Did 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?
Most 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.
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…
#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…
#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…
#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…
#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…
#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…
#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.
#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…
#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…
#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…
#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…
#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…
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.
As 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.
Do you have a bank account that you don’t actively use or a safe deposit box that you have not checked on for a while? If so, you might want to see if the government has grabbed your money. This sounds absolutely crazy, but it is true. All over the world, governments are shortening the time periods required before they can seize “dormant bank accounts” and “unclaimed property”. For example, as you will read about below, just last year the government of Australia seized a whopping 360 million dollars from dormant bank accounts. And this kind of thing is going on all over America as well. In fact, all 50 states actually pay private contractors to locate bank accounts and unclaimed property that can be seized. In some states, no effort will be made to contact you when your property is confiscated. And in most states, the seized property permanently become the property of the state government after a certain waiting period has elapsed. So please don’t put money or property into a bank somewhere and just let it sit there. If you do, the government may come along and grab it right out from under your nose.
In this day and age, broke governments all over the globe are searching for “creative ways” to raise revenues. In Australia for example, the time period required before the federal government could seize a dormant bank account was reduced from seven to three years, and this resulted in an unprecedented windfall for the Australian government over the past 12 months…
The federal government has seized a record $360 million from household bank accounts that have been dormant for just three years, prompting outrage in some quarters amid complaints that pensioners and retirees have lost deposits.
Figures from the Australian Security and Investments Commission (ASIC) show almost $360 million was collected from 80,000 inactive accounts in the year to May under new rules introduced by Labor. The new rules lowered the threshold at which the government is allowed to snatch funds from accounts that remain idle from seven years to three years.
The rule change has delivered the government a massive bonanza with the money collected in the year to May more than the total collected in the past five decades combined.
Most Americans are not going to be too concerned about this because it is happening on the other side of the planet.
But did you know that this is happening all over the U.S. as well?
For instance, the waiting period in the state of California used to be fifteen years.
Now it is just three years.
And when California grabs your money they don’t just sit around waiting for you to come and claim it. Instead, it gets dumped directly into the general fund and spent.
If you do not believe that California does this, just check out the following information that comes directly from the official website of the California State Controller’s Office…
The State acquires unclaimed property through California’s Unclaimed Property Law, which requires “holders” such as corporations, business associations, financial institutions, and insurance companies to annually report and deliver property to the Controller’s Office after there has been no customer contact for three years. Often the owner forgets that the account exists, or moves and does not leave a forwarding address or the forwarding order expires. In some cases, the owner dies and the heirs have no knowledge of the property.
And it is not just bank accounts and safe deposit boxes that are covered by California law. The reality is that a vast array of different kinds of “unclaimed property” are covered…
The most common types of Unclaimed Property are:
Bank accounts and safe deposit box contents
Stocks, mutual funds, bonds, and dividends
Uncashed cashier’s checks or money orders
Certificates of deposit
Matured or terminated insurance policies
Mineral interests and royalty payments, trust funds, and escrow accounts.
And when a state government grabs your property, the consequences can be absolutely devastating. The following is an excerpt from an ABC news report from a few years ago…
San Francisco resident Carla Ruff’s safe-deposit box was drilled, seized, and turned over to the state of California, marked “owner unknown.”
“I was appalled,” Ruff said. “I felt violated.”
Unknown? Carla’s name was right on documents in the box at the Noe Valley Bank of America location. So was her address — a house about six blocks from the bank. Carla had a checking account at the bank, too — still does — and receives regular statements. Plus, she has receipts showing she’s the kind of person who paid her box rental fee. And yet, she says nobody ever notified her.
“They are zealously uncovering accounts that are not unclaimed,” Ruff said.
To make matters worse, Ruff discovered the loss when she went to her box to retrieve important paperwork she needed because her husband was dying. Those papers had been shredded.
And that’s not all. Her great-grandmother’s precious natural pearls and other jewelry had been auctioned off. They were sold for just $1,800, even though they were appraised for $82,500.
And some states are even more aggressive than the state of California in going after bank accounts.
In a recent article, Simon Black noted that the state of Georgia can go after “dormant bank accounts” after just one year of inactivity…
In fact, each of the 50 states has its own regulations pertaining to the seizure of dormant accounts. And the grand prize goes to… the great state of Georgia!
Georgia’s Disposition of Unclaimed Properties Act sets the threshold as low as one year.
In other words, if you have a checking account in Georgia that you haven’t touched in twelve months, the state government is going to grab it.
So much for setting aside money for a rainy day and having the discipline to never touch it.
As economic conditions get even worse, the temptation for governments all over the planet to grab private bank accounts is going to become even greater.
We all remember what happened in Cyprus. When the global financial Ponzi scheme finally collapses, politicians all over the world are going to be looking for an easy way to raise cash. And our bank accounts may be one of the first things that they decide to confiscate.
So please don’t keep all of your eggs in one basket, and check on all of your accounts in regular intervals.
In this day and age, it pays to be diligent.
The 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.
Everywhere 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?