Caught In A Lie: Bernanke Promised Congress The Federal Reserve Would Not Monetize The Debt But Now That Is Exactly What Is Happening

On June 3rd, 2009 Federal Reserve Chairman Ben Bernanke promised the U.S. Congress that the Federal Reserve would not monetize the debt of the U.S. government.  On November 3rd, 2010 the Federal Reserve announced a massive quantitative easing plan which will involve the purchase of 600 billion dollars of U.S. Treasury securities by the middle of 2011.  Creating 600 billion dollars out of thin air and using them to buy up U.S. government securities is monetizing the debt.  So Federal Reserve Chairman Ben Bernanke has been caught in a lie.  Will we ever be able to trust a single word that he says ever again?

Monetizing the debt is a desperate act.  It is a signal that we are rapidly reaching the end of the game.  Slamming interest rates all the way to the floor did not revive the U.S. economy.  Hundreds of billions of dollars in extra government spending did not do the trick either.  The U.S. economy is still dying and the U.S. government is now beginning to find it very difficult to locate buyers for all the debt that it is constantly issuing.

So the Fed apparently hopes that this new round of quantitative easing will be a way to finance the exploding U.S. government debt and spark an “economic recovery” at the same time.

But didn’t Bernanke promise that the Fed was not going to do this?

Didn’t he pledge to Congress that the Federal Reserve would not monetize the debt?

Yes, he did.  The following is video footage of Bernanke from June 3rd, 2009 promising that the Federal Reserve would not monetize the debt….

So much for keeping his promises.

But what else can Bernanke do?

The truth is that we are reaching the end of the economic rope and the Federal Reserve has already played all of the other tricks that they have in their bag.

Buying up massive amounts of U.S. government debt and showering the U.S. economy with money is a desperate attempt to keep the shell game going for a few more rounds.

Once upon a time, the U.S. dollar was the strongest currency on the planet.  The rest of the world loved to use it as a reserve currency and they were more than glad to buy up U.S. Treasuries.

But now the mood has changed dramatically.  The rest of the world does not intend to keep lending us well over a trillion dollars each and every year.  The market for dollar-denominated debt is not what it once was.

In fact, Peter Schiff, the CEO of Euro Pacific Capital, believes that the primary reason for this new round of quantitative easing is that the U.S. government is having an increasingly difficult time financing its debts….

At the end of the day, all this deflation talk is a red herring. The true purpose of QE 2 is to disguise the decreasing ability of the Treasury to finance its debts. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. By announcing QE 2, it can monetize government debt without the markets perceiving a funding problem.

But the markets are not populated by a bunch of idiots.  They are going to see what is going on.  The Federal Reserve is monetizing the debt.  This is going to make U.S. government debt even less attractive to foreign investors as I wrote about yesterday….

As foreigners begin to balk at all of this nonsense, the U.S. government will either have to start paying higher interest rates on government debt in order to attract enough investors, or the Federal Reserve will just have to drop all pretense and permanently start buying up most of the debt.  Either way, once faith has been lost in U.S. Treasuries the financial world will never, ever be the same.

If there comes a point when China and Japan realize that the game is up, they are going to start bailing out of U.S. Treasuries faster than you can say “panic”.  That could create a crisis of unprecedented proportions.  Of course the Federal Reserve could just keep whipping up increasingly large batches of dollars out of thin air to soak up all the excess debt flooding the market, but that kind of a Ponzi scheme would not work for long, and it would likely set off horrific inflation.

In order for the current world financial system to maintain stability, there must be faith in the U.S. dollar and in U.S. Treasuries.  Once faith in those two pillars is gone, it is inevitable that the whole system will come crashing down.

Most Americans have no idea that the entire global financial system is hanging by a thread.  They have no idea that their futures could be radically altered if things go badly.

We like to think that we live in such a “democratic” society, but the decisions on which our economic future rest are in the hands of a group of unelected, unaccountable central bankers.

The truth is that the Federal Reserve is about as “federal” as Federal Express is.  The Fed is not part of the U.S. government.  If you watch interviews with top Federal Reserve officials, they love to talk about how “independent” they are.  In defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve objected by declaring that it was “not an agency” of the U.S. government and therefore it was not subject to the Freedom of Information Act.

The institution that has the most power by far over the U.S. economy does not answer to the American people, and the American people are so “comfortably numb” that they don’t even realize it.

In fact, most Americans do not even know that the Federal Reserve, in association with their buddies on Wall Street, caused the first Great Depression.

But Ben Bernanke does.

At a November 8th, 2002 conference to honor Milton Friedman’s 90th birthday, Bernanke actually confessed that Milton Friedman and Anna J. Schwartz were right when they wrote that the Federal Reserve caused the Great Depression….

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.

So does that make you feel better?

Ben Bernanke says that the folks over at the Federal Reserve are very sorry that they caused the Great Depression of the 1930s and they promise not to do it again.

