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.
The idea that the Obama administration has the budget deficit under control is a complete and total lie. According to the U.S. Treasury, the federal government has officially run a deficit of 589 billion dollars for the first 11 months of fiscal year 2014. But this number is just for public consumption and it relies on accounting tricks which massively understate how much debt is actually being accumulated. If you want to know what the real budget deficit is, all you have to do is go to a U.S. Treasury website which calculates the U.S. national debt to the penny. On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32. As I write this, the U.S. national debt is sitting at $17,742,108,970,073.37. That means that the U.S. national debt has actually grown by more than a trillion dollars in less than 12 months. We continue to wildly run up debt as if there is no tomorrow, and by doing so we are destroying the future of this nation.
The chart that I have posted below shows the exponential growth of the U.S. national debt over the past several decades. Anyone that would characterize this as “under control” is lying to you…
This is the greatest government debt bubble in the history of the world, but very few people seem to have any desire to do anything about this anymore. We are literally gorging on debt, and most Americans seem to think that it is just fine and dandy.
Perhaps that it is because we have never really experienced any serious consequences for going into so much debt yet.
But when it comes to running up debt, a day of reckoning always comes eventually.
Just ask Greece.
And the absolutely insane spending policies of this administration and this Congress are hastening the day when our day of reckoning will arrive.
Consider the following facts…
-The U.S. national debt has increased by more than 7 trillion dollars since Barack Obama has been in the White House. By the time Obama’s second term is over, we will have accumulated about as much new debt under his leadership than we did under all of the other U.S. presidents in all of U.S. history combined.
-The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first established in 1913.
-If the U.S. national debt was reduced to a stack of one dollar bills it would circle the earth at the equator 45 times.
-Right now, the United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.
-In August, the average rate of interest on the government’s marketable debt was 2.028 percent. In January 2000, the average rate of interest on the government’s marketable debt was 6.620 percent. If we got back to that level today, we would be paying well over a trillion dollars a year just in interest on the national debt.
-At this point the U.S. government has accumulated more than 200 trillion dollars of unfunded liabilities that will need to be paid in future years. In other words, we have made more than 200 trillion dollars worth of promises that we do not have money for yet.
Thomas Jefferson once said that “the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”
What we are doing to future generations is absolutely unconscionable. We are stealing trillions upon trillions of dollars from our children and our grandchildren, and we are willingly consigning them to a lifetime of debt slavery.
I have said this before, but it bears repeating. If future generations get the chance, they will look back and curse us for what we have done to them.
And shame on anyone that would dare to suggest that we should continue to run up more debt that future generations will be expected to repay.
But government debt is far from the only massive debt bubble that we are dealing with as a country.
40 years ago, the total amount of debt in our nation (all government debt plus all business debt plus all individual debt) was sitting at a grand total of about 2.3 trillion dollars.
Today, that total has grown to 59.4 trillion dollars.
As the chart posted below shows, our total debt bubble is now more than 25 times larger than it was just 40 years ago…
If you were to take all forms of debt in our country and divide it up equally to each person, the average family of four would owe approximately $735,000.
This is not anywhere close to being sustainable, but most Americans don’t seem to care. They just continue to recklessly run up even more debt.
However, there are signs that we are starting to hit a wall with all of this debt.
For example, an astounding 35 percent of all Americans have debts that are so overdue that they have been referred to collection agencies.
Our nation has become an ocean of red ink from sea to shining sea, and the only way to keep the bubble from bursting is for the total amount of debt to continue to grow much faster than the overall economy is growing.
Obviously this cannot happen indefinitely, and when this house of cards comes crashing down it is going to be absolutely horrific. For much more on all of this please see my previous article entitled “The United States Of Debt: Total Debt In America Hits A New Record High Of Nearly 60 Trillion Dollars“.
The big question is how long our “bubble economy” can keep going before it finally collapses.
It has gotten to the point where even some of the biggest banks in the world are admitting that what we have been doing is completely and totally unsustainable. Just consider the following excerpt from a recent article by Joshua Krause…
Recently, strategists for Deutsche Bank released a startling study in regards to government debt. They decided to investigate whether or not the bond market is currently in a bubble. What they found was, unlike previous eras, the past 20 years has seen no lag between economic booms and busts:
It has long been our view that over the last couple of decades the global economy has rolled from bubble to bubble with excesses never fully being allowed to unravel. Instead aggressive policy responses have encouraged them to roll into new bubbles.
This has arguably kept the modern financial system as we know it a going concern. Clearly there have always been bubbles formed through history but has there been a period like the last 20 years where the bursting of one bubble has consistently led directly to the formation of the next?
Essentially, our current system has been dying a very slow death. It’s running out of steam.
Sadly, most Americans have no idea that we are living in a giant debt-fueled bubble that has a limited lifespan.
Most Americans just assume that since the politicians tell them that everything is going to be okay that they don’t need to be concerned about any of this.
But every single day our debts get even larger and our long-term financial problems get even worse.
Someday this bubble is going to burst and then all hell will break loose.
It is just a matter of time.
Are you ready to have your veins scanned every time you use your bank account? Are you ready to use a “digital tattoo” or a microchip implant to unlock your telephone? Once upon a time we read about such technologies in science fiction novels, but now they are here. The era of widespread biometric identification and microchip implants is upon us, and it is going to change the way that we live. Proponents of these new technologies say that they will make our private information and our bank accounts much more secure. But there are others that warn that these kinds of “Big Brother technologies” will set the stage for even more government intrusion into our lives. In the wrong hands, such technologies could prove to be an absolute nightmare.
