Credit Cards

Say Goodbye To The Good Life

Say Goodbye To The Good Life - The U.S. Capitol With A Babylonian Holiday Tree In The ForegroundWill this be the last normal holiday season that Americans ever experience?  To many Americans, such a notion would be absolutely inconceivable.  After all, in the affluent areas of the country restaurants and malls are absolutely packed.  Beautiful holiday decorations are seemingly everywhere this time of the year and children all over the United States are breathlessly awaiting the arrival of Santa Claus.  Even though poverty is exploding to unprecedented levels, most families will still have mountains of presents under their Christmas trees.  Of course a whole lot of those presents were purchased with credit cards, but people don’t like to talk about that.  It kind of spoils the illusion.  Sadly, the truth is that our entire economy is a giant illusion.  The extreme prosperity that we have been enjoying has been fueled by debt, and any future prosperity that we will experience is completely dependent on our ability to go into even more debt.  The total amount of debt in our economy is almost 10 times larger than it was just 30 years ago, but we don’t like to think about that too much.  Most Americans are way too busy living the good life to be bothered with “doom and gloom”.  Well, get ready to say goodbye to normal.  As history has shown us, no financial bubble lasts forever, and time is rapidly running out for us.

You know that the hour is late when even mainstream news sources start publishing articles with titles such as this: “Will 2013 Mark the Beginning of American Decline?”

That article appeared on Bloomberg.com the other day, and it was written by Simon Johnson, a former chief economist at the International Monetary Fund.  He is convinced that a day of reckoning is coming for U.S. government finances, and he seems resigned to the fact that we will not be ready when that day arrives…

“Sooner or later, it will be America’s turn to fall out of favor with investors and to see its own interest rates rise. It is hard to know when that day will come, or precisely what pressures the country will face.

Let me only venture one forecast: We will not be ready.”

Other analysts are far more pessimistic.  For example, the following is what Gerald Celente said about the “bond bubble” during a recent interview with King World News…

Eric King: “Gerald, I wanted to take a look at this upcoming issue you have coming out. (In here it says,) ‘Bonds Away! The bond bomb is ready to explode … threatening to make the real estate and dot-com bubbles, and even the Great Recession, look like market corrections.’ Can you talk about that?”

Celente: “Yes. This piece is being penned by Dr. Paul Craig Roberts, the former Assistant Treasury Secretary under Ronald Reagan. And he is convinced that the bond bubble is about to burst. This cannot continue to go on the way it is. Everyone knows that the whole game is rigged, and so is this….”

“The whole game is rigged. It’s ready to go down, and Dr. Paul Craig Roberts believes it’s ‘Bonds Away’ in 2013 as the bond bubble explodes and brings about a financial disaster even worse than the Great Depression.”

Eric King: “He’s saying here it’s a road to financial collapse that we are going to head down when this thing bursts.”

Celente: “It is. Because the whole world is being propped up by these phony bonds and it’s going to collapse. It has to happen. Interest rates are going to start going up, and when they do the bond bubble explodes. You cannot keep interest rates at zero for this amount of time and expect anything other than disaster to follow.”

For much more on all this, you can listen to another excellent interview with Gerald Celente right here.

Our politicians just assume that we will be able to borrow trillions upon trillions of dollars far into the future at super low interest rates, but that is a very dangerous assumption.

As I noted the other day, the average rate of interest on U.S. government debt was 2.534 percent at the end of November.  If that number just rose to where it was about a decade earlier we would be in a massive amount of trouble.

Back in the year 2000, the average rate of interest on U.S. government debt was 6.638 percent.  If we were at that level today, the U.S. government would be paying out more than a trillion dollars a year just in interest on the national debt.

But our politicians just keep borrowing and spending as if we could do this forever.

From the time that George Washington was inaugurated (1789) to the time that George W. Bush was inaugurated (2001), the U.S. government accumulated about 5.7 trillion dollars of debt.

