on an endless roller coaster ride ever since the Fed was created back in 1913.  Things can seem quite pleasant when the economy is on one of the upswings, but the downswings can be extremely painful.

It was economist Lance Roberts that pointed out this correlation between rate hiking cycles and economic troubles.  When I came across his most recent article, it really got my attention

A sustained interest rate hiking campaign, as undertaken by the Fed, has always resulted in negative stock market returns.

Always. Not usually, not might-be-correlated-to. Always. As in, 18 out of 18 times. Until now. When we’ve had the single highest percentage increase in history (93.33% peak to trough, so far).

To support his claims, he posted this chart

So far, however, there hasn’t been a huge stock market drop or a recession during this rate hiking cycle.

Has something changed?

Is the 19th time going to be fundamentally different?

Roberts believes that the unprecedented intervention by the Fed that we have seen in recent years that has fueled corporate buybacks has successfully “delayed the inevitable stock market correction”

So what gives? Of course, it’s the Fed. Having kept interest rates near zero for years on end and having filled corporate coffers with super cheap debt used to fuel market-bubble-sustaining corporate buybacks, the Fed has delayed the inevitable stock market correction.

I definitely agree with Roberts – a colossal stock market correction is inevitably coming.

And the warning signs are all around us.  As I have discussed so many times before, junk bonds are often an early warning sign for a major financial crisis, and it is extremely interesting to note that it looks like Deutsche Bank is planning a “fire sale” of their energy junk bonds.  The following analysis comes from Zero Hedge

Bloomberg reports that Deutsche is planning to sell the loan book as a whole and has marketed it to North American and European peers, said one of the people. The portfolio is expected to sell for par value, said the people, who asked not to be identified because they weren’t authorized to speak publicly; good luck with that!

The bank’s energy business is expected to wrap up on June 30, one of the people said. The bank has been an active lender in the energy space in the past year, participating in the financing of companies including Peabody Energy Corp. and Coronado Australian Holdings Pty., according to data compiled by Bloomberg.

So to summarize: Moody’s is warning that when the economy weakens we will see an avalanche of defaults like we haven’t seen before; Corporate debt-to-GDP and investor risk appetite is reminding a lot of veterans of previous credit peaks; and now the most desperate bank in the world is offering its whole junk energy debt book in a firesale… just as high yield issuance starts to slump.

Wow.

To me, that is one of the strongest indications yet that things are about to take a major turn for the worse for the global financial system.

And even former Federal Reserve chair Ben Bernanke is sounding quite pessimistic these days.  The following comes from a Bloomberg article entitled “Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020”

The stimulus “is going to hit the economy in a big way this year and next year, and then in 2020 Wile E. Coyote is going to go off the cliff,” Bernanke said, referring to the hapless character in the Road Runner cartoon series.

When you read that quote, alarm bells should have been going off in your head.

If his forecast is accurate, that means that the U.S. economy’s Wile E. Coyote moment will come just in time for the 2020 election

The timing of Bernanke’s possible slowdown would line up badly for Trump, who has called the current economy the best ever and faces reelection in late-2020.

Wouldn’t that be convenient for the elite?

U.S. voters tend to be extremely influenced by the performance of the economy, and so a major economic downturn would not bode well for Trump’s chances.

Similarly, if a major crisis erupts during the second half of this year, it will probably mean big problems for Republicans in November.  Timing is everything in politics, and when the next crisis comes most voters won’t even consider the fact that it had been building for a very, very long time.  All they will care about is who is in office at the time.

But for the moment, most of the “experts” are assuring us that things will be rosy for the foreseeable future.  For example, a couple of prominent analysts over at Goldman Sachs are saying that tech stock prices are likely to continue to rise

“Unlike the technology mania of the 1990s, most of this success can be explained by strong fundamentals, revenues and earnings rather than speculation about the future,” strategists Peter Oppenheimer and Guillaume Jaisson wrote in a note. “Given that valuations in aggregate are not very stretched, we do not expect the dominant size and contribution of returns in stock markets to end any time soon.”

And the optimists will continue to be right up until the moment that the bubble finally bursts.

Whenever the Federal Reserve starts raising rates, it always results in a bad ending.

This time will be no different, and anyone that is trying to convince you otherwise is just being delusional.

Michael Snyder is a nationally syndicated writer, media personality and political activist. He is the author of four books including The Beginning Of The End and Living A Life That Really Matters.

The Globalists Are Systematically Destroying America’s Middle Class

When people are dependent on the government they are much easier to control.  We are often told that we are not “compassionate” when we object to the endless expansion of government social programs, but that is not how the debate should be framed.  In America today, well over 100 million people receive money from the federal government each month, and the number of Americans that are truly financially independent is continually shrinking.  In fact, only 25 percent of all Americans have more than $10,000 in savings right now according to one survey.  If we eventually get to the point where virtually all of us are dependent on the government for our continued existence, that would give the globalists a very powerful tool of control.  In the end, they want as many of us dependent on the government as possible, because those that are dependent on the government are a lot less likely to fight against their agenda.

Back in 1992, the bottom 90 percent of American income earners brought in more than 60 percent of the country’s income.  But last year that figure slipped to just 49.7 percent.  The wealth of our society is increasingly being concentrated at the very top, and the middle class is steadily being eroded.  Surveys have found that somewhere around two-thirds of the country is living paycheck to paycheck at least part of the time, and so living on the edge has become a way of life for most Americans.

Earlier today, I came across a Business Insider article that was bemoaning the fact that the U.S. economy seems to be rather directionless at this point…

  • We do not have a real plan for health care, and costs continue to gobble up American wages.
  • We do not have a plan for dealing with globalization and economic change, but that change continues to shape our economy.
  • We don’t have a plan to update our decrepit infrastructure.
  • The one plan we did have — the Federal Reserve’s post-financial crisis program — is about to be unwound, marking the end of the last clear, executable plan to bolster America’s economy.