Barclays has just announced that it is going to become the first major bank in the western world to use vein scanning technology to control access to bank accounts. There will even be a biometric reader that customers plug into their computers at home…
Barclays is launching a vein scanner for customers as it steps up use of biometric recognition technology to combat banking fraud.
The bank has teamed up with Japanese technology firm Hitachi to develop a biometric reader that scans a customer’s finger to access accounts, instead of using a password or PIN.
The biometric reader, which plugs into a customer’s computer at home, uses infrared lights to scan blood flow in a person’s finger. The user must then scan the same finger a second time to confirm a transaction. Each “vein profile” will be stored on a SIM card inside the device.
Vein recognition technology is used by some banks in Japan and elsewhere at ATM machines, but Barclays said it is the first bank globally to use it for significant account transactions.
But Barclays is not the only one that is making a big move into biometric identification.
Online retailing behemoth Alibaba is going to start using fingerprint scanning in an attempt to make their transactions more secure…
Alibaba, the giant Chinese online retailer, is integrating fingerprint scanning into its Alipay Wallet app. Foxconn, the Taiwanese manufacturer of the iPhone and iPad, threw nearly $5 million at Norway’s NEXT Biometrics, which develops fingerprint scanning technology, back in May. And earlier this month it took a 10% stake for $2 million in AirSig, a Taiwanese company that uses smartphones’ built-in gyroscopes to track air handwriting. The company says AirSig provides three-factor authentication: your signature, your phone, and the way you sign with a flourish in mid-air.
It is only a matter of time before more banks, online retailers and major websites start using this kind of technology. We live at a time when theft on the Internet threatens to spiral out of control, and big corporations are going to be continually looking for answers.
Cell phone security is another area of great concern these days. If someone can get a hold of your phone and unlock it, that person can potentially do all sorts of damage.
So Motorola has developed a “digital tattoo” that will be used to ensure that only the owner of a phone is able to unlock it. The following is how Motorola described these new digital tattoos…
Made of super thin, flexible materials, based on VivaLnk’s eSkinTM technology, each digital tattoo is designed to unlock your phone with just a touch of your Moto X to the tattoo, no passwords required. The nickel-sized tattoo is adhesive, lasts for five days, and is made to stay on through showering, swimming, and vigorous activities like jogging. And it’s beautiful—with a shimmering, intricate design.
It’s another step in making it easier to unlock your phone on the go and keep your personal information safe. An average user takes 2.3 seconds to unlock their phone and does this about 39 times a day—a process that some people find so inconvenient that they do not lock their phones at all. Using NFC technology, digital tattoos make it faster to safely unlock your phone anywhere without having to enter a password.
And below I have posted the video that Motorola shared on YouTube about these tattoos…
Pretty bizarre stuff, eh?
But others are taking cell phone security to even greater extremes.
For example, some people were actually implanting themselves with microchips in anticipation of the release of the iPhone 6 on September 9th…
With a wave of his left hand, Ben Slater can open his front door, turn on the lights and will soon be able to start his car. Without even a touch he can link to databases containing limitless information, including personal details such as names, addresses and health records.
The digital advertising director has joined a small number of Australians who have inserted microchips into their skin to be at the cutting edge of the next stage of the evolution of technology.
Slater was prompted to be implanted in anticipation of the iPhone 6 release on September 9.
The conjecture among pundits and fans worldwide over what chief executive Tim Cook will reveal is building.
At present the iPhone cannot read microchip implants. However, Mr Slater believes the new version will have that capability. His confidence is now lodged between his thumb and forefinger.
Of course this kind of thing is not new. People have been getting implanted with microchips for years. If you doubt this, just do an Internet search for “biohackers” and see what you find.
But it is starting to become more mainstream, and there are already some thinkers that are quite eager to use such technology for very authoritarian purposes.
For example, one prominent philosopher recently suggested that we should use implantable microchips to prevent anyone that is “deemed unworthy” from becoming a parent…
Although he admits it “sounds blatantly authoritarian” and “violates just about every core value we possess in a free society,” a noted transhumanist author has said a world government body should forcibly sterilize anyone “deemed unworthy” of parenthood by using implanted microchips.
Constitutional attorney and civil liberties expert John W. Whitehead, founder of The Rutherford Institute, warned LifeSiteNews earlier this year that political officials would long to use this seminal technology.
In an article for Wired.com today, philosopher Zoltan Istvan wrote that the notion first crossed his mind when he heard a blonde nurse say, “with 10,000 kids dying everyday around the world from starvation, you’d think we’d put birth control in the water.”
After careful thought, in an effort to “give hundreds of millions of future kids a better life, I cautiously endorse the idea of licensing parents,” Istvan wrote today.
You might be tempted to think that this is crazy talk.
But the truth is that this kind of technology is already being developed.
In a previous article, I quoted a news article which discussed how billionaire Bill Gates is funding the development of a birth control microchip that “acts as a contraceptive for 16 years”…
Helped along by one of the world’s most notable billionaires, a U.S. firm is developing a tiny implant that acts as a contraceptive for 16 years — and can be turned on or off using a remote control.
The birth control microchip, funded by the Bill and Melinda Gates Foundation, would hold nearly two decades worth of a hormone commonly used in contraceptives and dispense 30 micrograms a day, according to a report from the MIT Technology Review.