During the first four years of the Obama administration, the U.S. government accumulated about 5.7 trillion dollars of debt.

How can anyone support this kind of insanity?

You can see an excellent video demonstrating the vastness of our national debt right here.  In the end, all of this debt will absolutely destroy the U.S. dollar, our economic system and the bright futures that our children and our grandchildren were supposed to have.

As if all of that was not enough to be concerned about, there is also the threat that Wall Street could implode at any time.  Most Americans have no idea that Wall Street has been transformed into the largest casino in the history of the world.  The “too big to fail” banks are the ringleaders, and the derivatives bubble hangs over our financial system like a “sword of Damocles” that could fall at virtually any moment.

Everything will remain fine as long as the spiral of derivatives that our bankers have constructed remains perfectly balanced.  But if something happens and it becomes unbalanced and starts to collapse, the consequences could be unlike anything we have ever seen before.

A recent Zero Hedge article entitled “1000x Systemic Leverage: $600 Trillion In Gross Derivatives ‘Backed’ By $600 Billion In Collateral” detailed how there is barely any collateral backing up the hundreds of trillions of dollars of derivatives that are out there…

But a bigger question is what is the actual collateral backing this gargantuan market which is about 10 times greater than the world’s combined GDP, because as the “derivative” name implies all this exposure is backed on some dedicated, real assets, somewhere. Luckily, the IMF recently released a discussion note titled “Shadow Banking: Economics and Policy” where quietly hidden in one of the appendices it answers precisely this critical question. The bottom line: $600 trillion in gross notional derivatives backed by a tiny $600 billion in real assets: a whopping 0.1% margin requirement! Surely nothing can possibly go wrong with this amount of unprecedented 1000x systemic leverage.

Our entire economy has become a giant pyramid of debt, risk and leverage.  At some point there is going to be a giant crash.  When that happens, people are going to become very desperate.

When people become very desperate, they often accept “solutions” that they were not willing to consider previously.

We need to learn some lessons from history.  This is exactly the kind of thing that happened back in the 1930s.

For example, an elderly woman named Kitty Werthmann is telling audiences what life was like in Austria back in the late 1930s…

“In 1938, Austria was in deep Depression. Nearly one-third of our workforce was unemployed. We had 25 percent inflation and 25 percent bank loan interest rates.”

“Farmers and business people were declaring bankruptcy daily. Young people were going from house to house begging for food. Not that they didn’t want to work; there simply weren’t any jobs.”

The Austrian people were really hurting and they were desperate for answers.  When Hitler came to them with “solutions”, they were ready to embrace him with open arms…

“We looked to our neighbor on the north, Germany, where Hitler had been in power since 1933.” she recalls. “We had been told that they didn’t have unemployment or crime, and they had a high standard of living.”

“Nothing was ever said about persecution of any group – Jewish or otherwise. We were led to believe that everyone in Germany was happy. We wanted the same way of life in Austria. We were promised that a vote for Hitler would mean the end of unemployment and help for the family. Hitler also said that businesses would be assisted, and farmers would get their farms back.””Ninety-eight percent of the population voted to annex Austria to Germany and have Hitler for our ruler.”

“We were overjoyed,” remembers Kitty, “and for three days we danced in the streets and had candlelight parades. The new government opened up big field kitchens and everyone was fed.”

Sadly, America is already starting to go down the same path in many ways.  If you doubt this, you can read the rest of her account right here.

Right now, things are still relatively good in America.  Yes, there are a whole host of economic numbers that look really bad, but what we are experiencing right now is nothing compared to the horrific economic pain that is coming.

When our economy finally crashes, nobody is going to be able to press a button and restore things to how they were previously.  We will be told that we have to “adjust” and consider “new solutions” to our “new challenges”.  Someday we will look back on the good life that we were enjoying in 2010, 2011 and 2012 and wish that we could go back to those days.

So enjoy the relative peacefulness and prosperity of these times while you still can.  A horrific economic collapse is on the way, and once it strikes none of our lives will ever be the same.

