The Beginning Of The End
The Beginning Of The End By Michael T. Snyder - Kindle Version

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When it comes to explaining the problems with our economy, one of the hardest things to do is to get people to understand that we are living in an economic fantasy world that is completely and totally unsustainable.  As a nation we consume far more than we produce, we spend far more than we bring in, our debt is growing much faster than our GDP is, our entitlement programs are growing at an exponential rate, our retirement system is a Ponzi scheme and the Federal Reserve is printing money as if there is no tomorrow in a desperate attempt to paper over all of our problems.  But we have all grown so accustomed to the debt-fueled prosperity that we have been enjoying for so many decades that it actually feels “real” to most of us.  Unfortunately, history has shown us that it is simply not possible to grow your debt faster than your economy indefinitely.  At some point your consumption will drop back to a level more equal to your production.    Sometimes that adjustment can be gradual, but other times it can be extremely painful.  In our case, we have been living way above our means for so long that it would take a major economic miracle just to keep our adjustment to an “exceedingly painful” level.  We are living in the largest debt-fueled prosperity bubble in the history of the world, and our unsustainable economy is going to crash and burn at some point.  Hopefully it will be later rather than sooner, but a crash is most definitely coming.

The following are some of the reasons why the bubble economy that we are living in right now is unsustainable….

The Trade Deficit

Most Americans do not really understand what a “trade deficit” is, but it is at the very core of our economic problems.

Basically, we buy far more stuff from the rest of the world than they buy from us.  We send them huge piles of our money, and they send us oil that we burn in our cars and cheap plastic products that we end up throwing away.  We keep doing this month after month after month, and this is systematically making us poorer as a nation.

In 2012, it is being projected that our trade deficit will fall somewhere between 500 billion and 600 billion dollars.

At this point, the United States has a trade imbalance that is more than 7 times larger than any other nation on earth has.

Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the world since 1975.

Instead of going out of the country, those 8 trillion dollars could have gone to U.S. businesses and U.S. workers.  In turn, taxes would have been paid on those 8 trillion dollars and our debt problems would not be nearly as dramatic today.

But we didn’t do that.

We chose to allow tens of thousands of businesses, millions of jobs and trillions of dollars of our national wealth to leave the country.

Stupid move, eh?

But both political parties have been endlessly pushing the “free trade” agenda.  They have both promised that it would bring us tremendous prosperity.

Well, just take a look at our formerly great manufacturing cities today.  Do they look prosperous to you?

It turns out that Ross Perot was right when he warned about the “giant sucking sound” that would happen if NAFTA was implemented.

When NAFTA was pushed through Congress in 1993, the United States had a trade surplus with Mexico of 1.6 billion dollars.  By 2010, we had a trade deficit with Mexico of 61.6 billion dollars.

That didn’t work out so well, did it?

What about opening up trade with China?

Back in 1985, our trade deficit with China was approximately 6 million dollars (million with a little “m”) for the entire year.

In 2011, our trade deficit with China was 295.4 billion dollars.  That was the largest trade deficit that one nation has had with another nation in the history of the world.

Our trade with China is tremendously unbalanced.  Today, U.S. consumers spend approximately 4 dollars on goods and services from China for every one dollar that Chinese consumers spend on goods and services from the United States.

This is a huge reason why shiny new factories are going up all over China, and our blue collar cities are turning into rotting war zones filled with unemployed people.

If you can believe it, the United States has actually lost more than 56,000 manufacturing facilities since 2001.

Until we fix the trade deficit we are going to continue bleeding factories, jobs and national wealth at an astounding pace.

The National Debt

It is being projected that U.S. GDP will grow at a rate of about 2.2 percent this year.

The problem is that our federal budget deficit will be somewhere around 7 percent of GDP this year.

With each passing day we are losing ground.  No other nation on earth has been able to run up debt like this indefinitely, and neither will we.

Does this chart look like a healthy situation to you?….