The new birth control, which is set to begin preclinical testing next year with hopes of putting it on shelves in 2018, can be implanted in the buttocks, upper arm or abdomen.
Yes, I know that a lot of the things that I have talked about in this article sound really weird.
But the reality of the matter is that technology is changing at an exponential rate, and our world is going to get crazier and crazier as time goes by.
Are you ready for what comes next?
Should we be concerned that the percentage of Americans that are either working or looking for work is the lowest that it has been in 36 years? In August, an all-time record high 92,269,000 Americans 16 years of age and older did not “participate in the labor force”. And when you throw in the people that are considered to be “in the labor force” but are not currently employed, that pushes the total of working age Americans that do not have jobs to well over 100 million. Yes, it may be hard to believe, but there are more than 100 million working age Americans that are not employed right now. Needless to say, this is not a sign of a healthy economy, and it is a huge reason why dependence on the government has soared to absolutely unprecedented levels. When people can’t take care of themselves, they need someone else to take care of them. If the percentage of people in the labor force continues to decline like it has been, what is that going to mean for the future of our society?
The chart below shows the changes in the civilian labor force participation rate since 1980. As you can see, the rate steadily rose between 1980 and 2000, but since then it has generally been declining. In particular, this decline has greatly accelerated since the beginning of the last recession…
We have never seen an extended precipitous decline of this nature before. But instead of admitting that we have a very serious problem on our hands, many mainstream economists are dismissing this decline as “structural in nature”. For example, check out the following excerpt from a recent Reuters article…
A paper published on Thursday by the Brookings Institution, a Washington-based think tank, suggested the decline was primarily due to an aging population and other structural factors, and concluded the labor force would continue to shrink.
But there is a major flaw in this analysis. It turns out that older Americans are the only group for which employment numbers have actually been going up. I really like how Zero Hedge made this point the other day…
Well that’s very odd, because it was only two months ago that the Census wrote the following : “Many older workers managed to stay employed during the recession; in fact, the population in age groups 65 and over were the only ones not to see a decline in the employment share from 2005 to 2010 (Figure 3-25)… Remaining employed and delaying retirement was one way of lessening the impact of the stock market decline and subsequent loss in retirement savings.”
Yes, Baby Boomers are hitting retirement age.
But that does not explain why the labor force participation rate numbers for younger groups have been going down.
Each month, the U.S. economy has to add somewhere between 100,000 and 150,000 jobs just to keep up with population growth. Since job creation has been tepid at best in recent years, the only way that the government has been able to get the official unemployment rate to steadily “go down” has been to remove millions upon millions of Americans from the labor force.
According to the official government numbers, since 2007 768,000 jobs have been added to the economy, but a whopping 13 million Americans have been added to the numbers of those “not in the labor force”.
As a result, the official unemployment rate has magically been “declining”.
But the truth is that our employment crisis has not been solved at all.
And it isn’t just the number of jobs that we need to be concerned about. We are also dealing with a multi-year decline in the quality of our jobs. In fact, the Wall Street Journal just reported that 34 percent of all U.S. workers are “freelancers” now…
More evidence that this isn’t your parents’ labor market: Roughly one in three U.S. workers is now a freelancer.
Fifty-three million Americans, or 34% of the nation’s workforce, qualify as freelancers, according to a new report from the Freelancers Union, a nonprofit organization, and Elance-oDesk Inc., a company that provides platforms for freelancers to find work. These individuals include independent contractors, temps, and moonlighters, among others.
In other words, about a third of all workers in the country are “temps” at this point.
I don’t know about you, but to me that is an extremely alarming statistic.
If the economy really was recovering, this would not be happening.
And as millions upon millions of Americans are being forced out of the official labor force, an increasing number of people are turning to the underground economy.
For example, in some of our major cities we are witnessing a rise in the number of street vendors. The following is an excerpt from a recent Los Angeles Times article entitled “More Angelenos are becoming street vendors amid weak economy“…
Sitting at her street vending booth with products arrayed neatly on a sequined purple tablecloth, Jackie Lloyd reflects nostalgically on the days when she had a steady salary and regular hours.
That was four years ago, before the 39-year-old was laid off from her job as an elementary school cafeteria worker and mounting bills forced her to venture into self-employment.
Now the Pico-Union resident hops from location to location, selling body oils, shea butter, soap and incense. She moves when nearby businesses complain or she feels unsafe.
Some days, her sales bring in $150. Others, they don’t break $20.
In order to have a strong middle class, we need middle class jobs.
If our labor force participation rate continues to fall and the quality of our jobs continues to decline, the middle class will continue to shrink. For much more on this, please see my previous article entitled “30 stats to show to anyone that does not believe the middle class is being destroyed“.
But our authorities never seem to want to admit what our real problems are.
Instead, they love to come up with alternative theories for our economic struggles.
One of the latest theories being put forward by the Federal Reserve is that the economy is not moving along like it should because ordinary Americans are “hoarding money”…
One of the great mysteries of the post-financial crisis world is why the U.S. has lacked inflation despite all the money being pumped into the economy.
The St. Louis Federal Reserve thinks it has the answer: A paper the central bank branch published this week blames the low level of money movement in large part on consumers and their “willingness to hoard money.”
This seems completely absurd to me.
From what I can see, most families are just doing their best to survive from month to month these days.