Ultimately, the truth is that we don’t actually need some sort of “central plan” for our economy.  We are supposed to be a free market system that is not guided and directed by central planners, but many Americans don’t even understand the benefits of free market capitalism anymore.

However, that Business Insider article did make a great point about globalization.   Most people don’t realize that our economy is slowly but surely being integrated into a global economic system.   This is really bad for American workers, because now they are being merged into a global labor pool in which they must compete directly for jobs with workers in other countries where it is legal to pay slave labor wages.

Even down in Mexico, many autoworkers are only making $2.25 an hour

Most of the workers at the new Audi factory in the state of Puebla, inaugurated in 2016 and assembling the Audi Q4 SUV, which carries a sticker price in the US of over $40,000 for base versions, make $2.25 an hour, according to the Union.

Volkswagen, which owns Audi, started building Beetles in Puebla in 1967 and has since created a vast manufacturing empire in Mexico, with vehicles built for consumers in Mexico, the US, Canada, and Latin American markets.

Volkswagen, Ford, GM, or any of the global automakers, which can manufacture just about anywhere in the world, always search for cheap labor to maximize the bottom line.

Would you want to work for $2.25 an hour?

Over time, millions of good paying jobs have been leaving high wage countries and have been going to low wage countries.  The United States has lost more than 70,000 manufacturing facilities since China joined the WTO, and this is one of the biggest factors that has eroded the middle class.

In a desperate attempt to maintain our standard of living, we have gone into increasing amounts of debt.  Of course our federal government is now 20 trillion dollars in debt, but on an individual level we are doing the same thing.  Today, American consumers are over 12 trillion dollars in debt, and it gets worse with each passing day.

The borrower is the servant of the lender, and most Americans have become debt slaves at this point.  This is something that Paul Craig Roberts commented on recently

Americans carry on by accumulating debt and becoming debt slaves. Many can only make the minimum payment on their credit card and thus accumulate debt. The Federal Reserve’s policy has exploded the prices of financial assets. The result is that the bulk of the population lacks discretionary income, and those with financial assets are wealthy until values adjust to reality.

As an economist I cannot identify in history any economy whose affairs have been so badly managed and prospects so severely damaged as the economy of the United States of America. In the short/intermediate run policies that damage the prospects for the American work force benefit what is called the One Percent as jobs offshoring reduces corporate costs and financialization transfers remaining discretionary income in interest and fees to the financial sector. But as consumer discretionary incomes disappear and debt burdens rise, aggregate demand falters, and there is nothing left to drive the economy.

This debt-based system continuously funnels wealth toward the very top of the pyramid, because it is the people at the very top that hold all of the debts.

Each year it gets worse, and most Americans would be absolutely stunned to hear that the top one percent now control 38.6 percent of all wealth in the United States…

The richest 1% of families controlled a record-high 38.6% of the country’s wealth in 2016, according to a Federal Reserve report published on Wednesday.

That’s nearly twice as much as the bottom 90%, which has seen its slice of the pie continue to shrink.

The bottom 90% of families now hold just 22.8% of the wealth, down from about one-third in 1989 when the Fed started tracking this measure.

So how do we fix this?

Well, the truth is that we need to go back to a non-debt based system that does not funnel all of the wealth to the very top of the pyramid.  Unfortunately, most Americans don’t even realize that our current debt-based system is fundamentally flawed, and it will probably take an unprecedented crisis in order to wake people up enough to take action.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

The Middle Class Is Being Destroyed: Now Only 25 Percent Of All Americans Have $10,000 Or More In Savings

We just got more evidence that the middle class is being systematically eviscerated.  According to a GOBankingRates survey that was just released, more than half the country has less than $1,000 in savings.  So in the event of a major economic disaster of some kind, over 50 percent of the nation is going to be completely out of cash almost immediately.  For years I have been writing about the steady decline of the middle class in the United States, but I still get astounded by numbers such as these.  According to this new survey, only 25 percent of all Americans have $10,000 or more in savings at this point…

$0 saved: 39 percent
Less than $1,000 saved: 18 percent
$1,000 to $4,999 saved: 12 percent
$5,000 to $9,999 saved: 6 percent
$10,000 or more saved: 25 percent

Other surveys have come up with similar results.  One discovered that about two-thirds of the country is living paycheck to paycheck, and another which was conducted by the Federal Reserve found that 44 percent of all U.S. adults do not even have enough money “to cover an unexpected $400 expense”.

Most of us have grown accustomed to barely scraping by from month to month.  But that is not what being “middle class” is supposed to be about.  If you are in the “middle class” you should be making more than you are spending and building long-term wealth.

But just like our federal government, most of us are spending money like there is no tomorrow.  If we don’t have quite enough money for what we want to do, we just borrow more.  Right now, U.S. consumers are more than 12 trillion dollars in debt, and it is impossible to build any real wealth when you are constantly drowning in red ink.

We are willingly enslaving ourselves, but most people were never even taught about the dangers of going into too much debt.

Another major factor in the decline of the middle class is the fact that we have been shipping millions of good paying jobs overseas.  We have lost more than 70,000 manufacturing facilities since China joined the WTO, and we have been replacing good paying manufacturing jobs with low paying service jobs.

Without enough good paying jobs, our middle class has been steadily shrinking.  In 2015, the middle class became a minority of the population in the United States for the first time ever recorded.

If you go back to the early 1970s, the middle class was well over 60 percent of the population, but now that number is hovering in the high 40s.

And things continue to get even worse.  For example, NBC News recently reported that the number of Americans that can’t afford to be living in their own homes has more than doubled since 2001…

Over 38 million American households can’t afford their housing, an increase of 146 percent in the past 16 years, according to a recent Harvard housing report.

Under federal guidelines, households that spend more than 30 percent of their income on housing costs are considered “cost burdened” and will have difficulty affording basic necessities like food, clothing, transportation and medical care.