Sadly, all of this government debt is just about the only thing holding up our economy at this point.  Since Barack Obama has been in the White House, the U.S. national debt has increased by about 5.5 trillion dollars.  Of course the Obama administration has spent a lot of that money on incredibly stupid stuff, but it still gets into the pockets of average Americans that in turn spend it on food, gas, mortgage payments, etc.

If we could go back in time and suck that 5.5 trillion dollars of extra spending out of the economy we would be in a horrible economic depression right now.

But that does not mean that borrowing and spending all of that money was the right thing to do.  We have stolen it from our children and our grandchildren and we are going to stick them with the bill.

That is highly immoral and it is a national disgrace.

Yet we continue to do it because we can’t help ourselves.  We are ruining the future of this nation in order to make the present more pleasant for ourselves.

As I noted yesterday, the U.S. national debt jumped more on the very first day of fiscal year 2013 than it did from 1776 to 1941 combined.

We are completely addicted to debt and we can’t stop.  We know that we are destroying the future of the United States but we have absolutely no self-discipline.

By the end of Barack Obama’s first term, the U.S. government will have accumulated more debt during those four years than it did from the time that George Washington took office to the time that George W. Bush took office.

But most Americans seem fine with that.

Most Americans don’t even really know why this is happening, and most don’t really seem too concerned about finding out.  They just want the good times to continue to roll.

Sadly, the truth is that our financial system is designed to create government debt.  It is one of the primary purposes of the Federal Reserve system.

At this point, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

So I guess you could say that the Federal Reserve is doing a good job of what it was designed to do.

And until we change the system things are going to continue to get worse until the entire system collapses.

Boston University economist Laurence Kotlikoff is warning that we are basically facing financial armageddon if something is not done.  Kotlikoff speaks of a “fiscal gap” which he defines as “the present value difference between projected future spending and revenue”.  His calculations have led him to the conclusion that the United States is facing a fiscal gap of 222 trillion dollars in the years ahead.

Where in the world are we going to get an extra 222 trillion dollars?


Every society needs a safety net, but we are rapidly getting to the point where there are going to be more Americans on the safety net than there are Americans supporting it.

Back in 1983, less than 30 percent of all Americans lived in a home where at least one person received financial assistance from the federal government.

Today, that number is up to an all-time record of 49 percent.

Many people don’t believe me when I tell them that more than 100 million Americans are enrolled in at least one welfare program run by the federal government right now, and that does not even count Social Security or Medicare.

But it is actually true.

Overall, there are nearly 80 different “means-tested welfare programs” that the federal government is currently running.

But of course the biggest financial burdens are Medicaid, Medicare and Social Security.  All three are on course to become completely and totally unsustainable.

For example, the number of Americans on Medicaid soared from 34 million in 2000 to 54 million in 2011, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.


Well, what about Medicare?

Sadly, Medicare is even more frightening.

As I wrote recently, it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

How in the world can we afford that?

At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for each and every household in the United States.

Are you ready to contribute your share?

Social Security is in really bad shape as well.

At the moment, approximately 56 million Americans are collecting Social Security benefits.

By 2035, that number is projected to soar to a whopping 91 million.

Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

Where are we going to get that money?

Total Debt

Of course the national debt is not out only debt problem.  All over the country there are state and local governments that are on the verge of insolvency.  Corporations and financial institutions are leveraged like crazy.  And of course consumers have absolutely gorged on debt over the past several decades.

As a result, we are drowning in debt from sea to shining sea.

The good news is that our GDP is more than 12 times larger than it was 40 years ago.

The bad news is that the total amount of debt in our country is more than 30 times larger than it was 40 years ago….

Obviously this is something that cannot go on forever.

We simply cannot keep accumulating debt much faster than our economy is growing.

Nobody knows exactly when the “adjustment” is coming, but it most definitely will arrive at some point.

Money Printing

The Federal Reserve has attempted to monetize many of our economic problems by printing gigantic mountains of money in recent years.

