The pension nightmare that is at the heart of the horrific financial crisis in Detroit is just the tip of the iceberg of the coming retirement crisis that will shake America to the core. Right now, more than 10,000 Baby Boomers are hitting the age of 65 every single day, and this will continue to happen every single day until the year 2030. As a society, we have made trillions of dollars of financial promises to these Baby Boomers, and there is no way that we are going to be able to keep those promises. The money simply is not there. Yes, I suppose that we could eventually see a “super devaluation” of the U.S. dollar and keep our promises to the Baby Boomers using currency that is not worth much more than Monopoly money, but as it stands right now we simply do not have the resources to do what we said that we were going to do. The number of senior citizens in the United States is projected to more than double by the middle of the century, and it would have been nearly impossible to support them all even if we weren’t in the midst of a long-term economic decline. Tens of millions of Americans that are eagerly looking forward to retirement are going to be in for a very rude awakening in the years ahead. There is going to be a lot of heartache and a lot of broken promises. (Read More...)
Share This Chart With Anyone That Believes The U.S. Economy Is Not Going To Crash
Anyone that thinks that the U.S. economy can keep going along like this is absolutely crazy. We are in the terminal phase of an unprecedented debt spiral which has allowed us to live far, far beyond our means for the last several decades. Unfortunately, all debt spirals eventually end, and they usually do so in a very disorderly manner. The chart that you are about to see is one of my favorite economic charts. It compares the growth of U.S. GDP to the growth of total debt in the United States. Yes, U.S. GDP has certainly grown at a decent pace over the years, but our total debt has absolutely exploded. 40 years ago, the total amount of debt in our system (government debt + corporate debt + consumer debt, etc.) was about 2 trillion dollars. Today it has grown to more than 56 trillion dollars. Our debt has grown at a much, much faster rate than our economy has, and there is no way in the world that we will be able to continue to do that for long. (Read More...)
25 Facts About The Fall Of Detroit That Will Leave You Shaking Your Head
It is so sad to watch one of America’s greatest cities die a horrible death. Once upon a time, the city of Detroit was a teeming metropolis of 1.8 million people and it had the highest per capita income in the United States. Now it is a rotting, decaying hellhole of about 700,000 people that the rest of the world makes jokes about. On Thursday, we learned that the decision had been made for the city of Detroit to formally file for Chapter 9 bankruptcy. It was going to be the largest municipal bankruptcy in the history of the United States by far, but on Friday it was stopped at least temporarily by an Ingham County judge. She ruled that Detroit’s bankruptcy filing violates the Michigan Constitution because it would result in reduced pension payments for retired workers. She also stated that Detroit’s bankruptcy filing was “also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy“, and she ordered that a copy of her judgment be sent to Barack Obama. How “honoring the president” has anything to do with the bankruptcy of Detroit is a bit of a mystery, but what that judge has done is ensured that there will be months of legal wrangling ahead over Detroit’s money woes. It will be very interesting to see how all of this plays out. But one thing is for sure – the city of Detroit is flat broke. One of the greatest cities in the history of the world is just a shell of its former self. The following are 25 facts about the fall of Detroit that will leave you shaking your head… (Read More...)
Worldwide Unemployment Crisis: There Are 93 Million Unemployed Workers In G20 Nations
Did you know that the total number of unemployed workers in G20 counties is now up to 93 million and that it is increasing with each passing day? You see, the truth is that the United States is not the only one dealing with a systemic unemployment crisis. This is literally happening all over the planet. So what is causing this crisis? Is there any hope that it will be turned around? Well, unfortunately there are several long-term trends that have been developing for decades that have played a major role in bringing us to this point. First of all, the giant corporations that now totally dominate the global economy have figured out that they can make a lot more money by replacing expensive workers that live in major industrialized nations with workers that live in nations where it is legal to pay slave labor wages. So it isn’t really a huge mystery why there is such a huge problem with unemployment in the western world. If you were running a giant corporation, why would you want to hire workers that will cost you 10 to 20 times as much as other workers? A worker is a worker, and over the past decade we have seen a massive movement of jobs to countries where labor is cheaper. In addition, large corporations are also trying to completely eliminate as many jobs as they can by using technology. If a corporation can get a computer or a machine or a robot to do a task more cheaply than a human worker can do it, then why would that corporation want to continue to rely on human labor? And of course we have seen an overall weakening of the economies of the western world in recent years as well. This has been particularly true in the United States. As these long-term trends intensify, the worldwide unemployment crisis is going to get even worse. (Read More...)
