The Biggest Ponzi Scheme In The History Of The World

America Is BrokeDid you know that you are involved in the most massive Ponzi scheme that has ever existed?  To illustrate my point, allow me to tell you a little story.  Once upon a time, there was a man named Sam.  When he was younger, he had been a very principled young man that had worked incredibly hard and that had built a large number of tremendously successful businesses.  He became fabulously wealthy and he accumulated far more gold than anyone else on the planet.  But when he started to get a little older he forgot the values of his youth.  He started making really bad decisions and some of his relatives started to take advantage of him.  One particularly devious relative was a nephew named Fred.  One day Fred approached his uncle Sam with a scheme that his friends the bankers had come up with.  What happened next would change the course of Sam’s life forever.

Even though Sam was the wealthiest man in the world by far, Fred convinced Sam that he could have an even higher standard of living by going into a little bit of debt.  In exchange for IOUs issued by his uncle Sam, Fred would give him paper notes that he printed off on his printing press.  Since the paper notes would be backed by the gold that Sam was holding, everyone would consider them to be valuable.  Sam could take those paper notes and spend them on whatever his heart desired.  Uncle Sam started to do this, and he started to become addicted to all of the nice things that those paper notes would buy him.

Fred took the IOUs that he received from his uncle and he auctioned them off to the bankers.  But there was a problem.  The IOUs issued by Uncle Sam had to be paid back with interest.  When the time came to pay back the IOUs, Uncle Sam could not afford to pay back the debts, pay the interest on those debts, and buy all of the nice things that he wanted.  So Uncle Sam issued even more IOUs than before so that he could get enough notes to pay off his debts.  As time rolled on, this pattern just kept on repeating.  Uncle Sam repeatedly paid off his old debts by taking out even larger new debts.

Meanwhile, since the notes that Uncle Sam was using were backed by gold, everyone else in the world decided to start using them to trade with one another.  This was greatly beneficial to Uncle Sam, because the rest of the world was glad to send him oil, home electronics, plastic trinkets and anything else that Uncle Sam wanted in exchange for his gold-backed notes.

Eventually, however, the rest of the world started to suspect that the number of gold-backed notes that Uncle Sam was issuing far exceeded the amount of gold that Uncle Sam actually had.  So the rest of the world started to trade in their notes for gold.

And by that time Uncle Sam definitely did not have enough gold to back up his notes.  Realizing that the scheme was starting to collapse, one day Uncle Sam announced that his notes would no longer be backed by gold.  But he insisted that the rest of the world should continue using his notes because he was the wealthiest man on the planet and everyone should just trust him.

And the rest of the world did continue to trust him, although it wasn’t the same as before.

As Uncle Sam got greedier and greedier, he started to issue IOUs and spend notes at a rate that nobody ever dreamed possible.  The great businesses that Uncle Sam had built when he was younger were starting to decline, and Uncle Sam started buying far more stuff from the rest of the world than they bought from him.  The rest of the world was still glad to take Uncle Sam’s notes because they used them to trade with one another, but they started accumulating far more notes than they actually needed.

Not sure exactly what to do with mountains of these notes, the rest of the world started to loan them back to Uncle Sam.  It eventually got to the point where Uncle Sam owed the rest of the world trillions of these notes.  Even though the notes were losing value at a rate of close to 10 percent a year, Uncle Sam somehow convinced the rest of the world to loan him notes at an average rate of interest of less than 3 percent a year.

One day Uncle Sam woke up and realized that the amount of debt that he owed was now more than 5000 times larger than it was when Fred had first approached him with this ill-fated scheme.  Uncle Sam now owed more than 16 trillion notes to his creditors, and Uncle Sam had already made future financial commitments of 202 trillion notes that he would never be able to pay.  Meanwhile, the notes that Fred had been printing up for Uncle Sam were now worth less than 5 percent of their original value.  Uncle Sam was becoming concerned because some of his other relatives were warning that this whole scheme was about to collapse.