But the number of Americans struggling with their housing costs has risen from almost 16 million in 2001 to 38 million in 2015, according to the Census data crunched in the report. That’s more than double.

If we want to turn things around for the middle class, we need more entrepreneurs and more small businesses.

Small businesses have traditionally been the primary engine for job growth in this country.  But instead of encouraging small businesses to start and grow, the federal government has been absolutely killing small businesses with red tape and high taxes.

If I win my election, I am going to do all that I can to fight for entrepreneurs and small businesses.  Today, the percentage of Americans that work for themselves is close to a record low, and we desperately need to get that turned around.

So I I go to Congress, one of the first things I plan to do is to push for the elimination of the “self-employment tax”.

If you are an entrepreneur, then you already know how painful that particular tax can be.

We have got to get this economy growing again.  Barack Obama was the only president in our entire history never to have a single year when the U.S. economy grew by at least 3 percent, and overall we have not had a year when our economy grew by at least 3 percent in over a decade.

And as I noted earlier this week, “our economy has still only grown at an average rate of just 1.33 percent a year over the last 10 years.”

Is that acceptable to you?

I hope not, because it sure is not acceptable to me.

What we have been doing is simply not working.  In fact, if we were not propping up the economy with the greatest debt binge in human history, we would be a in a rip-roaring economic depression right now.

If we want America to once again become the greatest economic machine on the planet, we need to do the things that made us great in the first place.  We need an extremely limited federal government that stays out of the way of business, and we need to once again embrace the principles of free market capitalism.

Free markets work tremendously well if you allow them to do so.

But if we continue to march down the road toward big government socialism, we will get what we deserve, and it won’t be pretty.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Hillary Almost Proposed ‘A Universal Basic Income’ In 2016, And The Idea Is Catching Fire Among Grassroots Democrats

Should you get free money from the U.S. government every month simply for being alive?  That may sound like a crazy idea to many of us, but the truth is that this will likely be one of the biggest political issues in the 2020 presidential election.  At this point, 40 percent of all Americans already “prefer socialism to capitalism”, and the concept of a “universal basic income” is starting to catch fire among grassroots Democrats.  Many liberals are convinced that the time has come to fight for the right to “a minimum standard of living”, and one study by a “left-leaning” group found that giving every adult in the country $1,000 each month would increase the size of the U.S. economy by more than 2 trillion dollars

Giving every adult in the United States a $1,000 cash handout per month would grow the economy by $2.5 trillion by 2025, according to a new study on universal basic income.

The report was released in August by the left-leaning Roosevelt Institute. Roosevelt research director Marshall Steinbaum, Michalis Nikiforos at Bard College’s Levy Institute, and Gennaro Zezza at the University of Cassino and Southern Lazio in Italy co-authored the study.

What an incredible idea, eh?

All we have to do is give out free stuff and the economy grows like magic.  And the study also discovered that the larger the universal basic income is, the more the economy would grow.

So why not make it $10,000 a month for everyone?

Well, it turns out that there is a catch.  According to the study, the economy only grows if the universal basic income is funded by deficit spending.  If we have to raise taxes to pay for it, there is no positive benefit to the economy at all

These estimates are based on a universal basic income paid for by increasing the federal deficit. As part of the study, the researchers also calculated the effect to the economy of paying for the cash handouts by increasing taxes. In that case, there would be no net benefit to the economy, the report finds.

Oh.

What a bummer.

Getting free stuff from the government always sounds like a great idea until you realize that we are going to end up paying for it one way or another.

Unfortunately, that little detail isn’t stopping potential Democratic presidential candidates such as Mark Zuckerberg from “exploring” the idea.  And actually, it is being reported that Hillary Clinton almost made a “universal basic income” part of her platform in 2016

In her new book “What Happened,” and in a recent subsequent interview with Vox Editor-in-Chief Ezra Klein, Clinton explains how she seriously considered including a version of universal basic income — a radical solution to poverty, currently being tested in cities and countries around the world — as one of her platforms in the 2016 US presidential election.

The platform would have been called “Alaska for America,” in homage to the state’s Permanent Dividend Fund. Every year since 1982, Alaskans have received a yearly check — typically ranging from $1,000 to $2,000 — as a kickback from the pot of money that has been set aside in case oil reserves dry up.

If the left is ever able to get this implemented, do you think that we will ever be able to take it away?

Over time, government just keeps getting bigger and bigger and so does our national debt.  In fact, we just hit a major milestone in that regard.  According to CNS News, we just surpassed the 20 trillion dollar mark for the first time ever…

The federal debt officially surpassed $20 trillion for the first time on Friday, as the debt subject to the legal limit set by Congress jumped $317,645,000,000 in one day–following President Donald Trump’s signing of a spending-and-debt-limit deal that will fund the government through Dec. 8.

If the left wants a “universal basic income”, they are going to have to get the money from somewhere.  Our budget deficit is already larger “than the entire GDP of Argentina”, and hard working Americans are already being taxed to death.

The truth is that the money simply isn’t there.  As it is, we need to dramatically cut back our borrowing because the path that we are currently on leads to national suicide.  Just consider the following numbers

Here’s the problem: the national debt is growing MUCH faster than the US economy. In Fiscal Year 2016, for example, the debt grew by 7.84%.

Yet even when including the ‘benefits’ of inflation, the US economy only grew by 2.4% over the same period.

This is not even close to the realm of being sustainable.  We are steamrolling toward an inevitable financial collapse, and yet most Americans don’t seem to care.

And thanks to our rapidly aging population, our entitlement spending is set to absolutely explode in coming years.  The following comes from David Stockman

The Federal spending machine is almost entirely on autopilot and heading for disaster owing to ballooning populations and debt. Ten years from now the combined cost of mandatory programs and debt service will reach $5.12 trillion compared to just $2.87 trillion during FY 2018.

Entitlement spending will be nearly double — even if Congress took a 10-year recess!