Of course we have already seen how much Ben Bernanke’s promises are worth.

With people like Bernanke in charge, there is not a lot of reason for optimism.

Meanwhile, Bernanke and his fellow central bankers are heading down to Jekyll Island this weekend for a grand celebration.

That’s right.

The Federal Reserve is holding a conference this weekend entitled “A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve” to celebrate the 100 year anniversary of the infamous 1910 Jekyll Island meeting that spawned the draft legislation that would ultimately create the U.S. Federal Reserve.

They will surely be congratulating themselves on doing such a fine job of running the U.S. economy.

Yeah, they are doing a fine job of running it – right off a cliff and into oblivion.

The Federal Reserve Is Holding A Conference On Jekyll Island To Celebrate 100 Years Of Dominating America: “A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve”

The Federal Reserve is going back to Jekyll Island to celebrate the 100 year anniversary of the infamous 1910 Jekyll Island meeting that spawned the draft legislation that would ultimately create the U.S. Federal Reserve.  The title of this conference is “A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve”, and it will be held on November 5th and 6th in the exact same building where the original 1910 meeting occurred.  In November 1910, the original gathering at Jekyll Island included U.S. Senator Nelson W. Aldrich, Assistant Secretary of the Treasury Department A.P. Andrews and many representatives from the upper crust of the U.S. banking establishment.  That meeting was held in an environment of absolute and total secrecy.  100 years later, Federal Reserve bureaucrats will return to Jekyll Island once again to “celebrate” the history and the future of the Federal Reserve.

Sadly, most Americans have no idea how the Federal Reserve came into being.  Forbes magazine founder Bertie Charles Forbes was perhaps the first writer to describe the secretive nature of the original gathering on Jekyll Island in a national publication…. 

Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundred of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written… The utmost secrecy was enjoined upon all. The public must not glean a hint of what was to be done. Senator Aldrich notified each one to go quietly into a private car of which the railroad had received orders to draw up on an unfrequented platform. Off the party set. New York’s ubiquitous reporters had been foiled… Nelson (Aldrich) had confided to Henry, Frank, Paul and Piatt that he was to keep them locked up at Jekyll Island, out of the rest of the world, until they had evolved and compiled a scientific currency system for the United States, the real birth of the present Federal Reserve System, the plan done on Jekyll Island in the conference with Paul, Frank and Henry… Warburg is the link that binds the Aldrich system and the present system together. He more than any one man has made the system possible as a working reality.

It was a system that was designed by the bankers and for the bankers.  Now, the bureaucrats running the system are returning to Jekyll Island to congratulate themselves.  Those attending the conference on November 5th and 6th include Federal Reserve Chairman Ben Bernanke, former Fed Chairman Alan Greenspan, Goldman Sachs managing director E. Gerald Corrigan and the heads of the various regional Federal Reserve banks.  You can view the entire agenda of the conference right here.  It looks like that there will be plenty of hors d’oeuvres to go around, but should the Federal Reserve really be celebrating their accomplishments at a time when the U.S. economy is literally falling to pieces?

Today, 63 percent of Americans do not think that they will be able to maintain their current standard of living.  1.47 million Americans have been unemployed for more than 99 weeks.  We are facing a complete and total economic disaster.

Today, the Federal Reserve has more power over the economy than any other single institution in the United States.  It is the Fed that primarily determines if we will see high inflation or low inflation, whether the money supply with expand or contract and whether we will have high interest rates or low interest rates.  The President and the U.S. Congress have far less power to influence the economy than the Federal Reserve does.

As this election has demonstrated, the American people are absolutely furious about the state of the U.S. economy, but American voters have been mostly blaming our politicians.  They just don’t understand that it is actually the Federal Reserve that has the most control over the performance of the economy.

It would be hard to understate how powerful the U.S. Federal Reserve really is in 2010.  U.S. Representative Ron Paul recently told MSNBC that he believes that the Federal Reserve is actually more powerful than Congress…..

“The regulations should be on the Federal Reserve. We should have transparency of the Federal Reserve. They can create trillions of dollars to bail out their friends, and we don’t even have any transparency of this. They’re more powerful than the Congress.”

So how has the Federal Reserve performed over the years?

Well, since 1913 inflation has been on a relentless march upwards, U.S. government debt has increased exponentially and the U.S. dollar has lost over 96 percent of its value.

That is not a record to be celebrating.

The truth is that the Federal Reserve was created to enslave the United States government in an endlessly expanding spiral of debt from which it would never be able to escape.  As I wrote about yesterday, that is exactly what has happened.  The U.S. government debt is escalating at an exponential rate.  It is a trap from which the U.S. government will never be able to get out of under our current system.

Now many at the Federal Reserve are touting more “quantitative easing” as the solution to our economic problems.  But anyone with a brain should be able to see that creating a gigantic pile of paper money out of thin air and dumping it into the economy is only going to make our long-term problems even worse.