Everything Is Fine, But…
Everything is going to be just great. Haven’t you heard? The stock market is at an all-time high, Federal Reserve Chairman Ben Bernanke says that inflation is incredibly low, and the official unemployment rate has been steadily declining since early in Barack Obama’s first term. Of course I am being facetious, but this is the kind of talk about the economy that you will hear if you tune in to the mainstream media. They would have us believe that those running things know exactly what they are doing and that very bright days are ahead for America. And it would be wonderful if that was actually true. Unfortunately, as I made exceedingly clear yesterday, the U.S. economy has already been in continual decline for the past decade. Any honest person that looks at those numbers has to admit that our economy is not even close to where it used to be. But could it be possible that we are making a comeback? Could it be possible that Obama and Bernanke really do know what they are doing and that their decisions have put us on the path to prosperity? Could it be possible that everything is going to be just fine? (Read More...)
The U.S. Government Will Borrow Close To 4 Trillion Dollars This Year
When you add maturing debt to the new debt that the federal government is accumulating, the total is quite eye catching. You see, the truth is that the U.S. government must not only borrow enough money to fund government spending for this year, it must also “roll over” existing debt that has reached maturity. Of course the government never actually pays any of that debt off. Instead, it essentially takes out new debts to cover the old ones. So the U.S. government is actually borrowing far more money each year than most Americans realize. For fiscal year 2013, the U.S. budget deficit will be about $845 billion, but on top of that the government will also have to borrow about 3 trillion dollars to pay off old debt that is maturing. Overall, the U.S. government will borrow close to 4 trillion dollars this year, and that number will likely be even higher next year. That is not going to cause a crisis as long as interest rates stay super low, but if interest rates begin to rise substantially, the game will change dramatically. (Read More...)
40 Stats That Prove The U.S. Economy Has Already Been Collapsing Over The Past Decade
The “coming economic collapse” has already been happening. You see, the truth is that the economic collapse is not a single event. It has already started, it is happening right now, and it will accelerate during the years ahead. The statistics in this article show very clearly that the U.S. economy has fallen dramatically over the past ten years or so. Unfortunately, there are lots of mockers out there that love to mock the idea of an economic collapse even though one is happening right in front of our eyes. They love to say stuff like this (and I am paraphrasing): “An economic collapse is never going to happen. We can consume far more wealth than we produce forever. We can pile up gigantic mountains of debt forever. There is no way that the party is over. In fact, the party is just getting started. Woo-hoo!” That sounds absolutely ridiculous, but “economists” and “journalists” actually write things that reflect these kinds of sentiments every single day. They do not seem alarmed about the fact that our national debt is nearly 17 times larger than it was 30 years ago. They do not seem alarmed about the fact that the total amount of debt in our country is more than 28 times larger than it was 40 years ago. They do not seem alarmed about the fact that our economic infrastructure is being absolutely gutted and we are steadily becoming poorer as a nation. They just think that the magic formula of print, borrow, spend and consume can go on indefinitely. Unfortunately, the truth is that a massive economic disaster has already started to unfold. We inherited the greatest economic machine in the history of the world, but we totally wrecked it. We have been able to live far, far beyond our means for the last couple of decades thanks to the greatest debt bubble in the history of the planet, but now that debt bubble is getting ready to burst. Anyone with half a brain should be able to see what is coming. Just open your eyes and look at the facts. The following are 40 stats that prove the U.S. economy has already been collapsing over the past decade… (Read More...)
The “McDonald’s Budget”: Laughably Unrealistic But Also Deeply Tragic
Can you support a family on $2,000 a month? Recently, McDonald’s and Visa teamed up to launch a website that is intended to help employees of McDonald’s manage their money. The aspect of the website that is getting a tremendous amount of national attention is the “McDonald’s Budget” which is a sample monthly budget which is designed to help workers plan their spending. You can see a copy of it for yourself right here. This budget is laughably unrealistic, but it is also deeply tragic, because there are tens of millions of American workers that are actually trying to raise families on this kind of an income. (Read More...)