As shown below, that means the Federal spending share of GDP is now inexorably climbing toward 30% owing to baby boom retirements, even as revenue under current law is stuck at about 18% of GDP. The CBO’s latest projection of the widening fiscal gap — soon more than 10% of GDP annually — leaves nothing to the imagination.

There is no such thing as “free money”.  In the end, we all have to pay for any “free stuff” that the government gives out.

But the “free stuff army” is going to continue to demand more free stuff from the government, and the Democrats are going to be more than happy to give it to them.

To many of you this may sound like complete and utter insanity, but the truth is that the path that we are already on is completely insane as well.  If we don’t find a way to right the ship, it is just a matter of time before it goes under, and anyone that tries to tell you otherwise is not being straight with you.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Debt Nightmare: Does Anyone Actually Care That Our Exploding National Debt Is Destroying Our Future?

When will America finally wake up?  The borrower is the servant of the lender, and we now have a colossal 20 trillion dollar chain around our collective ankles.  We have willingly enslaved ourselves, our children and our grandchildren, and yet our addiction is so insatiable that we continue to add more than 100 million dollars to our debt load every single hour of every single day.  The national debt is sitting at a grand total of $20,162,176,797,904.13 at this moment, but now that the debt ceiling has been lifted that number is expected to shoot up very rapidly toward 21 trillion dollars by the end of the year.  The national debt had been held down by accounting tricks to keep it under the debt limit for many months, but every time this has happened before we have seen the national debt absolutely explode back to projected levels once the debt ceiling was raised.

But very few of our “leaders” in Washington seem to care that we are in the process of committing national suicide.  There is no possible way that we will be able to continue to be the most powerful economy on the planet if we continue down this road.  During Obama’s eight years in the White House, we added more than 9 trillion dollars to the national debt.  That certainly improved things in the short-term, because if we could go back and take 9 trillion dollars out of the economy over the past 8 years we would be in an absolutely nightmarish economic depression right now.

But even with all of this borrowing and spending, our economy has still only grown at an average rate of just 1.33 percent a year over the last 10 years.

And by going into so much debt, we are literally destroying the future for our children and our grandchildren.

What we are doing to them is beyond criminal, and people should be going to prison over this.  But instead we just keep rewarding these Congress critters by sending the same cast of characters back to Washington over and over again.

Are we insane?

The feds are now projecting that the official yearly budget deficit will reach 1.4 trillion dollars by 2027.  Of course federal projections always end up being far more optimistic than reality.

And we are already spending about 500 billion dollars a year just on interest on the national debt, and by 2027 that number is projected to jump to 760 billion dollars a year.

This is complete and utter insanity, and yet we just can’t control ourselves.  The government continues to throw around money as if there is no tomorrow, and our tax dollars are being wasted on some of the most ridiculous things imaginable.

For instance, the U.S. military is spending 42 million dollars each year on Viagra.

We must stop this madness, and we must stop it now.  I really like how an editorial in the Houston Chronicle made this point…

Tax-and-spend politics are bad, but borrow-and-spend is worse. While we have some control over whether our lawmakers raise taxes, our children and grandchildren don’t get a vote on whether we burden them with debt.

Over the long run, huge government debt takes cash out of the economy and drives up interest rates, slowing economic growth and hurting private enterprise.

To protect the U.S. economy, Republicans need to nip plans to eliminate the debt ceiling in the bud and then get to work balancing the federal budget.

Will we ever learn?

Since the beginning of our nation, many of our most prominent statesmen have been warning about the dangers of accumulating government debt.  For example, during his farewell address President George Washington instructed the country to “avoid … the accumulation of debt not only by shunning occasions of expense but by vigorous exertions to discharge the debts, no throwing upon posterity the burden which we ourselves ought to bear.”

And Thomas Jefferson famously said that he wished that he could have added one more amendment to the U.S. Constitution which would have banned government borrowing…

“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 it’s constitution; I mean an additional article, taking from the federal government the power of borrowing.”

This is one of the primary reasons why we must abolish the Federal Reserve system.  The Federal Reserve was actually designed to create a government debt spiral from which we could never possibly escape.  That is why the size of our national debt has gotten more than 5000 times larger since 1913, and we are never going to permanently solve our national debt problem until we get rid of the Fed.

Most Americans don’t realize this, but the path that we are currently on is not sustainable by any definition.  Debt levels are growing much, much faster than GDP, and that is a recipe for disaster.  The following is an excerpt from one of my previous articles

We are living in the greatest debt bubble in the history of the world.  In 1980, total government and personal debt in the United States was just over the 3 trillion dollar mark, but today it has surpassed 41 trillion dollars.  That means that it has increased by almost 14 times since Ronald Reagan was first elected president.  I am searching for words to describe how completely and utterly insane this is, but I am coming up empty.  We are slowly but surely committing national suicide, and yet most Americans don’t even understand what is happening.

According to 720 Global, total government debt plus total personal debt in the United States was just over 3 trillion dollars in 1980.  That broke down to $38,552 per household, and that figure represented 79 percent of median household income at the time.

Today, total government debt plus total personal debt in the United States has blown past the 41 trillion dollar mark.  When you break that down, it comes to $329,961.34 per household, and that figure represents 584 percent of median household income.

Sadly, most people are entirely clueless about what we are doing to ourselves.  Investors are the most optimistic that they have been in years, and most of the talking heads on television seem to believe that the party can go on indefinitely.

But that is simply not possible.

And the same thing is true from a global perspective as well.  The following comes from Chris Martenson

First: our entire economic model, which dependent on borrowing at a faster rate than income (GDP) grows, is something that simply cannot be maintained at its current rate or level. Check.

Second: depleting species, soils and aquifers are all wildly unsustainable practices that are accelerating. Check.

Last (and most glaring of all): the world’s leadership (and we use that term very loosely) continues to insist on adhering to the indefensible idea that infinite growth on a finite planet is possible  Checkmate.