The Federal Reserve is at the very heart of our economic problems, but most Americans don’t realize this.  It was the Federal Reserve that created the conditions for the housing bubble, and it was the Federal Reserve that badly mismanaged the response when that bubble burst.  The Federal Reserve decides how much money will be printed and what our interest rates will be.  The Federal Reserve lends out trillions of dollars to the banks that they like, and other banks they let die.  The Federal Reserve picks winners and losers in our economy, and most of the time that means good things for the big Wall Street banks and bad things for the rest of us.

In a desperate attempt to keep our unsustainable financial system from collapsing, the Federal Reserve has decided to start printing unprecedented amounts of money.  Just look at what this has done to the monetary base….

And QE3 really hasn’t even started to kick in yet.

So how bad will that chart look after QE3 has been adding another 40 billion dollars a month to the financial system for a while?

You know, the Weimar Republic was absolutely convinced that they were doing the right thing by printing lots of money too.

But in the end that didn’t work out very well for them at all….

So should we really be celebrating the fact that the Federal Reserve is going down the same path that the Weimar Republic did?

Demonocracy has released a great new graphic that does a wonderful job of illustrating just how huge the amounts of money involved in QE3 are going to be.  If you have not seen it yet, you can view the graphic right here.

The rest of the world is watching the games that we are playing with our currency.  Right now we think that we are getting away with it, but what we are doing is not sustainable.  At some point the rest of the world will totally lose confidence in the U.S. dollar, and when that happens the U.S. dollar could easily lose its status as the primary reserve currency of the world.

If that were to happen the coming shift in our standard of living would happen much more rapidly.

Please share this article with as many people as you can.  We need to wake people up and get them to understand how incredibly vulnerable our financial system really is.  We are on a path that is unsustainable any way that you want to look at it, and if something dramatic is not done our economy is going to experience an unprecedented collapse.

So what happens if nothing is done and everything crashes all around us?

Well, I hope that you are prepared because it isn’t going to be pretty.

  • Metazip

    “Instead of going out of the country, those 8 trillion dollars could have gone to U.S. businesses and U.S. workers. In turn, taxes would have been paid on those 8 trillion dollars and our debt problems would not be nearly as dramatic today.” Oh how you sound so much like AARP…If that $8 Trillion stayed here congress would have spent more on silly projects probably like buying a house and 2 cars for every illegal alien here.

    The problem is and always has been that the government owes the social security too much damn money in IOU’s. I for one will never ever agree that they can skip out on that. Before that happens, no one in government gets paid, no golden retirements, family trips disguised as junkets to find out why the black north American fly has infested one single pineapple field in Hawaii. No healthcare for them either. To me these are the “Entitlements” that need to be done away with.

    Let the government and their employees subsist on the meager food stamps and Medicaid like the rest of us.

  • Thomas Hildebrand

    “”Thus says The Lord of Hosts to all the sons and daughters of this, the last generation of men: You have all inherited the error of your fathers! You have altogether become like them! Behold, you have surpassed the sins of ancient Egypt, when I poured out My wrath upon them! Your wickedness has increased beyond every tribe, people, and nation, which has dwelled upon the earth!… THIS GENERATION IS WICKED BEYOND MEASURE!
    Thus great wrath is stirred up and My indignation has come to the full! My anger is fully aroused and shall surely be poured out!… RECOMPENSE for all nations! RECOMPENSE for all these churches of men who have spoken presumptuously in My name! RECOMPENSE for all these corrupt workers who have done falsely on My behalf!… I HAVE NOT SENT YOU!
    And you, O peoples of the earth, I have seen how you perform every form of evil at your leisure! You cease not from reveling in that which I hate! Behold, you murder the innocent day and night and plot evil against your neighbor! You stand up for the rights of those who commit abomination and clap your hands as wickedness is celebrated openly in the streets!… O MOST PERVERSE AND ABOMINABLE GENERATION, SHALL I NOT REPAY?!
    Behold, My body is persecuted in every land, and My bride is murdered at the hands of idolators! My people are bruised and beaten! My servants slandered and hated, without cause! Therefore I am come down to take vengeance, to pour out wrath upon this people for all their wickedness!… I SHALL IMPART RECOMPENSE IN FULL!””