Santa Claus - A Symbol Of Our Materialism

If One Storm Can Turn D.C. Dark For Several Days, What Would A Massive EMP Burst Do?

Sometimes we all get a little reminder of just how completely and totally dependent we are on the power grid.  Massive thunderstorms that ripped through Ohio, West Virginia, Maryland, Washington D.C. and Virginia left millions without power over the weekend.  At this point it is being projected that some people may not get power back until the end of the week.  The “super derecho” storm that pounded the Washington D.C. area on Friday night with hurricane-force winds is being called unprecedented.  But the truth is that there are other events that could happen that would be far more damaging to our power grid.  For example, a substantial EMP burst over a major U.S. city would fry virtually all of the electronics in the city and take the power grid in the area down indefinitely.  A gigantic EMP burst over the entire country (caused by a massive solar storm or a very large nuclear explosion high in the atmosphere) could theoretically take down the entire national power grid.  Just try to imagine a world where nobody has any electricity, nobody can pump gas, nobody can use their credit cards or get any more money, where most vehicles won’t start, where nobody has the Internet, where all cell phones are dead and where nobody can heat or cool their homes.  That is how serious an EMP burst could potentially be.  We are talking about an event that could be millions of times worse than 9/11.

Hopefully this latest storm has reminded Americans about how vulnerable our power grid really is and about how close we really are to being knocked back to the late 1800s.

Let’s review some of the damage that this “super derecho” storm caused to the D.C. area….

-Thousands of businesses have been forced to close temporarily because they cannot operate without electricity

-Many federal agencies were closed on Monday because there was no power

-Many 911 call centers throughout Northern Virginia were down over the weekend and could not respond to emergencies

-Without electricity, many families have not been able to cook warm meals

-Without warm water, many families have not been able to take hot showers

-A “boil water advisory” was put into effect for several areas of northern Virginia

-Many families that still do not have power are in danger of losing much of the food in their refrigerators and freezers

-Many gas stations were not able to operate because of a lack of electricity and so this has made filling up the gas tank a major hassle for many families

-Hundreds of traffic lights are still out and this is making commuting a major problem in some areas

-Without air conditioning many families are absolutely sweltering as high temperatures remain well above 90 degrees

-During the power outage some people have been without cell phone service because many cell phone towers were inoperable

-Without electricity, thousands upon thousands of people have not been able to use their computers for several days and this is causing a lot of frustration

-Several major websites were totally knocked offline by the storms as Robert McMillan of Wired Magazine explained….

Hurricane-like storms knocked an Amazon data center in Ashburn, Virginia, offline last night, and a chunk of the internet felt it. The six-hour incident temporarily cut off a number of popular internet services, including Netflix, Pinterest, Heroku, and Instagram.

But to be honest this was not a major disaster.

After a few days the damage will be fixed and people will start to forget what just happened.

Well, what if the damage was permanent and the entire nation had to go without electricity for the foreseeable future?  The following is from a USA Today article by Dan Vergano….

The sky erupts. Cities darken, food spoils and homes fall silent. Civilization collapses.

End-of-the-world novel? A video game? Or could such a scenario loom in America’s future?

There is talk of catastrophe ahead, depending on whom you believe, because of the threat of an electromagnetic pulse triggered by either a supersized solar storm or terrorist A-bomb, both capable of disabling the electric grid that powers modern life.

As I have written about previously, an EMP attack could fundamentally change life in America in a single instant.

What would you do if such a scenario happened?

Would you try to go somewhere?  Even if the electronics in your car were not totally fried, you would not be able to pump more gas anywhere.

Would you try to call someone?  Most phones would be totally dead and all normal communications networks would be down.  So who would you call?

Would you bunker down and try to survive on what you have at home?  Most of the food in your refrigerator and freezer would rapidly go bad and most Americans only have enough food to last a few days or a few weeks.  In addition, most Americans would no longer be able to heat or cool their homes, so extreme cold and extreme heat would become huge problems very quickly.