The clock is ticking, and disaster awaits at the end of this road.

Will somebody please do something?

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Would You Like To Steal 128 Million Dollars?

What would you do with 128 million dollars?  Many people like to daydream about winning the lottery, and I have to admit that when I was much younger I would do the same thing.  If you were suddenly financially set for life, you could quit your job, buy your dream home, travel the world and spend your days doing whatever you felt like doing.  We only get one trip through this crazy journey called life, and an enormous mountain of cash could make the journey a whole lot nicer.  So if you could steal 128 million dollars and be absolutely certain that you could get away with it, would you do it?

You would probably be surprised at how many people out there would answer that question affirmatively.  Money is a very powerful motivator, and if the fear of getting caught was out of the equation a lot of people out there would certainly be willing to “bend the rules” for a cool 128 million dollars.

But let’s turn this around for a moment.

What if someone stole 128 million dollars from you?

How would you feel about that?

Every crime has a victim, and losing that amount of money would be unimaginable.

Perhaps you think that this scenario is way too outlandish to even be considering.  After all, who in the world could steal 128 million dollars from someone and get away with it?

Well, what if I told you that this has been happening every day?

And what if I told you that this has actually been happening every single hour of every single day for many years?

When Barack Obama entered the White House, the U.S. national debt was just over 10.6 trillion dollars, and when he left the White House 8 years later it was sitting just shy of 20 trillion dollars.

So during those 8 years more than 9 trillion dollars was added to the national debt.  But for purposes of this example we will round down to an even 9 trillion dollars.

When you divide 9 trillion dollars by 8, you get an average of 1.125 trillion dollars that was added to the national debt per year during the Obama era.

Dividing that figure by 365, you find that an average of $3,082,191,780 was added to the national debt every single day during the Obama administration.

And since there are 24 hours in a day, that means that an average of $128,424,657 was stolen from our children and our grandchildren every single hour of every single day while Barack Obama was president.

When you borrow and spend 128 million dollars that you do not have every single hour of every single day, of course that is going to have a huge impact on the economy.  I am often asked why we are not in a horrendous economic depression yet, and this is one of the biggest reasons.  If we were to go back and take 9 trillion dollars of government spending out of the economy over the last eight years, we would be in the worst depression in American history right now.

But even with all of this added debt, the U.S. economy has still only grown at an average yearly rate of just 1.33 percent over the past 10 years, and that is absolutely terrible.

Our leaders in D.C. were able to prop things up in the short-term by going on the greatest debt binge in U.S. history, but of course they have also made our long-term financial problems much, much worse in the process.

Many people don’t realize this, but the growth of the national debt was actually accelerating as the Obama era drew to a close.  In fact, we added more than 1.4 trillion dollars to the debt during fiscal year 2016.

Once upon a time a lot of people out there would get really upset about the growth of our debt, but these days most Americans seem to have accepted that this is how we do things.  This fiscal liberals seem to have won, and our nation is steamrolling down a road toward financial oblivion.

When you point out the economic disasters in Greece, Italy, Cyprus, Venezuela and Zimbabwe, it doesn’t seem to register with most Americans that our country is on the exact same path.

By borrowing money, you can live way above your means for a while, but eventually you have to pay a price for being so reckless.  This has been true all throughout human history, and it will be true in our case as well.

In a letter to John Taylor on November 26th, 1798, Thomas Jefferson explained that he wished that he could have added one more amendment to the U.S. Constitution…

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 it’s constitution; I mean an additional article taking from the federal government the power of borrowing.

Jefferson wrote extensively about how government debt is a way for one generation to steal money from another generation.

And what we are doing to our children and our grandchildren is absolutely inexcusable.

The term “child abuse” is not nearly strong enough to describe what is taking place, and I don’t know why more people are not seething with anger over what is being done to them.  I am going to do whatever I can to stop this madness, and I hope that you will help me.

Have you ever run up a lot of credit card debt?  If you really wanted to, you could go out today and start living like a millionaire by running up huge credit card balances.  But eventually a day of reckoning would arrive, and you would get to a point where your debts were no longer sustainable.

It is the same thing on a national level.  We have been living way beyond our means for quite a while, but we have been stealing from future generations in order to do it.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

The Debt Crisis Of 2017: Once Their Vacation Ends, Congress Will Have 4 Days To Avoid A Government Shutdown On April 29

April 2017 could turn out to be one of the most important months in U.S. history that we have seen in a very long time.  On April 6th, Donald Trump attacked Syria on the 100th anniversary of the day that the U.S. officially entered World War I, and now at the end of this month we could be facing an unprecedented political crisis in Washington.  On Friday, members of Congress left town for their two week “Easter vacation”, and they won’t resume work until April 25th.  What this means is that Congress will have precisely four days when they get back to pass a bill to fund government operations or there will be a government shutdown starting on April 29th.

Up to this point, there has been very little urgency by either party to move a spending bill forward.  It is almost as if everyone is already resigned to the fact that a government shutdown will happen.  The Democrats will greatly benefit from a government shutdown because they can just blame the entire mess on the Republicans.  But for the GOP, this is essentially the equivalent of political malpractice.

To me, there is simply no way that Congress is going to be able to agree on a bill that funds the entire government in just four days.  And it turns out that this upcoming deadline comes exactly on the 100th day of Trump’s presidency

The U.S. government is poised to shut down on Day 100 of Donald Trump’s presidency, unless Congress can pass a new spending bill or a continuing resolution before the current one expires on April 28.

Since Congress is currently on a two-week recess, there will be a sense of urgency to get a new bill passed once they reconvene on April 25. Leaders in both chambers would have four days to craft a new proposal that each side can agree on and get it on the president’s desk for Trump to sign.

If the Republicans control the White House, the Senate and the House of Representatives, why will it be so difficult to get an agreement on a spending bill?

Well, first of all, look at how difficult it was for the Republicans to agree on a bill to repeal and replace Obamacare.  At this point, it doesn’t look like that is going to happen at all.