    Hear the WORD of the LORD spoken to THIS modern generation!…

    Letters from God and His Christ, given to a modern man for modern man’s sake!…

  • Karie

    You have finally made this economy/deficit thing easily understandable for me as it should be. I think our leaders want us to think its far too complicated for us to understand so we can be left in the dark!

    Thanks for the great article.

  • Scottar

    Um, it couldn’t be the 35% corporate tax or the union comfy wages could it? It couldn’t be those over the top regulations could it? Naw Corps and businesses are just gweedos out to rip off the consumer. We must tax them all for fairness including your mother in law.

  • paul

    The surest way to bring on the crash is to slash the handouts to the poor.

    The best way to get out of the dilemma is to slash the benefits and entitlements the “rich” receive.

    Rich isn’t the defining factor of this group but they are all rich. But you will detect them by their hordes of lawyers and lobbyists who make sure that these people receive the benefits from the tax payer.

    I am not talking about Medicaid or social security. I am talking about zero tax for big corporations, while even Americans who don’t live on the US have to pay tax.

  • paul

    Why should foreigners buy your goods if even you prefer Made in China?

  • paul

    Just got a message from a Chinese friend:

    “I’m busy every day. Never get a break. I’m planning to quit my job and take a rest.”

    Overtime is definitely not sustainable.

    Anyway, I go to China for some hiking and camping.

    I miss the food.

    • Mondobeyondo

      You really must try the egg foo yung. Especially the ones they serve at Panda Express – although I’ve heard the authentic ones are… well, more authentic.

  • Mike The Thai Guy

    The sad thing is that numbers do not lie and we have gone way beyond any place from which a sensible recovery can be made. Find somewhere safe and load up with ammunition and food while you wait for the crazies to come knockin’

    • Paul

      Brambles grow by themselves and provide food.

      Why waste money on ammo and increase the profit of the ruling class? If the crazies come, they bring guns and ammo. Ever seen the first Rambo movie?

  • Larry

    Whenever any form of government becomes destructive of these ends [life, liberty, and the pursuit of happiness] it is the right of the people to alter or abolish it, and to institute new government…

    Thomas Jefferson


    Audiovox Corporation (NASDAQ: VOXX) is an American consumer electronics company founded in 1965 and headquartered in Hauppauge, New York, specializing in low-cost consumer electronic equipment they just bought klipsh SPEAKERS WTF ??In March 2011, Audiovox purchased the designer and maker of high-performance audio equipment, Klipsch, for $166 million.WTF??specializing in low-cost consumer electronic equipment!!THATS THE WAY OUR COUNTRY IS HEADING I WILL BET PAUL W KLIPSCH WOULD BE ASHAMED OF WHAT HAPPENED TO HIS COMPANY !!HAVE YOU EVER HEARD A KLIPSCH??
    When he founded our company in a tiny tin shed in Hope, Arkansas in 1946, American audio pioneer Paul W. Klipsch had an unyielding desire to channel live sound from the performer directly into the ears of listeners. He stopped at nothing, defying convention and breaking rules to create new ones DAMN I LIKE THE QUALITY OF MY MADE IN AMERICA KLIPSCH HIGH COMPRESSION DRIVER WELDED PRESICELY TO THAT ALTEC LANSING 511 B HORN AND NOW AUDIO VOX HAS THEM!! DONT YOU LIKE CORPORATE TAKE OVERS!!I KNOW MR KLIPSCH ITS LIKE SELLING YOUR SOUL TO THE DEVIL!I WILL KEEP BUYING YOUR OLD SCHOOL STUFF!!100 BUCKS FOR A K55 HIGH COMPRESSION DRIVER ON EBAY HELL YES AND HOW ABOUT Other noteworthy Klipsch speakers over the years include:
    La Scala
    Belle Klipsch


    Total number of cell phone towers in the US 190,000
    Total number of cell phone towers in the US in 1985 900
    Average cost of building a cell phone tower $150,000
    Maximum range of a cell phone tower 21.7 miles
    Average yearly cell phone tower lease rate $45,000
    Chances of being approved to build a cell tower on your property 0.8 %
    Lowest annual cost to lease a cell tower $100!!!WTH!!!from 900 to 190000 we are moving on up!!!