But the Federal Reserve system was never designed to benefit the American people.  It was designed to make massive amounts of money for the banking establishment.  As I wrote about in “11 Reasons Why The Federal Reserve Is Bad“, the Federal Reserve was created to transfer wealth from the American people to the U.S. government and from the U.S. government to the super wealthy.

The sad truth is that the Federal Reserve is at the very core of our economic and financial problems, and that is nothing to celebrate.

Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World

Do you want to see something truly frightening?  Just check out the 3 charts posted further down in this article.  These charts prove that we are now in the biggest debt bubble in the history of the world.  As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none.  But that is not even close to accurate.  The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world.  Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us.  So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal. 

We have been robbing future generations blind for so long that it doesn’t even seem to bother most people anymore.  We have become accustomed to living in debt.  We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.

Just check out the chart posted below.  It shows the total credit market debt owed in the United States.  In other words, it is a measure of what everyone owes (government, businesses and consumers). 

30 years ago, total credit market debt owed was less than 5 trillion dollars.  Today, it is over 50 trillion dollars.  Total credit market debt is now at a level equivalent to about 360 percent of GDP.  This is what has been fueling the great era of “economic prosperity” that we have been experiencing….        

So what is the answer to this problem? 

The truth is that there is not an easy answer under our current system.  The only way that the U.S. economy continues to “grow” is if the debt bubble continues to “expand”. 

If our leaders allowed the debt bubble to “pop” and the U.S. economy went into a deleveraging cycle, it would mean that we would start living far below our means for an extended period of time and it would spawn a deflationary depression that would make the Great Depression look like a Sunday picnic.

Most Americans are in no mood to take that kind of hard medicine.

Do you really think that the American people are going to vote in politicians who tell them that it is time to live below our means and that we are going to have to experience a standard of living far below what our parents experienced in order to pay for all the debt that they racked up?

No, that is clearly a dog that isn’t going to hunt. 

The American people want to hear that better times are ahead.

One way to give the American people “better times”, for the short-term at least, is to crank the debt spiral back up.

By introducing another huge flood of paper money into the economy, the Federal Reserve and the U.S. government are hoping that banks will start lending again and that U.S. consumers will start going into more debt again.  Already, as you can see from the chart below, U.S. household debt has started to sink just a little bit.  But considering the fact that approximately 70 percent of our GDP is generated by U.S. consumer spending, that is not good news for “economic growth” statistics.

Three decades of “economic expansion” have been fueled by consumer debt that has spiralled completely out of control.  Over the past 30 years, total U.S. household debt has gone from less than 2 trillion dollars to almost 14 trillion dollars….

So where did the housing bubble come from?  It came from Americans going into insane amounts of debt that they could not afford.  The truth is that only the top 5 percent of all U.S. households have earned enough additional income to match the rise in housing costs since 1975.

Not only that, but Americans are going into staggering amounts of debt in order to pay for their educations.  Total student loan debt in the United States is climbing at a rate of approximately $2,853.88 per second, and today Americans owe an all-time record of more than $849 billion on student loans, which is actually more than the total amount that Americans owe on their credit cards.

The truth is that American families are stretched thinner financially than they ever have been in the post-World War 2 era.  According to a poll taken last year, 61 percent of Americans “always or usually” live paycheck to paycheck.  That was up significantly from 49 percent in 2008 and 43 percent in 2007.

Many Americans have come to the absolute breaking point.  1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.

But remember, approximately 70 percent of our GDP is generated by U.S. consumer spending, so without more consumer spending there won’t be more economic growth.

So, instead of Obama and the Federal Reserve encouraging Americans to get out of debt and to save money, they are trying to get the American people to spend even more money and to go into even more debt because they desperately need positive “economic growth” figures. 

The worst offender of all when it comes to debt, of course, is the U.S. federal government.  Over the last 30 years, the U.S. national debt has gone from about 1 trillion dollars to almost 14 trillion dollars….

This is the largest single debt in the history of the world.

So just how big is one trillion dollars?

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

Yet somehow the U.S. government has accumulated a debt that is well over 13 trillion dollars.

Unfortunately, it keeps getting worse month after month after month.

According to the U.S. Treasury Department, the U.S. national debt is rapidly closing in on 14 trillion dollars and and will climb to an estimated $19.6 trillion by 2015.

Should we all throw a big party when it crosses the 20 trillion dollar mark?

I can just hear the theme song now….

“I’m going to party like I’m 19.99 trillion in debt!”

But the cold, hard reality is that we are in far, far more trouble than what the official government numbers tell us.

In a recent article, Boston University economics professor Laurence J. Kotlikoff analyzed the financial condition of the U.S. government, and he summarized the horror we are facing by making the following statement….

“Let’s get real. The U.S. is bankrupt.”

After carefully going over Congressional Budget Office data, Kotlikoff came to the conclusion that the U.S. government is now facing a “fiscal gap” of $202 trillion dollars.

Now how in the world did that happen?