More importantly, any bill to fund the government is going to require 60 votes in the Senate.  The “nuclear option” that the Republicans just used to push the Gorsuch Supreme Court nomination through is not available in this case under current Senate rules because a spending bill of this nature would not qualify.

So the Democrats have leverage, and they plan to use it to the maximum.  Senate Minority Leader Chuck Schumer is already promising to block any spending bill that includes funds for a border wall or that defunds Planned Parenthood

The threat from Senate Minority Leader Chuck Schumer and other Democratic leaders sets up a climactic first showdown with the president, particularly with their inclusion of Trump’s signature border wall proposal.

“If Republicans insist on inserting poison pill riders such as defunding Planned Parenthood, building a border wall, or starting a deportation force, they will be shutting down the government and delivering a severe blow to our economy,” Schumer said in a statement.

Up until now, Trump hasn’t needed Democratic votes to stock his cabinet or advance the repeal of Obamacare, but a spending bill keeping the government open is subject to a 60-vote threshold in the Senate.

Do you understand what this means?

President Trump is going to be under an immense amount of pressure to end the government shutdown once it begins, but to do so will mean that he has to give up his goal of getting a border wall.

Do you think that Trump will just throw in the towel and forget about his beloved border wall after giving countless speeches promising one?

It is a game of chicken between Trump and the Democrats, and I don’t think that either side will give in easily.

Of even greater importance is the debate over the funding of Planned Parenthood.

There are members of the Freedom Caucus that will absolutely not vote for any spending bill that includes funding for Planned Parenthood.  But without the Freedom Caucus, there aren’t enough Republican votes to get a spending bill through the House of Representatives.

Alternatively, Senate Minority Leader Chuck Schumer is vowing that his party will block any funding bill that attempts to defund Planned Parenthood in the Senate.

If Planned Parenthood is not defunded now, it never will be defunded.  This is one of the most pivotal moments in recent U.S. political history, and the outcome is going to have extraordinary consequences for our nation.

For those that are optimistic that there will not be a government shutdown, do you actually expect me to believe that this battle over the funding of Planned Parenthood will somehow get resolved in just four days?

Give me a break.

And of course there are dozens of other major issues that have to be resolved as well.  For example, Senator McCain is promising note to vote for any bill unless it includes an enormous increase in military spending, while many Senate Democrats would be very much against such a move.

I don’t see any way that a government shutdown is going to be avoided at this point, and the longer it goes on the more financial markets are going to get rattled.

Meanwhile, we continue to get even more signs that a substantial slowdown has begun for the U.S. economy.  Last week, we learned that only 98,000 jobs were added in March, and that was only about half of what most analysts were expecting.

And since it takes approximately 150,000 jobs a month just to keep up with population growth, that means that we are losing ground.

At the same time, the Atlanta Fed’s GDPNow forecasting model is now projecting that U.S. GDP growth for the first quarter of 2017 will be just 0.6 percent on an annualized basis.

That is absolutely pathetic, and as I have said before, I wouldn’t be surprised at all if we actually end up with a negative number for the first quarter.

If we do indeed get a negative number for the first quarter and that is followed by another negative number for the second quarter, that will mean that a new recession has already started right now but we just haven’t gotten official confirmation yet.

And lots of other things are already happening which have not happened since the last recession.  For instance, this is the first time since the last financial crisis when there has been no growth for commercial and industrial lending for at least six months.

In addition, commercial bankruptcies spiked during the last recession, and now it is happening again

Commercial bankruptcy filings, from corporations to sole proprietorships, spiked 28% in March from February, the largest month-to-month move in the data series of the American Bankruptcy Institute going back to 2012.

Of course consumer bankruptcies are rising at an alarming rate as well.  The following comes from Wolf Richter

In December, bankruptcy filings rose 4.5% from a year earlier. In January they rose 5.4%. It was the first time consumer bankruptcies rose back-to-back since 2010. I called it “a red flag that’ll be highlighted only afterwards as a turning point.”

In March, consumer bankruptcy filings rose 4% year-over-year, to 77,900, the highest since March 2015, when 79,000 filings occurred, according to the American Bankruptcy Institute data.  The turning point has now been confirmed.

If you would like, I could keep talking about the bad economic news for a couple thousand more words.  U.S. credit card debt has just surpassed the one trillion dollar mark, a major crisis has arrived for the U.S. auto industry, thousands of retail stores are closing all over America, our pension funds are underfunded by trillions of dollars, and the U.S. national debt is now sitting at a grand total that is just shy of 20 trillion dollars.  The only reason that we have not crossed that 20 trillion dollar mark yet is because the debt ceiling deadline has already passed, and that is another thing that Congress needs to address very quickly if they want to avoid a major crisis.

Needless to say, the last thing that we need at this point is another war or two on top of everything else.

Unfortunately, a U.S. aircraft carrier strike group headed by the USS Carl Vinson is heading toward North Korea right at this moment, and Russia and Iran are promising to “respond with force” to any new U.S. attacks on Syria.  I will be writing quite a bit more about all of this on End Of The American Dream later today.

Those that were hoping for some sort of “reprieve” under Donald Trump can forget all about that now.  The pace of global events is really starting to accelerate, and the U.S. is already in a more precarious position than it was at any point in 2016.

The clouds have been building for a very long time, and now the storm is almost upon us.  I hope that you have been getting prepared, because a day of reckoning for the United States of America is closing in very rapidly.

