The Beginning Of The End
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10 Examples Of The Social Decay That Is Eating Away At America Like Cancer

Social Decay - Public DomainIt isn’t just our economy that is crumbling.  Something is happening to America that no amount of money will be able to fix.  Everywhere around us we can see evidence of the social decay that is systematically eating away at the foundations of our society.  It can be found on the streets of our inner cities, in dark basements in extremely rural communities, in the most prestigious boardrooms on Wall Street, and definitely in the halls of power in Washington.   Bringing in an entirely different crop of politicians or printing gigantic mountains of money is not going to solve this problem, because it exists in the hearts of millions of ordinary men and women.  The truth is that we really need to take a good, long look at ourselves in the mirror, because we need to take a 180 degree turn as a nation.  What we are doing now is clearly not working, and the longer that we take to address this problem the worse it is going to get.  The following are 10 examples of the social decay that is eating away at America like cancer.  Individually, they could be dismissed as isolated incidents.  But I could have easily listed 100 examples or 1000 examples.  Every single day, we are inundated with reports like these.  The symptoms of the decay of our society are all around us.  We just have to be willing to look at them…

#1 It seems like many of the most horrific crimes these days are happening in middle America.  For example, a woman was recently hit over the head, raped and set on fire in a park in Wichita Kansas

Wichita police say a woman was sexually assaulted, hit on the head, and set on fire Monday night in Fairmount Park.

According to police, the woman was on the ground, almost in a crawl, barely moving, and naked.

The woman was helped by a neighbor – Johnnye Marshall woke up her boyfriend Deon McPherson when she heard somebody scream for help.

“What if that was my daughter?  I’d want somebody to go in and get her,” McPherson told The Wichita Eagle.  “Where there wasn’t blood, there was a burn.”

The flames from the fire were about 2 to 4 feet high.  McPherson stayed with the woman until firefighters arrived.

#2 I have repeatedly written about how the United States is the most obese of all the major industrialized nations.  Well, now we are using our extreme obesity to try to hide things that we have stolen

A 350-pound Wal-mart shopper was arrested yesterday after he was found sitting atop five stolen rib eye steaks in the seat of a motorized scooter that he was riding around the South Carolina store.

Rodney Fowler, 43, was spotted Tuesday afternoon placing the steaks in his scooter by a Walmart loss prevention officer, according to a police report.

“Suspect sat on the steaks and exited the store passing all points of sale, without attempting to pay for said merchandise,” cops noted.

The 5’ 5” Fowler was then confronted by the Walmart worker and escorted back into the store, where he was later arrested by police for shoplifting. “Due to his size, the suspect was cuffed using two pairs of cuffs,” investigators noted.

#3 What would you do if a police officer pulled you over for a traffic stop and exposed his private parts to you when he came up to your vehicle?  Well, this actually has been happening in New Jersey

A Newton police officer was arrested Monday on accusations that he unzipped his pants and exposed himself to young male drivers during “numerous” traffic stops.

Jason R. Miller, 37, of Hampton Township, a patrolman since 2001, turned himself in at the Sussex County Prosecutor’s Office and has been indefinitely suspended without pay pending the outcome of the criminal case, according to a statement issued by Sussex County Prosecutor Francis Koch and Newton Police Chief Michael Richards.

Miller was charged with two counts of official misconduct, one count of a pattern of official misconduct and one count of lewdness, the statement said.

Miller would expose his genitals to motorists “to satisfy his prurient interests” and then let them leave without issuing traffic summonses, according to a police complaint.

#4 If someone was planning to “accidentally” kill his wealthy wife, you would think that he would be smart enough not to put an “X” on the map where he planned to do it.  But that is apparently precisely what one man in Colorado foolishly did…

A suburban Denver man charged with pushing his wife to her death off a cliff in Colorado’s Rocky Mountain National Park could not explain to investigators why he had a park map with an “X” drawn at the spot where she fell.

Newly unsealed court documents say Harold Henthorn denied using the map during the deadly September 29, 2012, hike.

But he told friends that he scouted out the park’s steep and craggy terrain at least six times, trying to find the perfect place to take Toni to celebrate their 12th year of marriage.

It also turns out that his first wife died in a “freak accident” too.

Some coincidence, eh?

#5 It is one thing to kill someone.  It is another thing to hack the dead body up with a saw and cook it.  I don’t know what in the world has happened to the state of Florida, but a lot of really weird stuff has been going on down there lately…

Angela Stoldt told officials she took a hacksaw to her neighbor’s body last year and tried to cook away evidence of James Sheaffer.

One leg went in the oven. Other parts went into pots.

Stoldt’s house in Deltona smelled of burning flesh, but she assured her daughter it was just a rat broiling in the oven, according to details made public last week after a grand jury charged her with first-degree murder.

“Thursday is when I was cooking him,” Stoldt told investigators. “Friday is when I was dumping him.”

The 42-year-old Deltona woman is accused of killing Sheaffer, 36, a limousine driver, in April 2013.

#6 In recent years, it seems like there has been a constant stream of news stories about twisted men locking up women in their basements and forcing them to be sex slaves.  The latest example comes from Cincinnati

A man pleaded guilty Friday to locking multiple women in his Cincinnati home and forcing them into prostitution.

Christopher Hisle, 45, was arrested on April 8, 2014, in Louisville, Kentucky after authorities said he drove a young woman from Cincinnati to Louisville to engage in prostitution at a nearby Red Roof Inn.

An FBI investigation later revealed Hisle was involved in forcing and compelling the women to engage in commercial sex for at least two years. He held the women at his Avondale home at 908 Lexington Ave., documents state .