Well, it turns out that we have made promises to future generations that we cannot possibly even come close to keeping.

Social Security and Medicare are fiscal nightmares that are far more immense than anything that U.S. government has ever faced before.

According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019.  That is before a single penny is spent on anything else.

That is just 9 years away.

When people speak of the financial situation of the U.S. government being “unsustainable”, they aren’t kidding around.

The truth is that the U.S. government has been running gigantic Ponzi schemes which are about to collapse.

Take the Social Security shell game for example.  Back in 1950, each retiree’s Social Security benefit was paid for by approximately 16 workers.  Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers.  By 2025, it is projected that there will be approximately two workers for each retiree.

So exactly how is that supposed to work?

For much more on the coming Social Security nightmare, please see an article that I posted earlier this year: 22 Statistics About America’s Coming Pension Crisis That Will Make You Lose Sleep At Night.

Sadly, Professor Kotlikoff is not exaggerating in the least when he proclaims that the U.S. government is bankrupt.

At our current pace, the Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.

Public debt at a level of 100 percent of GDP is supposed to be an absolute nightmare scenario.

Needless to say, the whole thing is going to come crashing down long, long before we ever get to 2080.

We have been living far, far beyond our means for decades, and it has been the greatest party in the history of the world.

But it is time to turn out the lights because the party is over.

The Calm Before The Storm

An eerie calm has descended upon world financial markets as they await perhaps the two most important financial events of the year this week.  On Tuesday, investors will be eagerly awaiting the results of one of the most anticipated midterm elections in U.S. history.  On Wednesday, the Federal Reserve is expected to end months of speculation by formally announcing the details of a new round of quantitative easing.  If either the election or the meeting of the Federal Reserve open market committee delivers a highly unexpected result, it could have a dramatic impact on world financial markets.  In fact, many are looking at this week as a potential turning point for the U.S. economy.  The decisions that are made or not made this week could set us down a road from which the U.S. economy may never recover.

At this point, it looks like the Republicans will take control of the U.S. House of Representatives and will pick up a number of U.S. Senate seats as well.

There are many in the financial world who already consider Barack Obama to be the most “anti-business” president in U.S. history, so a defeat for the Democrats on Tuesday would be greatly welcomed by many on Wall Street.  Barack Obama’s decline in popularity since he was elected has been absolutely stunning.  According to Gallup, Barack Obama had an average approval rating of just 44.7% during the seventh quarter of his presidency, which was a brand new low.  In fact, Obama’s average approval rating has fallen during every single quarter since he took office.  Things have gotten so bad for Obama that one new poll has found that 47% of Democrats now think that Barack Obama should be challenged for the 2012 Democratic presidential nomination. 

However, if the Democrats were able to do surprisingly well on Tuesday, it would not only shock the political pundits, but it would also likely put world financial markets in a very bad mood. 

If the Republicans do very well on Tuesday, it will likely mean that there will be no more extensions for those receiving long-term unemployment benefits.  Some state governments are already anticipating this and are making preparations.  For example, armed security guards are now being posted at all 36 full-service unemployment offices in the state of Indiana.  It is estimated that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season if  Congress does not authorize another emergency extension of benefits by the end of November.  If the Republicans do very well on Tuesday, it would make it much more likely that the extension will not happen.

But if millions of unemployed Americans suddenly find themselves without any unemployment checks, that is only going to cause the anger and frustration regarding this economy to grow.

Either way, the unfortunate truth is that this election is not going to change much.

Over the past five elections, incumbents have been re-elected to the U.S. House of Representatives at an average rate of 96 percent.

This time will be a little different of course, but not that much different.  The sad truth is that we are still likely to see about 80 percent of the exact same faces going back to the U.S. Congress for the next session.

However, even if the American people could somehow vote out every single member of Congress, it would still not do much to fundamentally change our economic situation because the U.S. Congress does not run the economy and neither does the President.

Of course both of those institutions can influence the U.S. economy, but it is actually the Federal Reserve that runs the economy.

The Federal Reserve controls the money supply.  The Federal Reserve controls our interest rates.  If the U.S. government wants more money it has to go get it from the Federal Reserve.  It is the Federal Reserve that is tasked with the mandate of keeping unemployment low while also keeping inflation at a “reasonable” level.

But these days, Federal Reserve officials don’t really seem to be that concerned about the dangers of inflation.  In fact, several top Federal Reserve officials have come out in recent weeks and have made public statements not only advocating more quantitative easing, but also suggesting that inflation is not a danger because it is actually “too low” right now.

In fact, there have been some rumblings that many officials at the Fed would actually welcome more inflation because they think that it would somehow stimulate the economy.  In fact, a Federal Reserve paper that was released in September actually floated the idea that a spike in oil prices would be quite good for the U.S. economy.

And these are the people running our economy?

Are we all caught in an episode of The Twilight Zone?