How in the world would any of us survive in a world without electricity?

In past centuries our forefathers knew how to survive in such a world, but most of us do not have the same skills or resources that they had.

The following is how an article in the Wall Street Journal once described what a massive EMP burst would do to this nation….

No American would necessarily die in the initial attack, but what comes next is potentially catastrophic. The pulse would wipe out most electronics and telecommunications, including the power grid. Millions could die for want of modern medical care or even of starvation since farmers wouldn’t be able to harvest crops and distributors wouldn’t be able to get food to supermarkets. Commissioner Lowell Wood calls EMP attack a “giant continental time machine” that would move us back more than a century in technology to the late 1800s.

What would you do if you were suddenly cut off from all electricity, all money, all modern forms of communication, all modern forms of transportation and all modern forms of shopping?

Don’t think that it can’t happen.

Scientists tell us that massive EMP bursts generated by gigantic solar storms have hit our planet in the past and that it is inevitable that it will happen again.

In addition, nations all over the planet are aware of what an EMP burst can do and have been developing “Super-EMP” weapons that can take power grids down in a single strike.

The following is a short excerpt from a statement by Dr. Peter Vincent Pry to the United States Senate Subcommittee on Terrorism, Technology and Homeland Security on March 8th, 2005….

Russian and Chinese military scientists in open source writings describe the basic principles of nuclear weapons designed specifically to generate an enhanced-EMP effect, that they term “Super-EMP” weapons. “Super-EMP” weapons, according to these foreign open source writings, can destroy even the best protected U.S. military and civilian electronic systems.

That doesn’t sound good.

But perhaps even more troubling is that North Korea has been reportedly developing this type of weapon.  In fact, it has been reported that North Korea may have tested a “Super-EMP” weapon all the way back in 2009….

North Korea’s last round of tests, conducted in May 2009, appear to have included a “super-EMP” weapon, capable of emitting enough gamma rays to disable the electric power grid across most of the lower 48 states

In time, these kinds of weapons will get into more and more hands.

Will someone try to use this kind of weapon at some point?

Frank Gaffney, the president of the Center for Security Policy, believes that a single EMP burst could potentially end up killing the vast majority of the population of the United States….

“Within a year of that attack, nine out of 10 Americans would be dead, because we can’t support a population of the present size in urban centers and the like without electricity”

Once you understand these kinds of threats, it makes it a lot easier to understand why preppers are so busy preparing for the future.

Our world is becoming incredibly unstable.  Another major economic crisis could hit us at any time, war in the Middle East could erupt without warning, earthquakes and other natural disasters are becoming more frequent and society seems to get a little crazier with each passing day.

The era of tremendous peace and prosperity that we have all been enjoying is rapidly coming to an end.  In a world filled with instability and chaos, it only seems prudent to take some precautions.

You might want to get prepared while you still have time.

If The U.S. Government Keeps Spending Money Like This We Are Doomed And If The U.S. Government Stops Spending Money Like This We Are Doomed

If you increased your credit card spending by a couple thousand dollars per month would your lifestyle improve?  Of course it would.  By going into large amounts of debt, it is possible to live a lifestyle that you can’t really afford, at least for a while.  But if you keep racking up huge amounts of credit card debt every single month, eventually it gets to a point where it is extremely difficult to even keep up with the minimum monthly payments and the credit card companies will not lend you any more money.  Well, on a larger scale it is the same thing with government debt.  Right now, the U.S. government is spending more than a trillion dollars more than it takes in every year.  Even if the U.S. government spends all of that money on incredibly stupid stuff, it still gets into the pockets of ordinary Americans.  In turn, those ordinary Americans use that money to pay the mortgage, buy food, shop at the mall, etc.  All of this borrowing and spending by the U.S. government has created a “false prosperity” bubble that is not real.  It may feel real to you right now, but it is unsustainable by definition.  If the U.S. government suddenly started spending only the money that it actually brought in every year, our economy would be doomed and all of this “false prosperity” would rapidly disappear.  But if the U.S. government continues to rack up debt at this pace we are doomed as well.  In fact, every dollar that gets borrowed makes our eventual collapse ever worse.  We are heading down the exact same road that Greece has gone.  Eventually the rest of the world is not going to lend us gigantic mountains of super cheap money anymore.  When the flow of cheap money stops, it can be extremely painful.  Anyone that has ever seen the interest rates on their credit cards go above 20 percent knows how this feels.  If we had addressed these problems as a nation a decade or two ago, perhaps we could have found a solution.  But now there is no way out under our current financial system and a devastating economic collapse is on the horizon no matter what we do.