12 Reasons Why The Federal Reserve May Have Just Made The Biggest Economic Mistake Since The Last Financial Crisis

Wrong Way Signs - Public DomainHas the Federal Reserve gone completely insane?  On Wednesday, the Fed raised interest rates for the second time in three months, and it signaled that more rate hikes are coming in the months ahead.  When the Federal Reserve lowers interest rates, it becomes less expensive to borrow money and that tends to stimulate more economic activity.  But when the Federal Reserve raises rates , that makes it more expensive to borrow money and that tends to slow down economic activity.  So why in the world is the Fed raising rates when the U.S. economy is already showing signs of slowing down dramatically?  The following are 12 reasons why the Federal Reserve may have just made the biggest economic mistake since the last financial crisis…

#1 Just hours before the Fed announced this rate hike, the Federal Reserve Bank of Atlanta’s projection for U.S. GDP growth in the first quarter fell to just 0.9 percent.  If that projection turns out to be accurate, this will be the weakest quarter of economic growth during which rates were hiked in 37 years.

#2 The flow of credit is more critical to our economy than ever before, and higher rates will mean higher interest payments on adjustable rate mortgages, auto loans and credit card debt.  Needless to say, this is going to slow the economy down substantially

The Federal Reserve decision Wednesday to lift its benchmark short-term interest rate by a quarter percentage point is likely to have a domino effect across the economy as it gradually pushes up rates for everything from mortgages and credit card rates to small business loans.

Consumers with credit card debt, adjustable-rate mortgages and home equity lines of credit are the most likely to be affected by a rate hike, says Greg McBride, chief analyst at Bankrate.com. He says it’s the cumulative effect that’s important, especially since the Fed already raised rates in December 2015 and December 2016.

#3 Speaking of auto loans, the number of people that are defaulting on them had already been rising even before this rate hike by the Fed…

The number of Americans who have stopped paying their car loans appears to be increasing — a development that has the potential to send ripple effects through the US economy.

Losses on subprime auto loans have spiked in the last few months, according to Steven Ricchiuto, Mizuho’s chief US economist. They jumped to 9.1% in January, up from 7.9% in January 2016.

“Recoveries on subprime auto loans also fell to just 34.8%, the worst performance in over seven years,” he said in a note.

#4 Higher rates will likely accelerate the ongoing “retail apocalypse“, and we just recently learned that department store sales are crashing “by the most on record“.

#5 We also recently learned that the number of “distressed retailers” in the United States is now at the highest level that we have seen since the last recession.

#6 We have just been through “the worst financial recovery in 65 years“, and now the Fed’s actions threaten to plunge us into a brand new crisis.

#7 U.S. consumers certainly aren’t thriving, and so an economic slowdown will hit many of them extremely hard.  In fact, about half of all Americans could not even write a $500 check for an unexpected emergency expense if they had to do so right now.

#8 The bond market is already crashing.  Most casual observers only watch stocks, but the truth is that a bond crash almost always comes before a stock market crash.  Bonds have been falling like a rock since Donald Trump’s election victory, and we are not too far away from a full-blown crisis.  If you follow my work on a regular basis you know this is a hot button issue for me, and if bonds continue to plummet I will be writing quite a bit about this in the weeks ahead.

#9 On top of everything else, we could soon be facing a new debt ceiling crisis.  The suspension of the debt ceiling has ended, and Donald Trump could have a very hard time finding the votes that he needs to raise it.  The following comes from Bloomberg

In particular, the markets seem to be ignoring two vital numbers, which together could have profound consequences for global markets: 218 and $189 billion. In order to raise or suspend the debt ceiling (which will technically be reinstated on March 16), 218 votes are needed in the House of Representatives. The Treasury’s cash balance will need to last until this happens, or the U.S. will default.

The opening cash balance this month was $189 billion, and Treasury is burning an average of $2 billion per day – with the ability to issue new debt. Net redemptions of existing debt not held by the government are running north of $100 billion a month. Treasury Secretary Steven Mnuchin has acknowledged the coming deadline, encouraging Congress last week to raise the limit immediately.

If something is not done soon, the federal government could be out of cash around the beginning of the summer, and this could create a political crisis of unprecedented proportions.

#10 And even if the debt ceiling is raised, that does not mean that everything is okay.  It is being reported that U.S. government revenues just experienced their largest decline since the last financial crisis.

#11 What do corporate insiders know that the rest of us do not?  Stock purchases by corporate insiders are at the lowest level that we have seen in three decades

It’s usually a good sign when the CEO of a major company is buying shares; s/he is an insider and knows what’s going on, so their confidence is a positive sign.

Well, according to public data filed with the Securities and Exchange Commission, insider buying is at its LOWEST level in THREE DECADES.

In other words, the people at the top of the corporate food chain who have privileged information about their businesses are NOT buying.

#12 A survey that was just released found that corporate executives are extremely concerned that Donald Trump’s policies could trigger a trade war

As business leaders are nearly split over the effectiveness of Washington’s new leadership, they are in unison when it comes to fears over trade and immigration. Nearly all CFOs surveyed are concerned that the Trump administration’s policies could trigger a trade war between the United States and China.

A decline in global trade could deepen the economic downturns that are already going on all over the planet.  For example, Brazil is already experiencing “its longest and deepest recession in recorded history“, and right next door people are literally starving in Venezuela.

After everything that you just read, would you say that the economy is “doing well”?

Of course not.

But after raising rates on Wednesday, that is precisely what Federal Reserve Chair Janet Yellen told the press

“The simple message is — the economy is doing well.” Federal Reserve Chair Janet Yellen said at a news conference. “The unemployment rate has moved way down and many more people are feeling more optimistic about their labor prospects.”

However, after she was challenged with some hard economic data by a reporter, Yellen seemed to change her tune somewhat

Well, look, our policy is not set in stone. It is data- dependent and we’re — we’re not locked into any particular policy path. Our — you know, as you said, the data have not notably strengthened. I — there’s noise always in the data from quarter to quarter. But we haven’t changed our view of the outlook. We think we’re on the same path, not — we haven’t boosted the outlook, projected faster growth. We think we’re moving along the same course we’ve been on, but it is one that involves gradual tightening in the labor market.

Just like in 2008, the Federal Reserve really doesn’t understand the economic environment.  At that time, Federal Reserve Chair Ben Bernanke assured everyone that there was not going to be a recession, but when he made that statement a recession was actually already underway.