Well, as far as rising oil prices are concerned, the Fed will almost surely get its wish.  As I have written about previously, the price of oil is almost certainly heading to 100 dollars a barrel.

But if the price of oil shoots up, isn’t that going to cause significant inflationary pressure on the prices of thousands of other goods and services?

Of course.

Unfortunately, very few of our leaders seem too concerned about inflation or about protecting the value of the U.S. dollar these days.

In fact, now even the IMF is publicly proclaiming that the U.S. dollar is “overvalued”.

What a mess.

But there is another aspect of a new round of “quantitative easing” that the American people really wouldn’t like if they could actually figure out what is going on.

You see, the truth is that “quantitative easing” is not only just a way to stimulate the economy, it is also a way to give backdoor bailouts to the big banks without having to go through the U.S. Congress.

In a previous article, I described how this works….

1) The big U.S. banks have massive quantities of junk mortgage-backed securities that are worth little to nothing that they desperately want to get rid of.

2) They convince the Federal Reserve (which the big banks are part-owners of) to buy up these “toxic assets” at significantly above market price.

3) The Federal Reserve creates massive amounts of money out of thin air to buy up all of these troubled assets.  The public is told that all of this “quantitative easing” is necessary to stimulate the U.S. economy.

4) The big banks are re-capitalized and have gotten massive amounts of bad mortgage securities off their hands, the Federal Reserve has found a way to pump hundreds of billions (if not trillions) of dollars into the economy, and most of the American people are none the wiser.

Now how do you think the American people would feel about “quantitative easing” if they really understood all this?

But unfortunately, most Americans will be watching the election results on Tuesday night without having even a basic understanding of how our economy is really run.

Already, there are a ton of signs that the U.S. economy is heading in a very bad direction, and dumping a handful of Congress critters out of office might feel good, but it isn’t going to do much to really change our economic problems.

The American people desperately need to be educated about how our financial system really works.  But unfortunately, most Americans will likely not wake up until the whole house of cards comes crashing down.

Why Is Indiana Putting Armed Security Guards Into 36 Unemployment Offices Across The State?

Did you ever think that things in America would get so bad that we would need to put armed guards into our unemployment offices?  Well, that is exactly what is happening in Indiana.  Armed security guards will now be posted at all 36 full-service unemployment offices in the state of Indiana.  So why is this happening now?  Well, Indiana Department of Workforce Development spokesman Marc Lotter says that the agency is bringing in the extra security in anticipation of an upcoming deadline when thousands upon thousands of Indiana residents could have their unemployment benefits cut off.  But it is not just the state of Indiana that could have a problem.  In fact, one recent study found that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season unless Congress authorizes another emergency extension of benefits by the end of November.  At this point, however, that is looking less and less likely.

So perhaps all the states will have to start putting armed security guards in their unemployment offices.  The truth is that frustration among unemployed Americans is growing by the day.

Could we soon see economic riots similar to what we have seen in Greece and France?

Let’s hope not.

The following is a video news report about the armed guards that are going into Indiana unemployment offices….

So could things really get out of hand when thousands of unemployed workers in Indiana find out that they aren’t going to get checks any longer?

Indiana Department of Workforce Development spokesman Marc Lotter makes it sound like that is very much on his mind….

“Given the upcoming expiration of the federal extensions and the increased stress on some of the unemployed, we thought added security would provide an extra level of protection for our employees and clients.”

So who is paying for all of this extra security?

The Feds of course.

The additional cost of the new security will be approximately $1 million, and it will be paid for with U.S. government funds designated for the administration of the unemployment system according to Lotter.

This is not a good trend.  As you go through your daily life, just start taking note of the places that now have armed security that did not have armed security five or ten years ago.

Unfortunately, as the U.S. economy goes downhill even further, the amount of security that people feel is “necessary” is likely to go up even more.

So is America going to become an armed camp where the people and institutions with money are protected by armed guards from the hordes of frustrated unemployed workers that can’t feed themselves or their families?

Americans are certainly not in a good mood about the economy.  According to a recent poll conducted by CNBC, 92 percent of Americans believe that the performance of the U.S. economy is either “fair” or “poor”.

The lack of jobs is the main thing that the American people are so mad about.  In fact, it is hard for even highly educated people to find work in 2010.  In America today, 317,000 waiters and waitresses have college degrees. 

People are really hurting and they are getting to the end of their ropes.  Over 41 million Americans are now on food stamps, and one out of every six Americans is enrolled in at least one federal anti-poverty program.  It is getting hard to believe that this is even America anymore.  For many more statistics that reveal the economic horror we are now facing as a nation, please see my previous article entitled “30 Reasons Why People Should Be Getting Really Nervous About The State Of The U.S. Economy“.

But it is not just unemployment that is the problem.  In recent years, millions upon millions of Americans have been forced to take reduced hours or a cut in pay due to the economy.  Millions of others have had to take jobs that barely enable them to survive.  In fact, the number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.