I certainly don’t see a lot of people “hoarding money”.
What about you?
What do you think?
Please feel free to share your thoughts by posting a comment below…
Russia and China have just signed what is being called “the gas deal of the century”, and the two countries are discussing moving away from the U.S. dollar and using their own currencies to trade with one another. This has huge implications for the future of the U.S. economy, but the mainstream media in the United States is being strangely quiet about all of this. For example, I searched CNN’s website to see if I could find something about this gas deal between Russia and China and I did not find anything. But I did find links to “top stories” entitled “Celebs who went faux red” and “Adorable kid tugs on Obama’s ear“. Is it any wonder why the mainstream media is dying? If a particular story does not fit their agenda, they will simply ignore it. But the truth is that this new agreement between Russia and China is huge. It could end up fundamentally changing the global financial system, and not in a way that would be beneficial for the United States.
Russia and China had been negotiating this natural gas deal for ten years, and now it is finally done. Russia is the largest exporter of natural gas on the entire planet, and China is poised to become the world’s largest economy in just a few years. This new $400 billion agreement means that these two superpowers could potentially enjoy a mutually beneficial relationship for the next 30 years…
Russia reached a $400 billion deal to supply natural gas to China through a new pipeline over 30 years, a milestone in relations between the world’s largest energy producer and the biggest consumer.
President Vladimir Putin is turning to China to bolster Russia’s economy as relations sour with the U.S. and European Union because of the crisis in Ukraine. Today’s accord, signed after more than a decade of talks, will allow state-run gas producer OAO Gazprom (GAZP) to invest $55 billion developing giant gas fields in eastern Siberia and building the pipeline, Putin said.
It’s an “epochal event,” Putin said in Shanghai after the contract was signed. Both countries are satisfied with the price, he said.
Of course countries sell oil and natural gas to each other all the time. But what makes this deal such a potential problem for the U.S. is the fact that Russia and China are working on cutting the U.S. dollar out of the entire equation. Just check out the following excerpt from a recent article in a Russian news source…
Russia and China are planning to increase the volume of direct payments in mutual trade in their national currencies, according to a joint statement on a new stage of comprehensive partnership and strategic cooperation signed during high-level talks in Shanghai on Tuesday.
“The sides intend to take new steps to increase the level and expansion of spheres of Russian-Chinese practical cooperation, in particular to establish close cooperation in the financial sphere, including an increase in direct payments in the Russian and Chinese national currencies in trade, investments and loan services,” the statement said.
In my recent article entitled “De-Dollarization: Russia Is On The Verge Of Dealing A Massive Blow To The Petrodollar“, I warned about what could happen if the petrodollar monopoly ends. In the United States, our current standard of living is extremely dependent on the rest of the world continuing to use our currency to trade with one another. If Russia starts selling natural gas to China without the U.S. dollar being involved, that would be a monumental blow to the petrodollar. And if other nations started following the lead of Russia and China, that could result in an avalanche from which the petrodollar may never recover.
And it isn’t just the national governments of Russia and China that are discussing moving away from the U.S. dollar. For example, the second largest bank in Russia just signed a deal with the Bank of China “to pay each other in domestic currencies”…
VTB, Russia’s second biggest lender, has signed a deal with Bank of China, which includes an agreement to pay each other in domestic currencies.
“Under the agreement, the banks plan to develop their partnership in a number of areas, including cooperation on ruble and renminbi settlements, investment banking, inter-bank lending, trade finance and capital-markets transactions,” says the official VTB statement.
The deal underlines VTB Group’s growing interest in Asian markets and will help grow trade between Russia and China that are already close trading partners, said VTB Bank Management Board Vasily Titov.
You can almost feel the power of the U.S. dollar fading.
A few months ago, when I wrote about how China had announced that it no longer planned to stockpile more U.S. dollars, I speculated that it may be evidence that China planned to start making a big move away from the U.S. dollar.
Well, now China’s intentions have become even more clear.
The Chinese do not plan to allow the United States to indefinitely dominate the globe financially. In the long run, the Chinese plan to be the ones calling the shots, and that means that the power of the U.S. dollar must decline.
These days, instead of piling up mountains of U.S. currency, China has started accumulating hard assets instead. In the past, I have written about how China is rapidly stockpiling gold, and it turns out that the Chinese have also been very busy stockpiling oil as well…
China is stockpiling oil for its strategic petroleum reserve at a record pace, intervening on a scale large enough to send a powerful pulse through the world crude market.
The move comes as tensions mount in the South China Sea and the West prepares possible oil sanctions against Russia over the crisis in eastern Ukraine. Analysts believe China is quietly building up buffers against a possible spike in oil prices or disruptions in supply.
The International Energy Agency (IEA) said in its latest monthly report that China imported 6.81m barrels per day (bpd) in April, an all-time high.
Once upon a time, China was extremely dependent on the United States economically. The same was true with most of the rest of the world.
But now economic power has shifted so dramatically that nations such as Russia and China are realizing that they don’t really need to be dependent on the United States any longer.