Sadly, Uncle Sam did not listen to them.  Uncle Sam knew that if he admitted how fraudulent the financial scheme was, the rest of the world would quit sending him all of the things that he needed in exchange for his notes and they would quit lending his notes back to him at super low interest rates.

And if the rest of the world lost confidence in his notes and quit using them, Uncle Sam knew that his standard of living would go way, way down.  That was something that Uncle Sam could not bear to have happen.

When a financial crisis almost caused the scheme to crash in 2008, a desperate Uncle Sam went to Fred and asked for help.  In response, Fred started printing up far more notes than ever before and started directly buying up large amounts of IOUs from Uncle Sam with the notes that he was creating out of thin air.  Fred hoped that the rest of the world would not notice what he was doing.

It seemed to work for a little while, but then an even worse financial crisis came along.  Once again, Uncle Sam started issuing massive amounts of new IOUs and Fred started printing up giant mountains of new notes to try to fix things, but their desperate attempts to keep the system going were to no avail.  The rest of the world started to realize that they had been sucked into a massive Ponzi scheme, and they lost confidence in the notes that Uncle Sam was using.  Suddenly nobody wanted to lend notes to Uncle Sam at super low interest rates anymore, and people started asking for far more notes in exchange for the things that Uncle Sam wanted.

Uncle Sam’s standard of living dropped dramatically.  Since he could no longer flood the world with his notes, Uncle Sam could not continue to consume far, far more wealth than he produced.  Uncle Sam sunk into a deep depression as he watched the scheme fall apart all around him.

Uncle Sam had once been the wealthiest man on the entire planet, but now he was a broke, tired old man that was absolutely drowning in debt.  Unfortunately, once he was down on his luck the rest of the world did not have any compassion for him.  In fact, much of the rest of the world celebrated the downfall of Uncle Sam.

All of this could have been avoided if Uncle Sam had never agreed to Fred’s crazy scheme.  And once Uncle Sam made the decision to stop backing his notes with gold, it was only a matter of time before the scheme was going to collapse.

Does this little story sound crazy to you?  It shouldn’t.  The truth is that you are involved in such a scheme right now.  In case you haven’t figured it out, “Uncle Sam” is the United States, the “notes” are U.S. dollars, and “Fred” is the Federal Reserve.

Please share this story with as many people as you can.  Our country is headed for complete and total financial disaster, and we need to get people educated about this while there is still time.

The Sobering Reality Of What Life Is Like In Reno, Nevada

What do you do when the city where you live is dying?  All over the United States formerly great cities are crumbling, but some are definitely in worse shape than others.  One reader recently wrote to me about what she sees happening all around her in Reno, Nevada.  The unemployment rate in Reno is now up to 11.7 percent, which is well above the national average of 8.3 percent.  But that doesn’t tell the whole story.  The recent recession hit Nevada particularly hard and people have been moving out of the state in waves.  In fact, the labor force in Nevada has shrunk by close to 20 percent over the past year as workers have moved elsewhere in search of work.  But even though the labor force is now nearly 20 percent smaller, the unemployment rate is still well above 11 percent.  There simply are not enough jobs in large Nevada cities such as Reno and Las Vegas.  Unfortunately for Reno, it does not have the same kind of big corporate money pouring into it that Las Vegas does.  The good news is that you can buy a house very, very cheaply in Reno because homes were foreclosed on in droves during the housing crash.  Even today, some housing developments that were put up near the end of the boom times look like virtual ghost towns.  The main industry in Reno is “entertainment”, but many of Reno’s strip clubs and gambling establishments have aged so badly at this point that they just look kind of depressing.  I guess that is kind of fitting, because Nevada has the fifth highest suicide rate in the nation, and Reno has been ranked as one of the top 10 depressed cities in the entire country.  As the city has declined, gangs have moved in and the drug trade is flourishing.  Reno has been called the meth capital of America, and crime is on the rise.  Despite being surrounded by tremendous natural beauty, Reno has become a very unpleasant place in which to live.  But what is happening in Reno is also happening in hundreds of other communities across the United States.  Our economy is collapsing and our cities are crumbling right in front of our eyes, and it is only going to get worse from here.