So why aren’t there even close to enough jobs for everyone?  Well, there are a number of contributing factors, including the fact that we have been “offshoring” and “outsourcing” millions of our jobs and now it is really starting to catch up with us.  I have discussed this so many times now that I am starting to sound like a broken record.

But instead of fixing the fundamental problems with our economy, the Federal Reserve wants to print yet another gigantic pile of paper money and throw it at the problem.  It is called “quantitative easing“, and it may help smooth things over for a few months, but it is also going to make our long-term problems even worse.

Unfortunately, the Federal Reserve does not really seem concerned about protecting the value of the U.S. dollar at this point.  Not that they ever did, but it would be nice to see Fed officials paying at least some lip service to the dangers of inflation.

Instead, various Fed officials have been publicly making statements about the need for more quantitative easing for weeks.  Right now they seem desperate to put the American people back to work – even if it ends up crashing the value of the dollar.   

But now even the IMF seems supportive of a dollar devaluation.  On Thursday, the IMF actually said that the U.S. dollar is “overvalued” and that adjustments need to be made.

We’ll see what the Fed decides to do next week.  Most analysts believe that they will announce a quantitative easing program of some sort or another.

But what have we come to as a nation when those who control our economy believe that the best solution to our economic problems is to print another big pile of paper money and chuck it into the system?

We’ve got an absolutely gigantic economic mess on our hands, and none of our “leaders” seem to have any idea about how to fix it.

Meanwhile, millions of unemployed Americans are just going to become more and more frustrated – especially when it gets to the point when they aren’t receiving unemployment checks anymore.

5 Dangers To Global Crops That Could Dramatically Reduce The World Food Supply

The world food situation is starting to get very, very tight.  Unprecedented heat and wildfires this summer in Russia and horrific flooding in Pakistan and China have been some of the primary reasons for the rapidly rising food prices we are now seeing around the globe.  In places such as Australia and the African nation of Guinea-Bissau, the big problem for crops has been locusts.  In a world that already does not grow enough food for everyone (thanks to the greed of the elite), any disruption in food production can cause a major, major problem.  Tonight, thousands of people around the world will starve to death.  So what happens if things get even worse?  Many agricultural scientists are now warning that global food production is facing dangers that are absolutely unprecedented.  Crop diseases such as UG99 wheat rust and the “unintended effects” of genetic modification pose challenges that previous generations simply did not have to face.  The outbreak of a real, live global famine looks increasingly possible with each passing year.  So are you and your family prepared if a global famine does strike?

Already, there are huge warning signs on the horizon.  Just check out what agricultural commodities have been doing.  They have been absolutely soaring.      

A recent article on the Forbes website noted a few of the agricultural commodities that have skyrocketed during this year….

Here’s what’s happened to some key farm commodities so far in 2010…

•Corn: Up 63%
•Wheat: Up 84%
•Soybeans: Up 24%
•Sugar: Up 55%

Are you ready to pay 84 percent more for a loaf of bread?

You better get ready – these raw material prices will filter down to U.S. consumers eventually.

So what is going to happen if the world food situation gets even tighter?

Don’t think that it can’t happen.

The following are 5 potential dangers to global crops that could dramatically reduce the world food supply…. 

UG99 Wheat Rust

UG99 is commonly known as “wheat rust” or “stem rust” because it produces reddish-brown flakes on wheat stalks.  The International Maize and Wheat Improvement Center in Mexico believes that approximately 19 percent of the global wheat crop is in imminent danger of being infected with UG99.

Ultimately, it is estimated that about 80 percent of the wheat on the globe is capable of catching the disease.

There is no known cure.

This current strain of wheat rust was discovered in Uganda in 1999 and has spread into areas of Kenya, Sudan, Ethiopia, Yemen and Iran.  It is feared that this crippling disease will spread even farther into south Asia, devastating the fertile growing regions of Afghanistan, Pakistan, India and Bangladesh.

If that happens, you might as well kiss world food stability goodbye.

A recent article in the Financial Times contained an absolutely stunning quote from one prominent agricultural scientist….

“You can talk about crying wolf,” says Ronnie Coffman, director of the Durable Rust Resistance in Wheat project at the University of Cornell in the US, “but it is a wolf”, he asserts, driving across the corn fields of Kansas.

Later on in the same article, Coffman warns that this disease could cause a devastating famine in which literally millions of people would die….

“It can be absolutely devastating if environmental conditions are right,“ he says. “You can count the number of people who could die from this in the millions.”

Mad Soy Disease

Mad Soy disease is spreading at an alarming rate among soy farms down in Brazil.  Previously the disease had been confined to the north part of the country, but now it has been increasingly spreading south.  This disease retards the maturation of infected plants, and it has been causing yield losses of up to 40 percent.  The USDA says that “there are no known effective treatments.”

Verticillium Wilt

Verticillium Wilt is a fungus that prevents lettuce from absorbing water, causing it to quickly grow yellow and eventually wilt.  This dangerous fungus is very hard to get rid of totally because it can stay in the soil for up to seven years.