  • jaxon64

    Michael–and to others on the thread, sorry for my angry tone today. Just gets me riled to see how many pro-socialist and communist thinkers there are, but this is no excuse for sarcasm or name calling.

    Also I was going to email this to you Michael, but for the life of me I can’t find a link on this webpage/site.
    I encourage everyone to read this–including and in fact, especially those of you who keep proposing that the state take everything over and it will solve all the problems ( including taking over individual wealth — Paul & Gary–that’s right, your beliefs are the same as the National Socialist Party’s)..

    Michael please take a few minutes, the parallels of where we are headed and historical elements of this testimony are chilling.

    • Louise in MO


      I read the link…everyone should……especially the left leaning folks.

      I can see the train a coming.

  • joseph gibbons

    The solution to the problem 1)Give a zero tax rate to businesses that sent jobs overseas. 2)have them start back into producing the same items they shipped overseas
    3)Place an import tax on these same items to prevent foreign companies from dumping
    4)Give a 5% tax rate to all other companies.In a couple of years our employment rate will surge,taxable wages will skyrocket,there will be enough built up in the treasury to start paying down the debt.At the same time freeze spending for everything but the absolute necessities to keep government operating ie:layoff all government employees,
    ( they will be needed to fill the surge in the private sector)except those absolutely necessary to keep the government operating,strengthen the military,audit the Fed,kick the United Nations out of our country,means test all the “entitlement”programs as these recipients will be necessary for the labor force.WELCOME TO UTOPIA

  • joseph gibbons

    Solutions to the problems outlined above;
    1)Have the companies that sent jobs overseas bring that production back
    2)Give these companies a 0% tax rate for ten years ( to cover start-up costs)
    3)Give all other companies a 5% rate(will pay higher wages and better dividends)
    4)The tax $ will start filling the treasury and be used to pay down the debt
    5)means test all entitlement programs( there will be jobs available)
    6)bring the troops home,increase military funding to keep others from testing us
    7)never elect another socialist president

  • pulpo

    here is another related vid

    Your Wages Will Be Cut In Half!
    What is your plan for them?

  • Mondobeyondo

    If anyone were to ask me, “Is the U.S. screwed?”, my answer would be…

    We are.

    There is no conceivable way out of this Mess.
    Our politicians squabble about cutting this and cutting that.
    Forget the paper cuts. Put the Swiss army knife away. Bring on the axe, hatchet, hacksaw and chain saw. Time to get serious about this “cutting” stuff.

    Eliminate all the entitlement programs. All of them. Social Security, Medicare, Medicaid, etc.
    Eliminate every federal agency. The Department of Defense, the Department of Agriculture, Education, Health and Human Services, NASA, unemployment insurance, SNAP, etc. Wipe them all off the board. Immediately withdraw every soldier from Iraq and Afghanistan, and close every single overseas military base.

    “But we’ll be reduced to a defenseless third world country! Our people would be broke and destitute!” you say. Hell, half the U.S. population is already broke and destitute right now! And we wouldn’t even be close to eliminating the debt.

    “It’s mourning again in America”. (No, that was not from the 1984 Reagan ad. Ha!)

  • FxP

    Honestly, I think that our economic implosion is mirror image of our ecological footprint. Our lineal economic system of consumerism from raw material to wasteland is pretty much where we all going anyways… WASTELAND.

  • http://Youmissedtherealreasonfortheeconomicwoes. Michael Rivero

    Private Central Banks issuing the public currency as a loan at interest by design always produce more debt than money with which to pay that debt. It does not matter how hard people work or how frugally they live, given enough time, real wealth is transferred to the bank and massive debt piles up on the nation and its people.

    It is the new form of slavery; rule by compound interest, and is no more legitimate than rule by divine right or rule by chattel ownership of ones body.