And with each passing year, the relationship between Russia and China is becoming stronger. As Pepe Escobar recently observed, this emerging alliance is causing quite a bit of consternation in Washington…
And no wonder Washington is anxious. That alliance is already a done deal in a variety of ways: through the BRICS group of emerging powers (Brazil, Russia, India, China, and South Africa); at the Shanghai Cooperation Organization, the Asian counterweight to NATO; inside the G20; and via the 120-member-nation Non-Aligned Movement (NAM). Trade and commerce are just part of the future bargain. Synergies in the development of new military technologies beckon as well. After Russia’s Star Wars-style, ultra-sophisticated S-500 air defense anti-missile system comes online in 2018, Beijing is sure to want a version of it. Meanwhile, Russia is about to sell dozens of state-of-the-art Sukhoi Su-35 jet fighters to the Chinese as Beijing and Moscow move to seal an aviation-industrial partnership.
Meanwhile, the relationship that the U.S. has with both nations is quickly going sour. The crisis in Ukraine has caused relations with Russia to drop to the lowest point since the end of the Cold War, and now China is deeply offended by charges that Chinese military officers have been involved in cyberspying on the United States…
China on Tuesday warned the United States was jeopardizing military ties by charging five Chinese officers with cyberspying and tried to turn the tables on Washington by calling it “the biggest attacker of China’s cyberspace.”
China announced it was suspending cooperation with the United States in a joint cybersecurity task force over Monday’s charges that officers stole trade secrets from major American companies. The Foreign Ministry demanded Washington withdraw the indictment.
The testy exchange marked an escalation in tensions over U.S. complaints that China’s military uses its cyber warfare skills to steal foreign trade secrets to help the country’s vast state-owned industrial sector.
The divide between the East and the West is growing.
But the Obama administration has not figured out that we need the East more than they need us.
Right now, the number one U.S. export is U.S. dollars. Our massively inflated standard of living is very heavily dependent on the rest of the world using our currency to trade with one another and lending it to us at super low interest rates.
If the rest of the world quits playing our game, our debt-based financial system will quickly fall apart.
Unfortunately, nobody in the Obama administration seems to have much understanding of global economics, and they will probably continue to antagonize Russia and China.
In the end, the consequences for antagonizing them could end up being far greater than any of us ever imagined.
Are you deeply concerned about the future of America? Is something in your gut telling you that our system is fundamentally broken and that the mainstream media is not telling you the truth about what is happening? If so, you are definitely not alone. Right now, there are millions upon millions of Americans that are absolutely horrified as they watch this nation deteriorate. In fact, according to an analysis of recent polling data conducted by Real Clear Politics, approximately 68 percent of all Americans believe that the country is on the wrong track and only 23.5 percent of all Americans believe that the country is on the right track. And of course our problems did not appear just recently. In fact, many of them are the result of decades of very foolish decisions and they are not going to be fixed easily. Unfortunately, there is very little consensus among Americans about how to fix any of our problems. There is more anger, frustration, hatred and division in the United States today than there has been in decades, and there is very little hope that the great storms that are looming on the horizon will be averted. Those that are wise are preparing for what is coming. Those that are not are going to be absolutely blindsided by what is rapidly approaching.
Once upon a time, America was the wealthiest nation on the entire globe by a huge margin and it had the largest and most thriving middle class the world had ever seen. But now America is drowning in the biggest ocean of red ink in the history of the planet and the middle class is being systematically destroyed.
If you read my articles on a regular basis, you already know all of this. But now there are certain factors that are going to cause the problems of the middle class to greatly accelerate.
For instance, just consider what Obamacare is going to do to millions of American families.
The Foundry recently posted a story that detailed the extreme hardship that Obamacare is going to impose on one middle class family in Sonora, California. This particular family is very healthy and does not have a history of health problems. Up until now, they have had a health insurance policy with Anthem Blue Cross Insurance that they have been very happy with.
Back in 2011, this family was paying $389 a month for health insurance.
In 2012, due to changes in California law that figure went up to $499 a month.
Now, this family has just received a letter informing them that their current plan is being canceled and that if they want a new plan it is going to cost them $1,252 a month.
Needless to say, that news did not go over very well with that family.
Just think about it.
Can you come up with an extra $753 a month for health insurance?
Most American families certainly cannot.
Well, Kate Joy and her husband sat down and started trying to figure out how they could squeeze the new health insurance policy into their budget. It turned out that they would have to cut out a lot of things. The following is a list of the proposed cuts that they have come up with so far…
- Stop paying the extra payment on my mortgage: $100/month
- Stop eating out: $150/month
- Don’t go to the movies: $36/month
- Switch to getting a haircut every other month: $15/month
- Stop getting manicures: $40/month
- Stop monthly charitable donations to Wounded Warrior and Habitat for Humanity: $70/month
- Stop saving for an annual anniversary getaway: $60/month
- No Christmas gifts to extended family: $40/month
- Quit buying beef at the grocery store: $100/month
- Teeth cleaning only once per year: $30/month
- Cancel all magazine/newspaper subscriptions: at least $30/month
- Cut DISH service to cheaper plan: $50/month
- Cancel land line phone service: $70/month
If they make all of those cuts, it will save the family $791 a month.
Understandably, that family is having a very hard time feeling optimistic about the future right now. In fact, at the end of the article Kate Joy is quoted as saying the following…
“I fear for what’s coming.”
And of course her family is not the only one that is being absolutely hammered by Obamacare.
In a previous article, I discussed the results of one study which showed that health insurance premiums for men are going to go up by an average of 99 percent under Obamacare and health insurance premiums for women are going to go up by an average of 62 percent under Obamacare.
And a different study found that health insurance premiums for healthy 30-year-old men are going to go up by an average of 260 percent under Obamacare.
All of this is going to suck a tremendous amount of “discretionary income” out of the economy.