Today, Verticillium Wilt is spreading all over Monterey County, California.  Considering the fact that Monterey County produces more than 60 percent of the lettuce in the United States, that is very bad news.

Late Blight

In 2009, a disease known as “late blight” attacked potato and tomato plants in the United States with a ferocity never seen before.  According to a press release from Cornell University, late blight had “never occurred this early and this widespread in the U.S.” when it started showing up all over the place early last year.

Late blight begins as ugly brown spots on the stems of potato and tomato plants, and as the spots increase in size, white fungal growth develops until finally a soft rot completely collapses the stem.

This was the disease that was responsible for the Irish potato famine in the 1850s.  A major new outbreak could occur without warning.

Genetic Modification

While it may or may not technically be a disease (depending on how you look at it), genetic modification is having a very serious affect on crops around the globe.

For example, about 10 years ago Chinese farmers began to widely adopt Monsanto’s genetically modified Bt cotton.  Well, researchers have found that since that time, mirid bugs that are resistant to the Bt pesticide have experienced a complete and total population boom.

Today, six provinces in Northern China are experiencing what can only be described as a “mirid bug plague”.  Mirid bugs eat more than 200 different kinds of fruit, vegetables and grains.  Chinese farmers in the region are completely frustrated.

In the United States, a different problem is developing.  The complete and total reliance of so many U.S. farmers on Monsanto’s Roundup herbicide has resulted in several varieties of glyphosate-resistant “superweeds” developing in many areas of the United States. 

The most feared of these “superweeds”, Pigweed, can grow to be seven feet tall and it can literally wreck a combine.  Pigweed has been known to produce up to 10,000 seeds at a time, it is resistant to drought, and it has very diverse genetics.

Superweeds were first spotted in Georgia in 2004, and since then they have spread to South Carolina, North Carolina, Arkansas, Tennessee, Kentucky and Missouri. 

In some areas, superweeds have become so bad that literally tens of thousands of acres of U.S. farmland have actually been abandoned.

But that is what we get for trying to “play God”.

We think that we can just do whatever we want with nature and there will not be any consequences.

One of the most frightening things about genetic modification is that it actually reduces that amount of crop diversity in the world.

For example, if nearly all farmers start using the same “brand” of genetically modified plants that are all virtually identical, it sets up a situation where crop diseases and crop failures can cascade across the planet very easily.

Genetic variety is a very desirable thing, but today our scientists are just doing pretty much whatever they want without really considering the consequences. 

It has been said many times that genetic engineering is similar to “performing heart surgery with a shovel”.

The truth is that we just do not know enough about how our ecosystems work to be messing around with them so dramatically.

Perhaps even more frightening is that once these genetically engineered monstrosities have been released into our environment, it is absolutely impossible to recall them.  They essentially become a permanent part of our ecosystem.

But can we afford to make any serious mistakes at this point?

The truth is that we already live in a world that is not able to feed itself.

Tonight, approximately 1 billion people across the globe will go to bed hungry.  Every 3.6 seconds someone in the world starves to death, and three-fourths of those who starve to death are children under the age of five.

It is currently being projected that global demand for food will more than double over the next 50 years.

So what is going to happen if we start seeing widespread crop failures in the coming years?

The global food supply is not nearly as stable as most people believe.  At some point, it is going to be tested severely.

30 Reasons Why People Should Be Getting Really Nervous About The State Of The U.S. Economy

The mainstream media is full of happy economic news these days.  The S&P 500 has shot up 16 percent since the beginning of July.  Ford Motor Company just reported a profit that jumped nearly 70 percent in the third quarter.  It was Ford’s best third quarter performance ever and it was the 6th quarterly profit in a row for the company.  Other major firms have announced earnings that have far exceeded expectations in recent weeks.  Hooray!  The pundits are proclaiming that the economic collapse is over and that the U.S. economy has won.  It is almost enough to make one tear into a stirring rendition of “Happy Days Are Here Again”.  But perhaps we should take a moment and get a hold of ourselves first.  After all, the underlying economic fundamentals have not changed.  The same long-term trends that were ripping the U.S. financial system apart a month or two ago are still continuing to do so.  Millions upon millions of American families are still deeply suffering.  So exactly what in the world is going on here?  Well, this is what is known as a “sucker’s rally”.  Those on the inside know better than to throw money at this market.  In fact, corporate insiders are now selling off stock so fast you would think it is going out of style.  Meanwhile, hordes of innocent rubes are jumping back into the stock market thinking that it is the perfect time to get in. 

The truth is that these “good times” are only temporary.  Don’t get used to them.  The following are 30 reasons why people should be getting really, really nervous about the state of the U.S. economy…. 