It is unknown how many women Hisle held at one time and what their ages were. Authorities said at least 12 women are victims of his human trafficking operation.

#7 Why would a grown woman want to have sex with a 10-year-old boy?  You would have to be incredibly sick to try to do such a thing, but that is reportedly what one 25-year-old babysitter in Connecticut is charged with doing.  In fact, she is accused of doing this multiple times

A babysitter has been accused of repeatedly having sex with her friend’s 10-year-old son while she was looking after him and his other siblings.

Marybeth Rataic is facing 10 felony charges after allegedly having sex three times with the boy at his home in Meriden, Connecticut.

Police say that in one instance, the 25-year-old from Willimantic, had sex with the boy while his siblings slept in the room after creeping into the child’s room, which he shared with his brothers.

She is also accused of having sex with the 10-year-old while his mother was giving birth in hospital.

#8  A minor scuffle between two girls at a California high school erupted into a melee when a 400 pound police officer slammed his fist into the face of one of the girls.   Other students began to swarm the officer, and at that point things got wildly out of control

A lunchtime fight at a Central California high school Wednesday ended with police swarming onto campus, closing the school and putting six students under arrest, authorities said.

However, Ernest Righetti High School students say the initial fight was relatively minor, and that it was a Sheriff’s deputy striking one of the girls involved in the brawl that sparked the mass violence on campus.

That shocking moment was filmed by a bystander and has since been posted online by the Santa Maria Times.

The video shows the officer trying to break up a fight between two girls, only to hit one of the young women and drag her away. Students watching the altercation appear outraged by the act, and start to swarm the officer.

#9 When I was growing up, it seemed like almost everyone watched the Cosby Show on Thursday night.  Bill Cosby was “America’s Dad”, and he was universally respected.  Well, it turns out that now he is being accused of rape by 15 different women.  How is it possible that such horrific crimes could be covered up for so long, and what does that say about our society?  The following comes from Time Magazine

In Cosby’s story we find accusations of women being silenced for decades by threats, lawyers, fear and a generally defensive public, who until now were uninterested in being awakened from sweet dreams of their TV father.

The NPR audio interview released last week showcases Cosby’s clearly pre-determined response to the softest, almost nervous questions about the rape allegations: deafening silence.

This should not be viewed as the mature response of a well respected, integrity filled man (and in the case of his wife, a beloved, regal woman) attempting to maintain dignity and stay above the fray. It should be seen as what it is: A power move by a someone so arrogant that he thinks he shouldn’t even be asked about the fact that 15 women are accusing him of a horrific crime.

#10 As I have written about previously, the violence that we have seen in Ferguson, Missouri this year is a perfect example of how the streets of America can descend into chaos.  And now the upcoming grand jury decision threatens to rekindle that violence.

Instead of sober deliberation about this case and sincere attempts at peaceful reconciliation, both sides are preparing for mass civil unrest.  If the grand jury reaches “the wrong decision” we could see even more rioting, looting, violence and police brutality than we saw the first time around.

And this time, it may not be limited to Ferguson.  As the Daily Sheeple has pointed out, protest organizers have put up a Tumblr page for something called “The Ferguson National Response Network“.  According to that page,  “planned responses” are being organized in 82 cities throughout the United States.  In addition, protest organizers have released a list of 19 “Proposed Rules of Engagement” for confrontations with law enforcement authorities.  Needless to say, all of this sounds quite ominous.  The following are the 82 cities where “planned responses” are currently being organized…

Albany, NY
Albuquerque, NM
Atlanta, GA
Austin, TX
Baltimore, MD
Bangor, ME
Beavercreek, OH
Blacksburg, VA
Boston, MA
Buffalo, NY
Carbondale, IL
Chapel Hill, NC
Chattanooga, TN
Chicago, IL
Cleveland, OH
Columbia, MO
Columbus, OH
Dallas, TX
Denver, CO
Des Moines, IA
Detroit, MI
Durham, NC
Ferguson, MO
Gainesville, FL
Grand Rapids, MI
Greensboro, NC
Greenville, NC
Grinnell, IA
Houston, TX
Indianapolis, IN
Iowa City, IA
Jackson, MI
Kansas City, MO
Kennesaw, GA
Lawrence, KS
Lexington, KY
Longview, TX
Los Angeles, CA
Louisville, KY
Meadville, PA
Memphis, TN
Milwaukee, WI
Minneapolis, MN
Mobile, AL
Monpelier, VT
Monroeville, OH
Nashville, TN
New London, CT
New Orleans, LA
Newark, NJ
Northampton, MA
NYC, NY
Oak Ridge, TN
Oakland, CA
Olympia, WA
Oshkosh, WI
Phoenix, AZ
Philadelphia, PA
Pittsburgh, PA
Portland, OR
Providence, RI
Raleigh, NC
Rochester, NY
Rocky Mount, NC
San Diego, CA
Santa Barbara, CA
Seattle, WA
South Hadley, MA
Spring Valley, NY
Springfield, MA
St. Paul, MN
St. Petersburg, FL
Stroudsberg, PA
Tallahassee, FL
Tampa, FL
Toledo, OH
Toronto, Canada
Tucson, AZ
Washington, D.C.
West Hartford, CT
West Palm Beach, FL
Williamsburg, VA
Worcester, MA

Police in Ferguson are warning citizens that they better buy guns because they “will not be able to protect you or your family“.  And
CNN is reporting that gun sales in Ferguson are indeed surging.

Hopefully this grand jury decision will come and go and peace will prevail in Ferguson and elsewhere.

But without a doubt, the thin veneer of civilization that we all take for granted on a daily basis is disappearing.

