Selling government debt is a gigantic confidence game. For decades, investors all over the globe have gobbled up massive amounts of U.S. debt at incredibly low interest rates because they believed that it was a certainly that they would be paid back and be able to make a little bit of profit on top of it. Unfortunately, things have changed. Confidence is U.S. Treasuries is dying, and if confidence in U.S. government debt completely collapses at some point we could literally be looking at financial Armageddon. Why is that so? Well, when the world totally loses faith in U.S. Treasuries, interest rates on U.S. Treasuries will have to keep going up until enough investors are found to buy them. But much higher interest rates will mean much higher interest on the national debt and thus much higher federal budget deficits. That will erode confidence in U.S. Treasuries even further. In the end, a vicious cycle of eroding confidence and higher interest rates could ultimately lead to hyperinflation as the U.S. government and the Federal Reserve flood the system with endless amounts of paper money to try to keep the system solvent. (Read More...)
Derivatives: The Quadrillion Dollar Financial Casino Completely Dominated By The Big International Banks
If you took an opinion poll and asked Americans what they considered the biggest threat to the world economy to be, how many of them do you think would give “derivatives” as an answer? But the truth is that derivatives were at the heart of the financial crisis of 2007 and 2008, and whenever the next financial crisis happens derivatives will undoubtedly play a huge role once again. So exactly what are “derivatives”? Well, derivatives are basically financial instruments whose value depends upon or is derived from the price of something else. A derivative has no underlying value of its own. It is essentially a side bet. Today, the world financial system has been turned into a giant casino where bets are made on just about anything you can possibly imagine, and the major Wall Street banks make a ton of money from it. The system is largely unregulated (the new “Wall Street reform” law will only change this slightly) and it is totally dominated by the big international banks. (Read More...)
Start A Business? In The United States? Are You Kidding Me?
Many of you have decided that you are going to attempt to start a business in the United States today. Many of you are still convinced that this is “the land of opportunity” and that starting a business is fairly easy. Are you sure about that? Are you certain that you have considered all of the headaches involved? Are you sure that you are ready to handle the thousands of regulations that apply to your business and the mountains of paperwork mandated by various levels of government? Are you prepared to deal with entrenched unions, predatory lawyers and rabid environmentalists? The truth is that the business environment has never been this toxic in all of U.S. history. So even if you are able to start a viable business that can compete with the monolithic global corporations that dominate our economy, you still might not be able to make it. In the end, thousands upon thousands of businesses across America have been doomed to failure by ridiculous regulations, mountains of paperwork, health insurance costs, predatory lawsuits or corrupt government officials. So do you really think that you can beat the odds? (Read More...)
Will Ron Paul Be Able To End The Fed?
Is Ron Paul finally in position to really do something about the Federal Reserve? U.S. Representative Spencer Bachus, the chairman-elect of the House Financial Services Committee, has announced that Ron Paul will chair the domestic monetary policy subcommittee starting next month. This puts Ron Paul in tremendous position to be able to put significant pressure on the Federal Reserve. In previous years Ron Paul has introduced legislation to end the Federal Reserve but it never got any traction. During this most recent session of Congress an effort by Ron Paul to have a full audit of the Federal Reserve conducted gathered quite a bit of momentum for a while, but in the end it did not get passed. However, a very limited examination of Fed activities during the recent financial crisis was passed, and that examination has revealed some really shocking things. With so many Tea Party members entering Congress this upcoming session there may be more momentum than ever to hold the Federal Reserve more accountable. Ron Paul is already talking about how he is planning for a full slate of hearings on U.S. monetary policy and he has indicated that he plans to restart a push to have the Fed audited. (Read More...)
America’s Message To The Rest Of The World: You Send Us Oil And Cheap Plastic Gadgets And We’ll Send You Our Wealth And Prosperity
Have you ever seen pictures of extravagant wealth from places such as Dubai or Abu Dhabi and wondered where in the world they got all that money from? Have you ever read news stories that talk about China lending us hundreds of billions of dollars and wondered how they could possibly have so much wealth? Well, it is actually quite simple. They got much of it from us. Every month, the United States buys much more from the rest of the world then they buy from us. It is called a “trade deficit” and the United States has been running one for decades. In essence, what is happening each month is that we are transferring somewhere between 40 to 50 billion dollars of our national wealth to the rest of the globe and they are sending us oil and cheap plastic gadgets that Americans greedily consume. By the end of the year we have usually transferred somewhere around a half trillion dollars of our national wealth out of the country for good. (Read More...)
Why Democrats And Republicans Are Both Wrong About The Bush Tax Cuts
All over the Internet, Republican pundits are declaring that extending the Bush tax cuts will save the economy and Democrat pundits are declaring that ending the Bush tax cuts will save the economy. Well, you know what? Nothing will save the U.S. economy. The U.S. government is going to continue to drown in a sea of debt no matter what happens with these tax cuts. State and local governments are also going to continue to drown in a sea of debt. Thousands of factories and millions of jobs are going to continue to be shipped overseas every single year. America is going to continue to transfer tens of billions of dollars of its national wealth to foreign nations every single month. Nothing that the Republicans and Democrats are debating right now is going to do a thing to alter the fundamental problems that the U.S. economy is facing. (Read More...)
Say What? 30 Ben Bernanke Quotes That Are So Stupid That You Won’t Know Whether To Laugh Or Cry
Did you see Federal Reserve Chairman Ben Bernanke on 60 Minutes the other night? Bernanke portrayed the Federal Reserve as the great protector of the U.S. economy, he claimed that unemployment would be 15 percent higher if the Federal Reserve had sat back and done nothing during the financial crisis and he even started laying the groundwork for a third round of quantitative easing. Unfortunately, 60 Minutes did not ask Bernanke any hard questions and did not challenge him on his past record. It was almost as if they considered Bernanke to be above criticism. But someone in the mainstream media should be taking a closer look at this guy and his record. The truth is that the incompetence that Bernanke has displayed over the past few years makes the Cincinnati Bengals look like a model of excellence. Bernanke kept insisting that the housing market was stable even while it was falling apart, he had absolutely no idea the financial crisis was coming, he declared that Fannie Mae and Freddie Mac were in no danger of failing just before they failed, his policies have created asset bubble after asset bubble and the world financial system is now inherently unstable. But even with such horrific job performance, Barack Obama and leaders of both political parties continue to publicly praise Bernanke at every opportunity. What in the world is going on here? (Read More...)
Jobless Recovery?: 25 Unemployment Statistics That Are Almost Too Depressing To Read
Guess what? Unemployment is up again! That’s right – even though Wall Street is swimming in cash and the Obama administration is declaring that “the recession is over”, the U.S. unemployment rate has gone even higher. So are you enjoying the jobless recovery? The truth is that there should not be any talk of a “recovery” as long as the “official” unemployment rate remains at around 10 percent and the “real” unemployment continues to hover around 17 percent. There are millions and millions of American families that are living every day in deep pain because of the lack of jobs. Meanwhile, there are all of these economic pundits that are declaring that we are just going to have to realize that chronic unemployment is the “new normal” and that if other nations can handle high rates of unemployment then so can we. The most optimistic economists are projecting that we can perhaps get the unemployment rate down to around 8 percent by 2012. On the other hand, there are many economists that are convinced that things are going to get even worse. (Read More...)