#1 Corporate insiders are selling off stock at a blinding pace and are looking for the exits.  Alan Newman, the editor of the Crosscurrents newsletter, examined a number of the top performing stocks in the market including Google, Apple and Target and found that the ratio of corporate insider stock sold to corporate insider stock purchased over the last six months for those companies was 3,177 to 1.  At the group of firms that Newman looked at, corporate insiders had purchased 38,000 shares of stock over the last six months and yet had sold off over 120 million shares.

#2 Analysts at both Bank of America and Goldman Sachs both believe that the U.S. Federal Reserve is going to initiate a new round of quantitative easing in November.  It does not take a genius to figure out that this is very likely to push up inflation and have very serious consequences for the U.S. dollar.

#3 Economists at Goldman Sachs are projecting that the Fed will have to purchase at least $4 trillion in assets during this next round of quantitative easing to get the U.S. economy moving in a positive direction once again.

#4 In the United States today, there are 5,057 janitors with Ph.D.’s, other doctorates, or professional degrees.

#5 Investors have very little faith in the U.S. dollar (and in paper currencies in general) at this point.  Precious metals are soaring to obscene heights.  The price of gold has increased more than 20 percent in 2010.  The price of silver has skyrocketed about 40 percent this year.  These are not signs that indicate that the U.S. financial system is stable.

#6 Robin Griffiths, a technical strategist at Cazenove Capital, told CNBC on Monday that the U.S. dollar is in danger of becoming “toxic waste”.

#7 In the United States today, 317,000 waiters and waitresses have college degrees.

#8 U.S. lending institutions repossessed an all-time record total of 102,134 homes in the month of September.  That was the first time that home repossessions in the U.S. had ever exceeded the 100,000 mark during a single month.

#9 According to a Standard & Poor’s/Case-Shiller home price report that was released on Tuesday, single family home prices in the United States declined  for a second straight month in August.

#10 In the United States today, over 18,000 parking lot attendants have college degrees.

#11 During the months of August and September, the state of Nevada had an unemployment rate of 14.4 percent, which was the highest in the history of the state.  Not that the rest of the country is doing any better.  The state of California has become a complete and total economic disaster zone, and the city of Detroit, Michigan is literally dying.

#12 The “official” unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months.

#13 The number of people unemployed in the state of California is approximately equivalent to the populations of Nevada, New Hampshire and Vermont combined.

#14 According to the president of the Federal Reserve Bank of New York, there are approximately 3 million more vacant housing units than usual in the United States.

#15 China has reduced the export quota on rare earth elements for the second half of 2010 by 72%, thus strengthening their position in the world economy even more.  Rare earth elements are absolutely crucial to the manufacture of a vast array of high technology products, and now even more of them will have to be made in China.

#16 In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year.  In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.

#17 Wheat, corn and other staples are absolutely soaring in price on world markets.  These higher food prices are going to hit U.S. consumers hard.

#18 In 2007, 3 U.S. banks failed.  In 2008, 25 U.S. banks failed.  In 2009, 140 U.S. banks failed.  Last Friday, it was announced that 139 U.S. banks have failed so far this year and it is not even the end of October yet.

#19 Total student loan debt in the United States is climbing at a rate of approximately $2,853.88 per second.

#20 Back in 1980, the United States imported approximately 37 percent of  the oil that we use.  Now we import nearly 60 percent of the oil that we use.

#21 According to an analysis by the Congressional Joint Committee on Taxation, the health care reform legislation that Congress didn’t read but passed into law anyway will generate $409.2 billion in additional taxes on the American people by the year 2019.

#22 Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009.  That was the second yearly decline in a row.

#23 One out of every six Americans is now enrolled in a government anti-poverty program, and yet the number of Americans signing up for food stamps and other social programs just continues to set new all-time records month after month after month.

#24 The number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.

#25 American 15-year-olds do not even rank in the top half of all advanced nations when it comes to math or science literacy.

#26 According to a recent poll conducted by CNBC, 92 percent of Americans believe that the performance of the U.S. economy is either “fair” or “poor”.

#27 After analyzing Congressional Budget Office data, Boston University economics professor Laurence J. Kotlikoff came to the conclusion that the U.S. government is now facing a “fiscal gap” of $202 trillion dollars.

#28 A trillion $10 bills, if they were taped end to end, would wrap around the earth more than 380 times.  That amount of money would still not be enough to pay off the U.S. national debt.

#29 According to the U.S. Treasury Department, the U.S. national debt is rapidly closing in on 14 trillion dollars and and will climb to an estimated $19.6 trillion by 2015.

#30 At our current pace, the Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.

The U.S. economy is in the midst of a long-term decline.  There are always going to be moments when it seems like things are getting a bit better, but then reality will kick in and the depressing slide will continue.

If you really want to understand what is happening to the U.S. economy, do not become fixated on the short-term numbers.  Instead, always keep an eye on the long-term trends.

The U.S. economy is dying.  We are getting whipped by the rest of the world and we are drowning in a sea of debt.  A little rally in the stock market is not going to do a thing to fix our very deep fundamental economic problems.

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