The foundations of our society are steadily rotting and decaying, and our underlying problems are getting worse with each passing day.

How long will our nation be able to remain stable if this continues?

National Economic Suicide: The U.S. Trade Deficit With China Just Hit A New Record High

Economics - Public DomainDid you know that we buy nearly five times as much stuff from the Chinese as they buy from us?  According to government numbers that were just released, we imported 44.9 billion dollars worth of stuff from China in September but we only exported 9.3 billion dollars worth of stuff to them.  And this is not happening because our economy is so much larger than China’s.  In fact, the IMF says that China now has the largest economy on the entire planet on a purchasing power basis.  No, the truth is that this is happening because our economy is broken.  Every month, we consume far more wealth than we produce.  Because the outflow of money is far greater than the inflow, we have to go to major exporting nations and beg them to lend our dollars back to us so that we can pay our bills.  Meanwhile, the quality of the jobs in this country continues to go down and our formerly great manufacturing cities are rotting and decaying.  We are committing national economic suicide, and most Americans don’t seem to care.

Barack Obama is constantly hyping a “manufacturing resurgence” in America, but the numbers don’t lie.  In September, our manufactured goods trade deficit with the rest of the world soared to a new all-time record high of 69.16 billion dollars.  For the year, we are nearly 12 percent ahead of last year’s record pace.

When we buy far more things than we sell, we get poorer as a nation.

How do you think that we ever got into a position of owing China more than a trillion dollars?

We just kept buying far more from them than they bought from us, and their money just kept piling up.  Now it has gotten to the point where our politicians literally beg them to lend our money back to us.  They are the head and we are the tail.

And we did this to ourselves.

Once upon a time, the United States was the greatest manufacturing powerhouse that the world had ever seen.  But now China manufactures more stuff than us and China also accounts for more total global trade (imports plus exports) than us.

This should never have happened.  Several decades ago, the Chinese economy was a complete joke.  But decades of incredibly foolish decisions by our politicians have resulted in the loss of tens of thousands of manufacturing facilities, millions of good paying jobs and the destruction of vast stretches of our economic infrastructure.

During the same time frame, gleaming new manufacturing facilities have gone up all over China.

China is literally wiping the floor with us on the global economic stage and most Americans don’t even understand what is happening.  Here is more on the trade deficit numbers that were just released from the RealityChek Blog

>The China goods deficit of $35.56 billion blew past the old mark of $30.86 billion, set in July, by 15.23 percent. The new deficit also represented a 17.77 percent increase over the August level of $30.20 billion.

>U.S. goods exports to the still strongly growing Chinese economy fell on month in September from $9.63 billion to $9.33 billion (3.12 percent). U.S. merchandise imports from China jumped by 12.70 percent over August levels, from $39.83 billion to $44.89 billion – itself an all-time high.

>The U.S. goods deficit with China this year is now so far running 5.62 percent ahead of 2014’s record pace.

>The longstanding U.S. manufacturing trade shortfall shot up from $59.10 billion in August to $69.16 billion in September. This 17.02 percent jump resulted in a beat of the old record of $67.33 billion, also set in July, by 2.72 percent.

And it isn’t just cheap plastic trinkets that China is selling to us.

In fact, their number one export to us is computer equipment.

Meanwhile, one of our main exports to them is “scrap and trash”.

For much more on how China is absolutely dominating us, please see my previous article entitled “Not Just The Largest Economy – Here Are 26 Other Ways China Has Surpassed America“.

Sadly, there are a couple of factors that will probably make our trade deficit with the rest of the world even worse in the months ahead.

Number one, the currency war that I wrote about earlier this week will probably push the U.S. dollar even higher against the yen and the euro.

You might think that a rising dollar sounds good, but the truth is that it will make our exports less competitive in the global marketplace.

Nations such as Japan devalue their currencies so that they can sell more stuff to us.  But that hurts our own domestic industries.  And when our own domestic industries suffer, that means less jobs for American workers.

Secondly, the collapse in the price of oil could have very serious implications for the shale oil industry.

In recent years, the shale oil revolution has caused local economic booms in states such as Texas and North Dakota.  But shale oil tends to be quite expensive to extract.  As I write this, the price of U.S. oil has fallen to about 77 dollars a barrel.  If it stays at that level or keeps going down, shale oil production in the United States will slow down dramatically.

In other words, a lot of these shale oil “boom towns” could go “bust” very rapidly.

If that happens, the amount of oil that we import will rise substantially and that will add to our overall trade deficit.

But of course the biggest factor fueling our trade deficit is that the vast majority of Americans simply do not care that we are committing national economic suicide.

When we buy products made in America, we support American businesses and American workers.

When we buy products made overseas, we hurt American businesses, we kill American jobs and we make ourselves poorer as a nation.

Of course there is nothing wrong with buying a foreign-made product once in a while.  But this holiday season, most people will fill their shopping carts to the brim with foreign-made goods without even thinking twice about it.

The next time that you go into a huge retail establishment such as Wal-Mart, start picking up products and look to see where they were made.

I think that you will be shocked at how few of them are actually made inside the United States.

When are Americans going to get sick and tired of making China wealthier at our expense?

We are willing participants in the destruction of the U.S. economy, and yet only a small minority of people seem to care.

What is it going to take for people to finally wake up?