    Until the private central banks are shut down and money creation returned to the governments and the people, no amount of austerity can prevent the ultimate collapse.

    • Michael

      Great to have you posting a comment on the site Michael. :)


  • BFH

    Lets use some common damn sense here. Number 1, our employment picture will NEVER get any better, only worse. Does anyone here REALLY think the jobs are coming back? How in hell can anyone think that somehow magically the jobs will reappear? It’s not complicated folks. Why would ANY business pay 10-14 dollars an hour when they can have the same work done overseas for pennies on the dollar? Then sell the crap over here with a guaranteed market because we don’t make it anymore.
    Your lying ass politicians have made all this possible. They are reaping huge kickbacks from these corporations and they will NOT let it change. They have sold you out for their own damn greed.
    A word about the government spending. Want to see the damn crash come tomorrow? Let the goberment stop spending money and see what happens. The damn goberment is the big spender on the block. We can’t afford for it to stop spending nor can we afford it to continue. The “PERFECT STORM” is here folks.
    How’s that for common damn sense?

  • Andy

    I have actually seen the actual car in this photo. It is a symbol of the future.

  • http://NA Wallace Klinck

    The feedback on this site is is the sort of ill-informed and uneducated opinion that reinforces fatal misconceptions and confusion in the minds of an unsophisticated populace and renders them impotent in the face of imposed tyranny. It is undisciplined and erroneously based upon the entirely false notion or naive orthodox assumption and acceptance that the price-system is self-liquidating, i.e., that it releases sufficient effective consumer demand to claim the entire product of industry in each cycle of cost accountancy.

    Have governments and citizens cut back their spending, i.e., purchasing, under the existing defective consumer- income-starved financial regime, and you would have a total collapse of the economy because industry would be unable to recover its financial costs of production through final sales and would be catapulted into widespread bankruptcy. In the primitive economy of hand production where machine costs were insignificant the price-system was essentially self-liquidating However, as the economy becomes increasingly modernized through the use of labour-displacing technology involving evermore efficient physical capital (i.e., “tools”), financial costs and prices rapidly and exponentially exceed effective consumer purchasing-power. This phenomena occurs because of the way the existing system of debt-credit interacts with conventional methods of cost accountancy. Essentially, the consumer is properly charged with capital depreciation but wrongly not credited with capital appreciation.

    The only rational purpose of production is consumption–not to create more work, i.e., “jobs”. If goods are produced the consuming public has every right to access said goods should they so desire. Currently, a crude approximation of this required income, additional to wages, salaries and dividends, is provided by bank loans. Banks do not loan depositors’ money but create the money they lend, thereby expanding the money supply. Expansion of consumer income is absolutely essential to the continuance of the economic system. Our problems are not due to the creation of new money but due to the fact that ALL money is created and issued as debt. Consumer loans, being debt, are an inflationary charge to be recovered from future cycles of production. This is a violation of natural law because the physical costs of production (the required energy and materials) are fully met as production takes place. These real costs must be met; otherwise the physical product could not exist. That is axiomatic.

    The appropriate remedy for our debt and inflation problems is to introduce debt-free consumer credits into the economy so as to balance consumer income with industrial costs and prices. This should be done so as to increase consumer incomes by means of a universal Consumer (National) Dividend and Compensated Prices to progressively lower retail prices at point of sale. There should exist no overall need for consumer debt whatsoever.

    A balanced budget under the existing financial system is a mathematical impossibility. When are people going to wake up to this incontrovertible fact? Financial debt has been escalating exponentially ever since the establishment of the Bank of England in 1694. Surely no rational mind would expect this trend not to continue. Surely any intelligent mind would suspect a fundamental fault in the financial system. Yet people continue on–blind and oblivious to the facts. They only know from experience that if they spend more than they earn as individuals they get into insolvency, never suspecting the actual overall nature of the situation. I would recommend that you explore the websites listed below–repeatedly until you understand their content beyond any shadow of doubt.

  • Pingback: An Obama Reelection Will Ensure Complete U.S. Economic Collapse | PatriotsBillboard()

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