A reader of my site named Heather who has been unemployed since November of last year recently shared the following with me….

I am living in Reno/Sparks Nevada and I feel like it is ground zero for collapse. There are a lot of people who are in denial right now and cannot see the larger picture. I keep also saying we are the canary in the coal mine for the rest of the country.  It is quite depressing driving around seeing empty office buildings with vacancies and retail areas just empty. Went to the stores and retail seems pretty slow also. I am volunteering at ProNet locally and it helps unemployed people finds jobs and skills. It has been depressing there too with very little jobs out there for many people who need one.

She said that I should share what is happening in Reno with my readers.  She wanted people to know what those living in Reno are going through.

You might think that since Reno is so sunny, so warm and surrounded by such natural beauty that it would be one of the happiest places in America.

Unfortunately it turns out that the opposite is true.

Reno is actually a very sad place.

In fact, last year Men’s Health ranked Reno as the ninth saddest city in the United States.

In response to this ranking, one resident of Reno wrote the following….

In light of this disheartening list-making, it is, of course, important for Nevadans to look on the bright side. Rather than allowing these statistics to depress us further, we can consider them a series of challenges that make living in places like Reno and Las Vegas all the more impressive. You don’t just live in Reno. You survive Reno! To dwell in Reno, you must triumph over the odds that are stacked against you—one of the things we’re supposed to do best here.

If we can withstand all of the emotional curveballs thrown at us because we have selected such a turbulent location in which to reside, we can probably survive anything.

As a lifelong Renoite, I am inclined to respond to these lists with defiance. Yeah, things can look pretty grim sometimes when no one can find a job, and there seems to be no way out.

And that is how many Americans are feeling these days.  They are broke, unemployed, depressed and out of options.

How can you pick up and start a new life somewhere else when you have no job and no money?

Sadly, a lot of younger Americans are turning to drugs in an attempt to escape the pain of their daily lives.

One article that I found attempted to find humor in the raging meth epidemic that is happening in Reno….

Reno has been affectionately called the meth capital of the nation. Some foolishly think mass drug usage can ravage a city as swiftly as it can ruin a user’s clear complexion. In all reality, drug addiction is no more than an endearing quirk, certainly not a cause for concern. Babies and adolescents with addiction-addled parents should stop being coddled and learn how to take care of themselves. I’ve been doing my own laundry since I was six months old­ — I’m sure they can do the same. If there is anything disturbing about the meth problem in Reno, it’s that it shows the lack of variety in this town. Why don’t you try some uppers like MDMA? Your teeth will thank me.

Unfortunately, Reno is far from alone.  In the past I have written about how formerly great cities such as Detroit, Cleveland and Baltimore are completely falling apart as well.  This kind of thing is literally happening from coast to coast.

There is a very serious lack of decent jobs in America right now.  At this point only 24.6 percent of all jobs in the United States are good jobs.

This has made it increasingly difficult for Americans to be able to take care of themselves.

If you can believe it, more than 100 million Americans are on welfare at this point.

And that number does not even include the tens of millions of people that are on Social Security and Medicare.

What in the world has happened to us?

These days most Americans work really hard all of their lives but never end up reaching their dreams.

In fact, one recent study found that 46 percent of all Americans die with less than $10,000 worth of financial assets.

Talk about depressing.

But instead of having us focus on how bad the economic numbers are, the Federal Reserve wants to start measuring how “happy” everyone is.  The following is from a recent ABC News article….

Ben Bernanke wants to know if you are happy.

The Federal Reserve chairman said Monday that gauging happiness can be as important for measuring economic progress as determining whether inflation is low or unemployment high. Economics isn’t just about money and material benefits, Bernanke said. It is also about understanding and promoting “the enhancement of well-being.”

So what would you say if the Federal Reserve contacted you and asked if you are happy?

Please feel free to post a comment with your thoughts below….

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