12 Charts That Show The Permanent Damage That Has Been Done To The U.S. Economy

12 - Public DomainMost people that discuss the “economic collapse” focus on what is coming in the future.  And without a doubt, we are on the verge of some incredibly hard times.  But what often gets neglected is the immense permanent damage that has been done to the U.S. economy by the long-term economic collapse that we are already experiencing.  In this article I am going to share with you 12 economic charts that show that we are in much, much worse shape than we were five or ten years ago.  The long-term problems that are eating away at the foundations of our economy like cancer have not been fixed.  In fact, many of them continue to get even worse year after year.  But because unprecedented levels of government debt and reckless money printing by the Federal Reserve have bought us a very short window of relative stability, most Americans don’t seem too concerned about our long-term problems.  They seem to have faith that our “leaders” will be able to find a way to muddle through whatever challenges are ahead.  Hopefully this article will be a wake up call.  The last major wave of the economic collapse did a colossal amount of damage to our economic foundations, and now the next major wave of the economic collapse is rapidly approaching.

#1 Employment

The mainstream media is constantly telling us about the “employment recovery” that is happening in the United States, but the truth is that it is just an illusion.  As the chart below demonstrates, just prior to the last recession about 63 percent of all working age Americans had a job.  During the last wave of the economic collapse, that number dropped to below 59 percent and stayed there for a very long time.  In the past few months we have finally seen the employment-population ratio tick back up to 59 percent, but we are still far, far below where we used to be.  To call the tiny little bump at the end of this chart a “recovery” is really an insult to our intelligence…

Employment Population Ratio 2014

#2 The Labor Force Participation Rate

The percentage of Americans that are either employed or currently looking for a job started to fall during the last recession and it has not stopped falling since then.  The labor force participation rate has now fallen to a 36 year low, and this is a sign of a very, very sick economy…

Labor Force Participation Rate 2014

#3 The Inactivity Rate For Men In Their Prime Years

Some blame the decline in the labor force participation rate on the aging of our population.  But it isn’t just elderly people that are dropping out of the labor force.  In fact, the inactivity rate for men in their prime working years (25 to 54) continues to rise and is now at the highest level that has ever been recorded…

Inactivity Rate Men 2014

#4 Manufacturing Employees

Once upon a time in America, anyone that was reliable and willing to work hard could easily find a manufacturing job somewhere.  But we have stood by and allowed millions upon millions of good paying manufacturing jobs to be shipped out of the country, and now many of our formerly great manufacturing cities have been transformed into ghost towns.  Over the past few years, there has been a slight “recovery”, but we are still well below where we were at just previous to the last recession…

Manufacturing Employees 2014

#5 Our Current Account Balance

As a nation, we buy far more from the rest of the world than they buy from us.  In other words, we perpetually consume far more wealth than we produce.  This is a recipe for national economic suicide.  Our current account balance soared to obscene levels just prior to the last recession, and now we have almost gotten back to those levels…

Current Account Balance 2014

#6 Existing Home Sales

Our economy has never fully recovered from the housing crash of 2007-2008.  As you can see from the chart below, the number of existing home sales is still far below the level that we hit back in 2006.  At this point we are just getting back to the level we were at in 2000, but our population today is far larger than it was back then…

Existing Home Sales 2014

#7 New Home Sales

Things are even more dramatic when you look at new home sales.  This is an industry that have been absolutely emasculated.  The number of new home sales in the United States is just a little more than half of what it was back in 2000, and it isn’t even worth comparing to what we experienced during the peak of 2006.

New Home Sales 2014

#8 The Monetary Base

In a desperate attempt to get the economy going again, the Federal Reserve has been wildly printing money.  It has been so reckless that it is hard to put it into words.  When I look at this chart, the phrase “Weimar Republic” comes to mind…

Monetary Base 2014

#9 Food Inflation

Thankfully, much of the money that the Federal Reserve has been injecting into the system has not made it into the real economy.  But enough of it has gotten into the system to force food prices significantly higher.  For example, my wife went to the store today and paid just a shade under 10 bucks for just four pieces of chicken.  And as you can see from the chart below, food prices have been steadily going up in America for a very long time…

Food Inflation 2014

#10 The Velocity Of Money

One of the reasons why we have not seen even more inflation is because the velocity of money is extraordinarily low.  In general, when an economy is healthy money tends to flow through the system rapidly.  People are buying and selling and money changes hands frequently.  But when an economy is sick, money tends to stagnate.  And that is exactly what is happening in the United States right now.  In fact, at this point the velocity of the M2 money stock has dropped to the lowest level ever recorded…

Velocity Of Money 2014

#11 The National Debt

As our economic fundamentals have deteriorated, our politicians have attempted to prop up our standard of living by borrowing from the future.  The U.S. national debt is on pace to approximately double during the Obama years, and it increased by more than a trillion dollars in fiscal year 2014 alone.  Despite assurances that “the deficit is under control”, the federal government borrows about a trillion dollars a year to fund new spending in addition to borrowing about 7 trillion dollars to pay off old debt that is coming due.  What we are doing to future generations of Americans is absolutely criminal, and it is just a matter of time before this Ponzi scheme totally collapses…

National Debt 2014

#12 Total Debt

Of course it is not just the federal government that is gorging on debt.  When you add up all forms of debt in our society (government, business, consumer, etc.) it comes to a grand total of more than 57 trillion dollars.  This total has more than doubled since the year 2000…

Total Debt 2014

If you know anyone that believes that we are in good economic shape, just show them these charts.

The numbers do not lie.  Our economy is sick and it is getting sicker by the day.

And of course the next major financial crisis could strike at any time.  U.S. stocks just experienced their worst week in three years, and if cases of Ebola start popping up around the country the fear that would cause could collapse our economy all by itself.

The debt-fueled prosperity that we are enjoying today is not real.  We are living on the fumes of our past, and every single day our long-term problems get even worse.

Anyone with half a brain should be able to see what is coming.