If there was a Hollywood movie where some crooks successfully stole 150 million dollars, what would you think of those crooks?

Would you have admiration for them?

Would you be disgusted with them?

Would you feel like your intelligence was insulted because nobody could ever steal 150 million dollars and get away with it?

Well, right now the federal government is stealing approximately 150 million dollars from our children and our grandchildren every single hour.

That’s right – the U.S. government is borrowing an astounding 150 million dollars an hour that our children and our grandchildren will be expected to deal with.

It is a theft so vast that it is almost unimaginable.

So what should be done?

A lot of people out there think that our problems would be solved if the government would just quit borrowing so much money.

Well, it is just not that simple.

Look at Greece.  They were forced by the EU and the IMF to dramatically reduce government spending.  But when Greece reduced government spending, that caused the economy to shrink rapidly and it caused tax receipts to go down more than expected.  So Greek budget deficits were even larger than anticipated and so Greece was forced to cut spending even more.  But that created even more economic problems.

A recent article by John Mauldin described the nightmarish effect that this cycle has had on Greece….

And as Greece began shake and bake its way to “austerity,” the very act of cutting deficits pushed the country into recession, which lowered tax revenues and increased expenses, putting the elusive goal of a balanced budget even further off. We should quickly note that this is not just a Greek problem. Spain’s “draconian” cuts have meant that its 6% deficit target for the year has this week been raised to a more likely 8%, making it harder to get back to even.

For country after country, this is the Endgame. It is the end of the Debt Supercycle. Debt has grown to the size that it cannot be sustained. The market will not lend any more money on terms that can be afforded, and any efforts to cut spending and raise taxes will result in an even worse economy, in various degrees of recession, with falling revenues and rising costs.

This is what happens when a country that has been spending far beyond its means is forced to dramatically cut back.

Those that are convinced that balancing the federal budget in the United States will be relatively painless should take a close look at what is happening in Greece.

As I have written about previously, the Greek economy has been plunged into a 21st century “Great Depression”.  In Greece, 20 percent of all retail stores have already shut down, the unemployment rate for those under the age of 24 is sitting at 39 percent, and one third of the entire nation is living in poverty.

And this is only just the beginning for Greece.

Things are going to get even worse.

Unfortunately, many believe that the United States is destined to experience far worse pain than Greece is currently experiencing.

For example, Peter Schiff insists that the United States is in worse financial shape than Europe at this point.  Just check out this video….

Anyone that attempts to downplay the U.S. debt problem is making a serious mistake.  Yes, we are still able to borrow trillions of dollars for next to nothing, but that is going to come to an end.

Remember all of those “suckers” that signed up for mortgages at “teaser rates” that later got jacked up dramatically?

Of course you do.

So what happened to them?

When the rates went up many of them ended up losing everything.

Well, we have gotten ourselves into the exact same kind of a position.  All of this cheap money has enabled us to live very nicely for now, but when the cheap money ends the nightmare will begin.

Right now, our debt is growing much, much faster than our economy is.  Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.

What would your household finances look like if your total debt grew by 61 percent next year but your income only grew by 4 percent?

When I was a little boy, the U.S. national debt was considered to be a huge national crisis.  Politicians from both major political parties were promising that they would fix things.

But what has happened since then?