In addition, millions upon millions of Americans are going to make the choice to go without health insurance altogether. And considering the level of care that we get in many of these hospitals that is understandable. For example, the body of 57-year-old Lynne Spalding was recently discovered in a stairwell at San Francisco General Hospital 17 days after she had disappeared from her hospital room.
Those that provide our “health care” don’t care about us as much as they did in the old days. Instead, the health care industry just wants to get as much money out of us as rapidly as they can and then move on to the next victim.
And of course health care is not the only thing that middle class families have to be concerned about these days. Our national employment crisis is getting even worse, incomes are shrinking, and Obama is pushing Congress to approve a secret treaty that will ship millions more of our jobs out of the country.
And there are certainly a lot of troubling economic signs as we head toward 2014. Just consider the following examples…
-Pending home sales in the United States have fallen for five months in a row.
-Machinery giant Caterpillar is reporting negative retail sales growth in every region on the globe. Historically, the sales growth of Caterpillar has been one of the most important indications of where the economy is headed next.
-Major banks are warning the Federal Reserve that they may have to start charging depositors a fee. In other words, you may soon have to pay for the “privilege” of putting your money in the bank.
Of course this is just the beginning. Things are going to get much, much worse in the years ahead as our economy continues to deteriorate.
And as things continue to fall apart, people are going to become a lot more desperate. To get an idea of what is coming to America, just look at what is happening in Greece. Some poor people in Greece have become so desperate that they are literally infecting themselves with HIV just so that they can get monthly government payments…
Suicides rose by 17% between 2007 and 2009 and to 25% in 2010, according to unofficial 2010 data (398). The Minister of Health reported a further 40% rise in the first half of 2011 compared with the same period in 2010. Suicide attempts have also increased, particularly among people reporting economic distress (610). Homicide and theft rates have doubled. HIV rates and heroin use have risen significantly, with about half of new HIV infections being self-inflicted to enable people to receive benefits of €700 per month and faster admission on to drug-substitution programmes. Prostitution has also risen, probably as a response to economic hardship. Health care access has declined as hospital budgets have been cut by about 40% (398) and it is estimated that 26 000 public health workers (9100 doctors) will lose their jobs (611). Further cuts are expected as a result of recent negotiations with the IMF and European Central Bank.
If you doubt this, you can find the original report with these findings right here.
A lot of people accuse me of being a “doom and gloomer” for writing articles like this.
A lot of people accuse me of trying to spread worry and fear.
But I do not see it that way at all.
I was recently asked what the number one issue is that has me so worried that it keeps me up at night.
Do you know what my answer was?
Nothing that I write about keeps me up at night.
I am not worried about what is coming and I do not believe in giving in to fear.
Rather, I believe that there is hope in understanding what is happening, and I believe that there is hope in getting prepared.
Do you want to know who is going to be totally giving in to worry, fear and despair in the years ahead?
The people that are not getting prepared right now.
Do you want to know who is going to be jumping off the top of tall buildings in the years ahead?
The people that are laughing at articles like this one.
For most adults in America, they primarily define their lives by their jobs, their material possessions and by all of the toys that they have accumulated. When those things get taken away, we are going to see a national hissy fit that is absolutely unprecedented.
The Republicans are not going to save us from the storm that is coming and neither are the Democrats.
It is coming.
That is why I am urging people to get prepared on an individual basis, a family basis and a community basis.
If you prepare yourself and your family now, you will have a much better chance of surviving the coming storm. And you will be in much better position to help those that will need your assistance.
If you think back throughout history, most of those that we consider to be the greatest “heroes” emerged during times of great crisis.
Well, another time of great crisis is coming, and this will be a tremendous opportunity for a new generation of heroes to arise.
So do not cower in fear because of what is coming. Rather, use this time to get prepared for the greatest challenges and the greatest opportunities that you have ever known.
When things are the darkest, that is when the light is needed the most.
Choose to be a light. America will soon need you greatly.
If your neighborhood is not as safe as it used to be, then you have something in common with the rest of the country. All over America, crime is on the rise. According to a government survey that was just released, violent crime in the United States increased by 15 percent last year, and property crime was up by 12 percent. If violent crime keeps increasing at this rate, it will approximately double in just six years. But as I wrote about the other day, when the next major economic downturn strikes it will probably greatly accelerate the growth of the crime rate in this country. Desperate people do desperate things, and as you will read about below, there are people out there that are already stealing entire truckloads of food. In the future, when people are extremely hungry or crazy for their next drug hit, they won’t think twice about invading your home or pulling you out of your vehicle. The rise in crime that we are witnessing right now is just the beginning. It is going to get a lot worse than this.
Whenever I do this type of an article, inevitably someone leaves a comment insisting that I am lying because crime rates are going down.
Well, that used to be true. It is no longer accurate.
As an ABC News article that was just released explains, the crime victimization survey shows that violent crime in America has now increased for two years in a row…
The violent crime rate went up 15 percent last year, and the property crime rate rose 12 percent, the government said Thursday, signs that the nation may be seeing the last of the substantial declines in crime of the past two decades.
Last year marked the second year in a row for increases in the crime victimization survey, a report that is based on household interviews.
This is one of the primary reasons why so many people are moving out of the big cities right now. In the city of Chicago, police are so overwhelmed with crime that they will no longer respond in person “to 911 calls reporting vehicle theft, garage burglary or simple assault“.