Sadly, most Americans will continue to deny the truth until it is far too late.

The Dow And S&P 500 Soar To Irrational Heights – Meanwhile The Ultra-Wealthy Rush To Buy Gold Bars

Gold Bars - Public DomainDid you know that the number of gold bars being purchased by ultra-wealthy individuals has increased by 243 percent so far this year?  If stocks are just going to keep soaring, why are they doing this?  On Thursday, the Dow Jones industrial average and the S&P 500 both closed at record highs once again.  It is a party that never seems to end, and there are a lot of really happy people on Wall Street these days.  But those that are discerning realize that we witnessed the exact same kind of bubble behavior during the dotcom boom and during the run up to the last financial crash in 2007.  The irrational exuberance that we are witnessing right now cannot go on forever.  And the bigger that this bubble gets, the more painful that it is going to be when it finally bursts.  Those that get out at the peaks of the market are the ones that usually end up making lots of money.  Those that ride stocks all the way up and all the way down are the ones that usually end up getting totally wiped out.

To get an idea of how irrational the markets have become, all one has to do is to look at Twitter.

Would you value “a horribly mismanaged company” that is less than 10 years old and that has never made a yearly profit at 31 billion dollars?

Well, that is precisely how much the financial markets say that Twitter is worth at this moment.

Even though Twitter will probably never be much more popular than it is right now, it continues to bleed money profusely.  On a GAAP (generally accepted accounting principles) basis, Twitter lost an astounding 145 million dollars during the second quarter of 2014…

Twitter’s GAAP net loss totaled $145 million, up from $42 million a year ago. On a GAAP basis, Twitter lost $0.24 per share. Investors, however, were not expecting Twitter to be profitable by GAAP measurements, so the loss isn’t too much of a drag.

Why would anyone want to invest in such a money pit?

Here are some more disturbing financial numbers about Twitter from David Stockman

Currently, Twitter (TWTR) is valued at $31 billion.That’s 18X revenue, but the catch is that the revenue in question is it’s lifetime bookings over the 18 quarters since Q1 2010.

When it comes to profits, the numbers are not nearly so promising!  For the LTM period ending in June, TWTR booked $974 million of revenue and $1.7 billion of operating expense. That why “NM” shows up in its LTM ratio of enterprise value to EBITDA. It turns out that its EBITDA was -$704 million. In fact, its R&D expense alone was 83% of revenues.

Of course the truth is that Twitter should be able to make money.

And it probably would be making money if it was being managed better.

The following is what Silicon Valley venture capitalist Peter Thiel said about Twitter on CNBC the other day…

“It’s a horribly mismanaged company — probably a lot of pot-smoking going on there.”

But because Twitter is a “hot tech stock” investors are literally throwing money at it.

And there are many other tech companies that have similar stories.  Off the top of my head, Snapchat, LinkedIn, Yelp and Pinterest come to mind.

Fueled by the quantitative easing policies of the Federal Reserve, U.S. stocks have enjoyed an unprecedented joy ride.

However, as David Stockman recently told Yahoo Finance, the subsequent crash is likely to be enormously painful…

“I think what the Fed is doing is so unprecedented, what is happening in the markets is so unnatural,” he said. “This is dangerous, combustible stuff, and I don’t know when the explosion occurs – when the collapse suddenly is upon us – but when it happens, people will be happy that they got out of the way if they did.”

The behavior that we are observing in the stock market simply does not reflect what is happening in the economy overall whatsoever.

In many ways, U.S. economic fundamentals just continue to get even worse.  Small business ownership in the United States is at an all-time low, the labor force participation rate is the lowest that it has been in 36 years, and the U.S. national debt has grown by more than a trillion dollars over the past 12 months.

But on Wall Street right now, there is very little fear that the party is going to end any time soon.

The following is how Seth Klarman recently described the market complacency that he is seeing at the moment…

To put it a bit differently, writer and investor John Mauldin is right when he says that there is “a bubble in complacency.” Fear has effectively been banished. The members of the Fed know it. Stock traders who chase the market to new highs almost daily know it. Implied volatilities (and realized volatilities) are historically low (the VIX Index recently hit a seven-year low), and falling. The Bank for International Settlements recently cautioned that financial markets are euphoric and in the grip of an aggressive search for yield. The S&P has gone over 1,000 days without a 10% decline, according to Birinyi Associates. Dutch and French 10-year government bond yields are at 500 and 250 year lows, respectively; Spain, 225 years. Spanish debt yields were recently inside of U.S. levels.

But as Klarman also observed, just because “investors have been seduced into feeling good” does not mean that this current bubble is any different from what we witnessed back in 2007…

It’s not hard to reach the conclusion that so many investors feel good not because things are good but because investors have been seduced into feeling good—otherwise known as “the wealth effect.” We really are far along in re-creating the markets of 2007, which felt great but were deeply unstable when shocks started to pile up. Even Janet Yellen sees “pockets of increasing risk-taking” in the markets, yet she has made clear that she won’t raise rates to fight incipient bubbles. For all of our sakes, we really wish she would.

Meanwhile, the ultra-wealthy are making moves to protect themselves from the inevitable chaos that is coming.

For example, the Telegraph recently reported that sales of gold bars to wealthy customers are up 243 percent so far in 2014…

The super-rich are looking to protect their wealth through buying record numbers of “Italian job” style gold bars, according to bullion experts.

The number of 12.5kg gold bars being bought by wealthy customers has increased 243 percent so far this year, when compared to the same period last year, said Rob Halliday-Stein founder of BullionByPost.