Well, when Ronald Reagan took office the U.S. national debt was less than 1 trillion dollars.  Today, the U.S. national debt is over 15.2 trillion dollars.

During 2011, the federal government went into more debt than the U.S. government accumulated from the time that George Washington became president to the time that Ronald Reagan became president.

That may be hard to believe, but it is true.

During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars.

That is utter insanity, and yet most Americans have become convinced that this is “normal” and that there is nothing to worry about.

It is hard to grasp how much money a trillion dollars is.

If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

That is how much money a trillion dollars is.

And things look even worse when you look at the balance sheet of the U.S. government.

The U.S. government has total assets of 2.7 trillion dollars and has total liabilities of 17.5 trillion dollars.  Those liabilities do not even count 4.7 trillion dollars of intragovernmental debt that is currently outstanding.

But it is not just the federal government that has been living a fantasy.

The chart posted below shows the growth of total debt in America over the past several decades.  Consumers, businesses and government officials have been on a debt binge that is absolutely unprecedented….

The scary thing is that even with all of this borrowed money, our economy is still in the dumps.

So what in the world is it going to look like when the debt bubble totally bursts?

Even with all of this “borrowed prosperity”, anger at the government is rapidly growing.  A recent Gallup poll found that “satisfaction with government” in the United States is now at an all-time record low of 29 percent.

So how angry will the American people be when all of this “borrowed prosperity” disappears?

When this whole thing comes tumbling down, a lot of people are going to blame our problems on “capitalism”.

In fact, it is already happening.  Just check out what the founder of the World Economic Forum is saying….

“We have a general morality gap, we are over-leveraged, we have neglected to invest in the future, we have undermined social coherence, and we are in danger of completely losing the confidence of future generations,” said Klaus Schwab, host and founder of the annual World Economic Forum.

“Solving problems in the context of outdated and crumbling models will only dig us deeper into the hole.

“We are in an era of profound change that urgently requires new ways of thinking instead of more business-as-usual,” the 73-year-old said, adding that “capitalism in its current form, has no place in the world around us.”

But capitalism is not the problem.  Capitalism has produced the greatest eras of prosperity that the world has ever seen.

No, the real problem is our debt-based financial system that is managed and run by the central banks of the world.

You see, debt-based central banking is not capitalism.  But way too many people equate the two.

A lot of people cannot even imagine this, but theoretically you could have capitalism without any debt whatsoever.

But what we have today is a financial system that has debt as the very foundation.  And such a system is inevitably going to fail someday.

As I have written about so many times before, the Federal Reserve is at the very heart of our economic problems here in the United States.

The Federal Reserve was designed to be a perpetual debt machine.  And it has performed that task very well.  The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.

So yes, even though things seem somewhat “stable” for the moment, there are all kinds of reasons to be concerned about the viability of our economy and our financial system in the years ahead.

The other day, I was quoted in a Reuters article about our coming economic problems….

“Most people have a gut feeling that something has gone terribly wrong, but that doesn’t mean that they understand what is happening,” he said. “A lot of Americans sense that a massive economic storm is coming and they want to be prepared for it.”

Of course the Reuters reporter did not even bother to spell my name correctly, but at least he got the quote right.

A great economic storm is coming.

Don’t let this false prosperity and this “calm before the storm” fool you.

We are living in the greatest debt bubble the world has ever seen, and no matter how it plays out there is going to be a massive amount of pain.

You might want to get yourself and your family prepared for that.

59.9 Percent? Americans Are Racking Up Huge Credit Card Balances Once Again And Some Of The Interest Rates Are Absolutely Outrageous!