And as I have said before, I wouldn’t be surprised in the least if it is ultimately announced that GDP growth for the first quarter of 2017 was negative.

Whether it happens now or a bit later, the truth is that the U.S. economy is heading for a new recession, and the Federal Reserve has just given us a major shove in that direction.

Is the Fed really so clueless about the true state of the economy, or could it be possible that they are raising rates just to hurt Donald Trump?

I don’t know the answer to that question, but clearly something very strange is going on…

How The Federal Reserve Is Setting Up Trump For A Recession, A Housing Crisis And A Stock Market Crash

Janet Yellen - Public DomainMost Americans do not understand this, but the truth is that the Federal Reserve has far more power over the U.S. economy than anyone else does, and that includes Donald Trump.  Politicians tend to get the credit or the blame for how the economy is performing, but in reality it is an unelected, unaccountable panel of central bankers that is running the show, and until something is done about the Fed our long-term economic problems will never be fixed.  For an extended analysis of this point, please see this article.  In this piece, I am going to explain why the Federal Reserve is currently setting the stage for a recession, a new housing crisis and a stock market crash, and if those things happen unfortunately it will be Donald Trump that will primarily get the blame.

On Wednesday, the Federal Reserve is expected to hike interest rates, and there is even the possibility that they will call for an acceleration of future rate hikes

Economists generally believe the central bank’s median estimate will continue to call for three quarter-point rate increases both this year and in 2018. But there’s some risk that gets pushed to four as inflation nears the Fed’s annual 2% target and business confidence keeps juicing markets in anticipation of President Trump’s plan to cut taxes and regulations.

During the Obama years, the Federal Reserve pushed interest rates all the way to the floor, and this artificially boosted the economy.  In a recent article, Gail Tverberg explained how this works…

With falling interest rates, monthly payments can be lower, even if prices of homes and cars rise. Thus, more people can afford homes and cars, and factories are less expensive to build. The whole economy is boosted by increased “demand” (really increased affordability) for high-priced goods, thanks to the lower monthly payments.

Asset prices, such as home prices and farm prices, can rise because the reduced interest rate for debt makes them more affordable to more buyers. Assets that people already own tend to inflate, making them feel richer. In fact, owners of assets such as homes can borrow part of the increased equity, giving them more spendable income for other things. This is part of what happened leading up to the financial crash of 2008.

But the opposite is also true.

When interest rates rise, borrowing money becomes more expensive and economic activity slows down.

For the Federal Reserve to raise interest rates right now is absolutely insane.  According to the Federal Reserve Bank of Atlanta’s most recent projection, GDP growth for the first quarter of 2017 is supposed to be an anemic 1.2 percent.  Personally, it wouldn’t surprise me at all if we actually ended up with a negative number for the first quarter.

As Donald Trump has explained in detail, the U.S. economy is a complete mess right now, and we are teetering on the brink of a new recession.

So why in the world would the Fed raise rates unless they wanted to hurt Donald Trump?

Raising rates also threatens to bring on a new housing crisis.  Interest rates were raised prior to the subprime mortgage meltdown in 2007 and 2008, and now we could see history repeat itself.  When rates go higher, it becomes significantly more difficult for families to afford mortgage payments

The rate on a 30-year fixed mortgage reached its all-time low in November 2012, at just 3.31%. As of this week, it was 4.21%, and by the end of 2018, it could go as high as 5.5%, forecasts Matthew Pointon, a property economist for Capital Economics.

He points out that for a homeowner with a $250,000 mortgage fixed at 3.8%, annual payments are $14,000. If that homeowner moved to a similarly-priced home but had a 5.5% rate, their annual payments would rise by $3,000 a year, to $17,000.

Of course stock investors do not like rising rates at all either.  Stocks tend to rise in low rate environments such as we have had for the past several years, and they tend to fall in high rate environments.

And according to CNBC, a “coming stock market correction” could be just around the corner…

Investors are in for a rude awakening about a coming stock market correction — most just don’t know it yet. No one knows when the crash will come or what will cause it — and no one can. But what’s worse for most investors is they have no clue how much they stand to lose when it inevitably happens.

“If you look at the market historically, we have had, on average, a crash about every eight to 10 years, and essentially the average loss is about 42 percent,” said Kendrick Wakeman, CEO of financial technology and investment analytics firm FinMason.

If stocks start to fall, how low could they ultimately go?

One technical analyst that has a stunning record of predicting short-term stock market declines in recent years is saying that the Dow could potentially drop “by more than 6,000 points to 14,800”

But if the technical stars collide, as one chartist predicts, the blue-chip gauge could soon plunge by more than 6,000 points to 14,800. That’s nearly 30% lower, based on Friday’s close.

Sandy Jadeja, chief market strategist at Master Trading Strategies, claims several predicted stock market crashes to his name — all of them called days, or even weeks, in advance. (He told CNBC viewers, for example, that the August 2015 “Flash Crash” was coming 18 days before it hit.) He’s also made prescient calls on gold and crude oil.

And he’s extremely concerned about what this year could bring for investors. “The timeline is rapidly approaching” for the next potential Dow meltdown, said Jadeja, who shares his techniques via workshops and seminars.

Most big stock market crashes tend to happen in the fall, and that is what I portray in my novel, but the truth is that they can literally happen at any time.  If you have not seen my recent rant about how ridiculously overvalued stocks are at this moment in history, you can find it right here.  Whether you want to call it a “crash”, a “correction”, or something else, the truth is that a major downturn is coming for stocks and the only question is when it will strike.

And when things start to get bad, most of the blame will be dumped on Trump, but it won’t primarily be his fault.

It was the Federal Reserve that created this massive financial bubble, and they will also be responsible for popping it.  Hopefully we can get the American people to understand how these things really work so that accountability for what is coming can be placed where it belongs.