“These gold bars are usually stored in the vaults of central banks and are the same ones you see in the film ‘The Italian Job’,” added David Cousins, bullion executive from London based ATS Bullion.

Do they know something that we don’t?

The ultra-wealthy are able to stay ultra-wealthy for a reason.

They are usually a step or two ahead of most of the rest of us.

And any rational person should be able to see that this financial bubble is going to end very, very badly.

The Almighty Dollar Is In Peril As The Global ‘De-Dollarization’ Trend Accelerates

50 Dollars - Public DomainAs the Obama administration continues to alienate almost everyone else around the entire planet, an increasing number of prominent international voices are starting to question why the U.S. dollar should be so overwhelmingly dominant in global trade.  In previous articles, I have discussed Russia’s “de-dollarization strategy” and the fact that Gazprom is now asking their large customers to start paying in currencies other than the dollar.  But this is not just a story about Russia any longer.  As you will read about below, China and South Korea have just signed a major agreement to facilitate trade with one another using their own national currencies, and even prominent French officials are now talking about the need to use the dollar less and the euro more.  John Williams of shadowstats.com recently said that things have never “been more negative” for the U.S. dollar, and he was right on the mark.  The power of the almighty dollar has allowed all of us living in the United States to enjoy an extremely high standard of living for decades, but as that power now fades it is going to have profound implications for the U.S. economy.  In future years the value of the dollar will go down substantially, all of the imported goods filling our stores will become much more expensive, and it is going to cost the federal government a lot more to borrow money.  Unfortunately, with the stock market hitting all-time record highs and with the mainstream media endlessly touting an “economic recovery”, most Americans are not paying any attention to these things.

French oil giant Total is one of the largest energy companies in the entire world.  On Saturday, Total’s CEO made an absolutely stunning statement.  According to Reuters, he told reporters that there “is no reason to pay for oil in dollars”…

“Doing without the (U.S.) dollar, that wouldn’t be realistic, but it would be good if the euro was used more,” he told reporters.

There is no reason to pay for oil in dollars,” he said. He said the fact that oil prices are quoted in dollars per barrel did not mean that payments actually had to be made in that currency.

If Gazprom’s CEO had made such a statement, it would not have really surprised anyone.  But this came from a high profile French CEO.  A decade ago, it would have been unthinkable for him to say such a thing.  Wars have been started over less.  Virtually all oil and natural gas around the planet has been bought and sold for U.S. dollars since the 1970s, and this is an arrangement that the U.S. government has traditionally guarded very zealously.  But now that Russia has broken the petrodollar monopoly, the fear of questioning the almighty dollar appears to be dissipating.

And at this point even French government officials are not afraid to publicly discuss moving away from the U.S. dollar.  Just check out what French finance minister Michel Sapin said to the press this weekend

French finance minister Michel Sapin says “now is the right time to bolster the use of the euro” adding, more ominously for the dollar, “we sell ourselves aircraft in dollars. Is that really necessary? I don’t think so.” Careful to avoid upsetting his ‘allies’ across the pond, Sapin followed up with the slam-dunk diplomacy, “This is not a fight against dollar imperialism,” except, of course – that’s exactly what it is… just as it was over 40 years ago when the French challenged Nixon.

So why are the French suddenly so upset?

Could it be the fact that we just slapped the largest bank in France with a nearly 9 billion dollar fine?

The remarks come a week after Paris-based bank BNP Paribas (BNP) SA was slapped with a $8.97 billion fine by U.S. authorities for transactions carried out in dollars in countries facing American sanctions. The fine spurred debate in France about the right of the U.S. in extending its regulatory reach beyond its borders.

This is yet another example of how the Obama administration is alienating friends all over the globe.

In fact, there doesn’t seem to be anyone that the Obama administration is afraid of crossing.  Just a couple of days ago, the German press exploded in outrage when Germany arrested a U.S. spy.  Why we feel the need to spy on our friends is something that I will never figure out.

And of course our relations with Russia are probably the worst that they have been since the end of the Cold War at this point.  And as the Russians now rapidly move away from the U.S. dollar, they seem intent on bringing the rest of “the BRICS” with them.  The following is a short excerpt from a recent Voice of Russia article entitled “BRICS morphing into anti-dollar alliance“…

However, in her discussion with Vladimir Putin, the head of the Russian central bank unveiled an elegant technical solution for this problem and left a clear hint regarding the members of the anti-dollar alliance that is being created by the efforts of Moscow and Beijing:

“We’ve done a lot of work on the ruble-yuan swap deal in order to facilitate trade financing. I have a meeting next week in Beijing,” she said casually and then dropped the bomb: We are discussing with China and our BRICS parters the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system].” (source of the quote: Prime news agency)

It seems that the Kremlin chose the all-in-one approach for establishing its anti-dollar alliance. Currency swaps between the BRICS central banks will facilitate trade financing while completely bypassing the dollar. At the same time, the new system will also act as a de facto replacement of the IMF, because it will allow the members of the alliance to direct resources to finance the weaker countries. As an important bonus, derived from this “quasi-IMF” system, the BRICS will use a part (most likely the “dollar part”) of their currency reserves to support it, thus drastically reducing the amount of dollar-based instruments bought by some of the biggest foreign creditors of the US.

Of course the key economic player in the BRICS alliance is China.

So will China actually go along with a “de-dollarization” strategy?

Well, the truth is that China has been making moves to become more independent of the dollar for a long time, and it has just been announced that China and South Korea have signed an agreement which will mean more direct trade between the two nations using their own national currencies

China’s central bank has authorized the Bank of Communications, the country’s fifth largest lender, to undertake yuan clearing business in the South Korean capital, the People’s Bank of China (PBoC) said in a statement.