Things have gotten so bad in Chicago that a 14-year-old girl was sexually assaulted as she was walking to a bus stop this week and it barely made a blip on the news.
But we have come to expect this kind of thing in crime-infested cities such as Chicago. We don’t expect it to happen in “quiet communities” such as Augusta, Georgia…
“When we first moved out here three and a half years ago, my wife and I, it was a quiet community, it was a deal that we felt we couldn’t pass up on,” Don McIntee says.
McIntee lives in the Butler Creek Mobile Home Community, but he’s trying to change that. He recently put his home up for sale because he says the crime in his neighborhood is too much to deal with.
“I want to live in a place that I feel is secure and safe for my wife because I’m out of town a lot,” he says.
And it seems like criminals are becoming more brutal than ever. For example, one thug actually put his gun into the mouth of a 92-year-old World War II veteran in Fresno, California and threatened to kill him during one recent home invasion…
“I was sound asleep at about one or two o’clock in the morning, all the lights were on and a guy shook me with a gun in my face. (I said) Hey what’s going on? (He said) Shut up and he slapped me,” he explained.
While the suspect held him at gunpoint, three others ransacked his house, taking about 200 dollars in cash and jewelry including his 1941 class ring from Woodlake High School in Tulare County.
“They were in there for almost a half hour,” said Fresno County Sheriff Department spokesperson Chris Curtice. “So they had plenty of time to search the house, it was the middle of the night.”
At one point, Joseph said one of the suspects put a gun in his mouth and threatened to kill him. While being ordered into the bedroom closet, he said he hit him in the head with a handgun, causing him to fall to the floor.
Was there any need for that? That 92-year-old man was certainly no threat to the four home invaders.
But this is what is happening all over the nation now. Criminals appear to be getting crazier and crazier.
In Houston recently, one team of home invaders decided to storm a house at 8 AM in the morning while people all along the street were leaving their homes to go to work and to school…
It was about 8am — daylight, with people going to work and kids going to school, yet no one apparently saw this coming. The homeowner told me four men, armed with guns, broke in through her garage and forced their way inside her house.
The woman’s daughter and son-in-law were in the home with her, along with two of their daughters, ages four and six. The homeowner says the gunmen pointed guns at all of them — even the children — and demanded money over and over. They ransacked the house and the cars- and eventually got away with some cash, at least one cell phone and the homeowner’s wallet.
Who robs a house at 8 AM in the morning?
That is either incredibly bold or incredibly stupid.
In my article yesterday, I included another example of a crime which is either incredibly bold or incredibly stupid. One very enterprising carjacker actually decided to try to carjack the police chief of Detroit while he was sitting in a clearly marked police vehicle…
Just four months on the job, Detroit’s new police chief got an early taste of the city’s hardscrabble streets.
While in his patrol car at an intersection on Jefferson two weeks ago, Police Chief James Craig was nearly carjacked, police spokeswoman Kelly Miner confirmed today.
Craig said he was in a marked police car with mounted lights when a man quickly tried to approach the side of his car. Craig, who became police chief in June, retold the story Monday during a program designed to crack down on carjackings.
So what is going on here?
Are criminals becoming bolder or are they just becoming stupider?
I don’t have an answer for that question, but one thing seems certain – crime is definitely getting worse.
As I mentioned at the top of this article, some criminals are now actually stealing entire truckloads of food. A recent CBS News article explained how they are doing this…
To steal huge shipments of valuable cargo, thieves are turning to a deceptively simple tactic: They pose as truckers, load the freight onto their own tractor-trailers and drive away with it.
It’s an increasingly common form of commercial identity theft that has allowed con men to make off each year with millions of dollars in merchandise, often food and beverages. And experts say the practice is growing so rapidly that it will soon become the most common way to steal freight.
And what we are talking about is not just a few isolated incidents. This is literally happening from coast to coast and the dollar values of some of these thefts are staggering…
News reports from across the country recount just a few of the thefts: 80,000 pounds of walnuts worth $300,000 in California, $200,000 of Muenster cheese in Wisconsin, rib-eye steaks valued at $82,000 in Texas, $25,000 pounds of king crab worth $400,000 in California.
As economic conditions continue to deteriorate, I actually expect that we will start seeing armed guards on food trucks in a few years.
Desperate people do desperate things, and as food prices continue to rise I believe that food trucks will become highly prized targets.
America is rapidly changing, and not for the better.
So what are things like in your area of the country?
Are you noticing an increase in crime?
Please feel free to share your thoughts by posting a comment below…
On the global financial stage, China is playing chess while the U.S. is playing checkers, and the Chinese are now accelerating their long-term plan to dethrone the U.S. dollar. You see, the truth is that China does not plan to allow the U.S. financial system to dominate the world indefinitely. Right now, China is the number one exporter on the globe and China will have the largest economy on the planet at some point in the coming years. The Chinese would like to see global currency usage reflect this shift in global economic power. At the moment, most global trade is conducted in U.S. dollars and more than 60 percent of all global foreign exchange reserves are held in U.S. dollars. This gives the United States an enormous built-in advantage, but thanks to decades of incredibly bad decisions this advantage is starting to erode. And due to the recent political instability in Washington D.C., the Chinese sense vulnerability. China has begun to publicly mock the level of U.S. debt, Chinese officials have publicly threatened to stop buying any more U.S. debt, the Chinese have started to aggressively make currency swap agreements with other major global powers, and China has been accumulating unprecedented amounts of gold. All of these moves are setting up the moment in the future when China will completely pull the rug out from under the U.S. dollar.