The announcement came as Chinese President Xi Jinping wrapped up a state visit to South Korea on Friday. China is seeking to make the yuan – also known as the renminbi – used more internationally in keeping with the country’s status as the world’s second biggest economy behind the United States.

Unfortunately, most Americans don’t care about any of this at all.

They don’t understand that more U.S. dollars are actually used outside the United States than are used inside the United States.  Because most of the rest of the world uses U.S. dollars to trade with one another, this has created a tremendous amount of artificial demand for our currency.  In other words, the value of the U.S. dollar is much higher than it otherwise would be, and this has enabled us to import trillions of dollars of products at ridiculously low prices.  The standard of living that we enjoy today is highly dependent on this arrangement continuing.

And our ability to fund the federal government and our state and local governments is heavily dependent on the rest of the planet loaning our dollars back to us for next to nothing.  If we actually had to pay realistic market rates to borrow money, the finances of the federal government would have already collapsed long ago.

So it is absolutely imperative for our own economic well-being that this “de-dollarization” trend not accelerate any further.  The rest of the world could actually severely hurt us by deciding to stop using the almighty dollar, and the more that the Obama administration antagonizes both our friends and our foes around the globe the more likely that is to happen.

We live in very perilous times, and the almighty dollar is more vulnerable now than it has been in decades.

If it starts collapsing, it will take down the entire U.S. financial system with it.

Let us hope that we still have a bit more time before that happens, because once the U.S. dollar collapses it will be exceedingly painful for all of us.

12 Numbers About The Global Financial Ponzi Scheme That Should Be Burned Into Your Brain

Brain - Public DomainThe numbers that you are about to see are likely to shock you.  They prove that the global financial Ponzi scheme is far more extensive than most people would ever dare to imagine.  As you will see below, the total amount of debt in the world is now more than three times greater than global GDP.  In other words, you could take every single good and service produced on the entire planet this year, next year and the year after that and it still would not be enough to pay off all the debt.  But even that number pales in comparison to the exposure that big global banks have to derivatives contracts.  It is hard to put into words how reckless they have been.  At the low end of the estimates, the total exposure that global banks have to derivatives contracts is 710 trillion dollars.  That is an amount of money that is almost unimaginable.  And the reality of the matter is that there is really not all that much actual “money” in circulation today.  In fact, as you will read about below, there is only a little bit more than a trillion dollars of U.S. currency that you can actually hold in your hands in existence.  If we all went out and tried to close our bank accounts and investment portfolios all at once, that would create a major league crisis.  The truth is that our financial system is little more than a giant pyramid scheme that is based on debt and paper promises.  It is literally a miracle that it has survived for so long without collapsing already.

When Americans think about the financial crisis that we are facing, the largest number that they usually can think of is the size of the U.S. national debt.  And at over 17 trillion dollars, it truly is massive.  But it is actually the 2nd-smallest number on the list below.  The following are 12 numbers about the global financial Ponzi scheme that should be burned into your brain…

-$1,280,000,000,000 – Most people are really surprised when they hear this number.  Right now, there is only 1.28 trillion dollars worth of U.S. currency floating around out there.

-$17,555,165,805,212.27 – This is the size of the U.S. national debt.  It has grown by more than 10 trillion dollars over the past ten years.

-$32,000,000,000,000 – This is the total amount of money that the global elite have stashed in offshore banks (that we know about).

-$48,611,684,000,000 – This is the total exposure that Goldman Sachs has to derivatives contracts.

-$59,398,590,000,000 – This is the total amount of debt (government, corporate, consumer, etc.) in the U.S. financial system.  40 years ago, this number was just a little bit above 2 trillion dollars.

-$70,088,625,000,000 – This is the total exposure that JPMorgan Chase has to derivatives contracts.

-$71,830,000,000,000 – This is the approximate size of the GDP of the entire world.

-$75,000,000,000,000 – This is approximately the total exposure that German banking giant Deutsche Bank has to derivatives contracts.

-$100,000,000,000,000 – This is the total amount of government debt in the entire world.  This amount has grown by $30 trillion just since mid-2007.

-$223,300,000,000,000 – This is the approximate size of the total amount of debt in the entire world.

-$236,637,271,000,000 – According to the U.S. government, this is the total exposure that the top 25 banks in the United States have to derivatives contracts.  But those banks only have total assets of about 9.4 trillion dollars combined.  In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 25 to 1.

-$710,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives contracts generally fall within this range.  At the high end of the range, the ratio of derivatives exposure to global GDP is about 21 to 1.

Most people tend to assume that the “authorities” have fixed whatever caused the financial world to almost end back in 2008, but that is not the case at all.

In fact, the total amount of government debt around the globe has grown by about 40 percent since then, and the “too big to fail banks” have collectively gotten 37 percent larger since then.

Our “authorities” didn’t fix anything.  All they did was reinflate the bubble and kick the can down the road for a little while.

I don’t know how anyone can take an honest look at the numbers and not come to the conclusion that this is completely and totally unsustainable.

How much debt can the global financial system take before it utterly collapses?

How recklessly can the big banks behave before the house of cards that they have constructed implodes underneath them?

For the moment, everything seems fine.  Stock markets around the world have been setting record highs and credit is flowing like wine.

But at some point a day of reckoning is coming, and when it arrives it is going to be the most painful financial crisis the world has ever seen.

If you plan on getting ready before it strikes, now is the time to do so.

Greed Is Good? Where Will America’s Sick Obsession With Wealth And Money End?

Greed - Photo by J. Solana from Madrid, SpainEverywhere you look, Americans appear to be extremely obsessed with wealth and money.  These days, networks such as CNN endlessly run “news stories” with titles such as “Best cars for the super rich“.  We have television shows where people proudly show off how wealthy they are, and it seems like Hollywood is putting out an endless parade of movies that glorify the lifestyles of the elite.  We have hordes of motivational speakers and “life coaches” that will teach you how to be “more successful” in life, and every small movement in the stock market is carefully monitored by the mainstream news media.  Even in the world of faith, we have an entire class of ministers known as “prosperity preachers”, and many of those ministers wear that label quite proudly.  Yes, those that grew up in the 1980s may have been the “greed is good” generation, but the truth is that they didn’t have anything on us.  As a society we love money, and we are not ashamed to admit it.  In fact, there are times we absolutely revel in it.  For example, Time Magazine published an article this year entitled “Science Proves It: Greed Is Good” and hardly anyone even raised an eyebrow.  But where will America’s sick obsession with wealth and money end?  Could it end up destroying us?

I got the idea for this article when I was browsing through CNN’s website.  The following are eight “news stories” about wealth that were featured on CNN just on Thursday alone…

#1 “The richest Americans in history

#2 “How much do you need to be happy?

#3 “Where are the super rich?

#4 “From broke to billionaire

#5 “Homes: What $25 million buys around the world

#6 “Best cars for the super rich

#7 “America’s homes are bigger than ever

#8 “Mega yacht with a movie theater

This is what passes for news these days?

It has been said that we tend to talk about the things that we are obsessed with.

And CNN is clearly obsessed with wealth.

Not that there is anything wrong with having money.

If none of us had any money, we would all be homeless and starving.  So the truth is that money can be very useful.  But when it becomes an idol, that is when it becomes a problem.

And because we have taught entire generations of Americans that becoming wealthy is one of the primary goals in life, it is creating a tremendous amount of envy, jealousy, frustration and anger among those that have not been able to become wealthy.

In recent years, the level of bitterness and resentment that the rest of the nation has toward the very wealthy has risen to an unprecedented level.  It has become exceedingly apparent that the system is designed to funnel wealth to the very top of the food chain, and many of those at the bottom of the food chain are starting to become extremely upset about this.

Since the last financial crisis, almost all of the income gains have gone to the top one percent of all income earners.  The following comes from a recent Huffington Post article

Economic statistics show that incomes for the top 1 percent of U.S. households soared 31 percent from 2009 through 2012, after adjusting for inflation, yet inched up an average of 0.4 percent for those making less. Many economists are sounding alarms that the income gap, greater now than at any time since the Depression, is hurting the economy by limiting growth in consumer spending.

And income inequality has become such a hot topic that it has even produced a New York Times bestseller by a French economist named Thomas Piketty.  This is what CBS News recently had to say about his book…

His book has landed on that debate like a bomb. Piketty’s thesis: that the rate of return on capital, such as real estate, dividends and other financial assets, is racing away from the rate of growth required to maintain a healthy economy. If that trend continues for an extended period of time — if wealth becomes ever more concentrated in the hands of a few — then inequality is likely to get worse, says Piketty, 43, who started his academic career as an assistant professor at the Massachusetts Institute of Technology and who now teaches at the Paris School of Economics.

Another reason “Capital” has caught the public’s attention is that inequality is evident in what are by now a host of familiar symptoms. Stagnant pay, except among the super-rich. Soaring health care and education costs. The diminished expectations commonly found in young, especially those lacking college degrees, and old alike, as retirement becomes something to endure rather than to enjoy.

It would be foolish to deny that the gap between the rich and the poor is growing.  Even as the stock market reaches unprecedented heights, the middle class is dying and one out of every five children in America is living in poverty.

On a global scale, the wealthiest one percent now have 65 times more wealth than the entire poorest half of the global population does.

That is an astounding figure.

Most people don’t realize this, but the ultra-wealthy have approximately 32 trillion dollars (that we know about) stashed in offshore banks around the planet.  That amount of money would almost be about enough to pay off the entire U.S. national debt and buy every good and service produced in the United States for an entire year.

Meanwhile, the poorest half of the world’s population only owns about 1 percent of all global wealth, and about a billion people throughout the world go to bed hungry every night.

If greed was going to save the world, it would have done it by now.  At this point, the wealthy have accumulated more wealth than they ever have before.  For example, according to Zero Hedge the total amount of wealth in the U.S. has just hit a brand new record high…

Earlier today the Fed released its latest Flow of Funds report, which showed that in the first quarter household net worth rose from last quarter’s $80.3 trillion to a new record high of $81.8 trillion, driven by a $1.5 trillion increase in total assets while household liabilities were virtually unchanged in the quarter. And since the Fed is onboarding all the liabilities why should households bother with debt: that’s what the central bank balance sheet is for.

As for the proceeds, they go to the mega rich: of the $81.8 trillion in net worth, 70.4% of the total amount or $67.2 trillion, was in financial assets: the higest it has ever been courtesy of just one person: Ben Bernanke, and to a far lesser extent Janet Yellen who however is tasked with picking up Bernanke’s pieces.

But of course most people who are rich are only rich on paper.

As noted above, 67.2 trillion dollars of the total of 81.8 trillion dollars of wealth in this nation is made up of financial assets.

So what happens if there is a major financial crisis (such as the derivatives bubble bursting) which causes the total amount of financial wealth in the United States to drop by 50% or more?

What would such an event do to our country?

We are so obsessed with wealth and money that it is truly frightening to think about how we would react as a society if it was taken away.

But this current financial bubble will not last forever.

At some point it will come to an end.

When it does, will our society throw a massive temper tantrum?

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