Today, the U.S. financial system is the core of the global financial system. Because nearly everybody uses the U.S. dollar to buy oil and to trade with one another, this creates a tremendous demand for U.S. dollars around the planet. So other nations are generally very happy to take our dollars in exchange for oil, cheap plastic gadgets and other things that U.S. consumers “need”.
Major exporting nations accumulate huge piles of our dollars, but instead of just letting all of that money sit there, they often invest large portions of their currency reserves into U.S. Treasury bonds which can easily be liquidated if needed.
So if the U.S. financial system is the core of the global financial system, then U.S. debt is “the core of the core” as some people put it. U.S. Treasury bonds fuel the print, borrow, spend cycle that the global economy depends upon.
That is why a U.S. debt default would be such a big deal. A default would cause interest rates to skyrocket and the entire global economic system to go haywire.
Unfortunately for us, the U.S. debt spiral cannot go on indefinitely. Our debt is growing far, far more rapidly than our GDP is, and therefore our debt is completely and totally unsustainable.
The Chinese understand what is going on, and when the dust settles they plan to be the last ones standing. In the aftermath of a U.S. collapse, China anticipates having the largest economy on the planet, more gold than anyone else, and a respected international currency that the rest of the globe will be able to use to conduct international trade.
And China is not just going to sit back and wait for all of this to happen. In fact, they are already doing lots of things to get the ball moving. The following are 9 signs that China is making a move against the U.S. dollar…
#1 Chinese credit rating agency Dagong has downgraded U.S. debt from A to A- and has indicated that further downgrades are possible.
#2 China has just entered into a very large currency swap agreement with the eurozone that is considered a huge step toward establishing the yuan as a major world currency. This agreement will result in a lot less U.S. dollars being used in trade between China and Europe…
The swap deal will allow more trade and investment between the regions to be conducted in euros and yuan, without having to convert into another currency such as the U.S. dollar first, said Kathleen Brooks, a research director at FOREX.com.
“It’s a way of promoting European and Chinese trade, but not doing it with the U.S. dollar,” said Brooks. “It’s a bit like cutting out the middleman, all of a sudden there’s potentially no U.S. dollar risk.”
#3 Back in June, China signed a major currency swap agreement with the United Kingdom. This was another very important step toward internationalizing the yuan.
#4 China currently owns about 1.3 trillion dollars of U.S. debt, and this enormous exposure to U.S. debt is starting to become a major political issue within China.
#5 Mei Xinyu, Commerce Minister adviser to the Chinese government, warned this week that if the U.S. government ever does default that China may decide to completely stop buying U.S. Treasury bonds.
#6 According to Yahoo News, China has already been looking for ways to diversify away from the U.S. dollar…
There have been media reports this week that China’s State Administration of Foreign Exchange, the body that handles the country’s $3.66 trillion of foreign exchange reserve, is looking to diversify into real estate investments in Europe.
#7 Xinhua, the official news agency of China, called for a “de-Americanized world” this week, and also made the following statement about the political turmoil in Washington: “The cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations’ tremendous dollar assets in jeopardy and the international community highly agonized.”
#8 Xinhua also said the following about the U.S. debt deal on Thursday: “[P]oliticians in Washington have done nothing substantial but postponing once again the final bankruptcy of global confidence in the U.S. financial system”. The commentary in the government-run publication also declared that the debt deal “was no more than prolonging the fuse of the U.S. debt bomb one inch longer.”
#9 China is the largest producer of gold in the world, and it has also been importing an absolutely massive amount of gold from other nations. But instead of slowing down, the Chinese appear to be accelerating their gold buying. In fact, money manager Stephen Leeb says that his sources are telling him that China plans to buy another 5,000 tons of gold. There are many that are convinced that China eventually plans to back the yuan with gold and try to make it the number one alternative to the U.S. dollar.
So exactly what would happen if the Chinese announced someday that they were going to back their currency with gold and would no longer be using the U.S. dollar in international trade?
It would change the face of the global economy almost overnight. In a previous article, I described some of the things that we could expect to see happen…
If China does decide to back the yuan with gold and no longer use the U.S. dollar in international trade, it will have devastating effects on the U.S. economy. Demand for the U.S. dollar and U.S. debt would drop like a rock, and prices on the things that we buy every day would soar. At that point you could forget about cheap gasoline or cheap Chinese imports. Our entire way of life depends on the U.S. dollar being the primary reserve currency of the world and being able to import things very inexpensively. If the rest of the world (led by China) starts to reject the U.S. dollar, it would result in a massive tsunami of currency coming back to our shores and a very painful adjustment in our standard of living. Today, most U.S. currency is actually used outside of the United States. If someday that changes and we are no longer able to export our inflation that is going to mean big trouble for us.
The fact that we get to print up giant mountains of money and virtually everyone around the world uses it has been a huge boon for the U.S. economy.
When that changes, the word “catastrophic” is not going to be nearly strong enough to describe what is going to happen.
According to a Rasmussen Reports survey that was released this week, only 13 percent of all Americans believe that the country is on the right track. But the truth is that these are the good times. The American people haven’t seen anything yet.
Someday people will look back and desperately wish that they could go back to the “good old days” of 2012 and 2013. This is about as good as things are going to get, and it is only downhill from here.