Well, it was nice while it lasted.  One of the really good things that came out of the recent economic downturn was that millions of American families decided to get out of debt.  In particular, we had seen a sustained trend of reduced credit card usage in the United States.  It looked like Americans had finally wised up.  But we should have known that Americans would not be willing to tighten their belts forever.  Unfortunately, it appears that getting out of debt is no longer so “trendy”.  In fact, the month of December was the third month in a row in which consumer credit grew in the United States.  Prior to that, consumer credit in the United States had declined for 20 months in a row.  The American people were doing so, so good.  Why did they have to stop?  It appears that the American people have fallen off the wagon and have gotten a taste for credit card debt once again.  This time, however, the credit card companies are back with interest rates that are higher than ever.  In fact, one national credit card company has hundreds of thousands of customers signed up for a card that charges interest rates of up to 59.9%.

59.9%?

You mean there are people that are stupid enough to actually sign up for a credit card that will charge them 59.9% interest?

Unfortunately the answer is yes.

In fact, the top rate was 79.9% before First Premier Bank lowered it.

These cards are targeted at Americans that have a poor credit history, and these days there are a whole lot of those.

A recent story on the website of CNN described how large numbers of U.S. consumers with poor credit are gobbling up credit cards like these.  Unfortunately, many of these consumers are also not smart enough to realize what they are getting into.  The CNN story contained a quote from a woman who was in complete shock when she discovered that her interest rate was going to go up by 50 percentage points….

“I about had a heart attack when I got a disclosure notice saying that my starting rate of 29.9% was going up to 79.9%.”

First Premier Bank has since lowered the top rate on those cards to 59.9%, but that it still completely outrageous.

Not only are the interest rates on those cards super high, but they also charge a whole bunch of fees on those cards as well.  The following are some of the fees that First Premier Bank charges….

*$45 processing fee to open the account

*Annual fee of $30 for the first year

*$45 fee for every subsequent year

*A monthly servicing fee of $6.25

So you would think that nobody in their right mind would ever sign up for such a card, right?

Wrong.

CNN is reporting that almost 700,000 Americans have signed up for the card.

Ouch.

In fact, CNN says that First Premier Bank gets between 200,000 to 300,000 new applications a month for the card, but that they only open about 50,000 new accounts each month.

Are there really this many Americans that are this gullible?

If Americans would just remember the “DBS” rule they would be so much better off.

DBS = Don’t Be Stupid

Do you know how long it would take to pay off a credit card with a 59.9 percent interest rate?

Just a 20 percent interest rate is bad enough.

According to the credit card repayment calculator, if you owe $6000 on a credit card with a 20 percent interest rate and only pay the minimum payment each time, it will take you 54 years to pay off that credit card.

During that time you will pay $26,168 in interest rate charges in addition to the $6000 in principal that you are required to pay back.

Ouch!

The number one piece of financial advice that most of the “financial gurus” give is that you should get out of credit card debt – particularly credit card debt that has a high interest rate.

Unfortunately, 46% of all Americans carry a credit card balance from month to month today.

According to the United States Census Bureau, there are approximately 1.5 billion credit cards in use in the United States.

Of U.S. households that have credit card debt, the average amount owed on credit cards is $15,788.

This is how the bankers enslave us.

We end up paying them 3, 4 or even 5 times as much as we originally borrowed.

Month after month after month we slave away to make them wealthy.

So how do you stop this vicious cycle?

You quit buying stuff that you can’t afford!

Unfortunately, the vast majority of Americans have never received any formal training on how to manage finances.

Most of us were never taught any of this stuff in school.  Most of us were totally unprepared when the financial predators started preying on us in college.  Most of us got sucked in and spent years and years trapped in credit card debt.

When you carry a balance from month to month you are willingly signing up to become a debt servant to the big banks.  They get rich while you suffer.

The sad thing is that the mainstream media is pointing to increased credit card spending as a sign that the U.S. economy is getting back to normal.

But gigantic mountains of debt is what got us into all of this trouble in the first place.

Average household debt in the United States has now reached a level of 136% of average household income.

In China that figure is only 17%.

Obviously, we have a massive, massive problem with debt in this country.

Cranking the debt spiral back up is not going to cause the economy to recover.

Well, the profits of the big banks might recover, but the rest of us will suffer.

If you want to be financially free, then it is time to pay off your credit card debt and get off the debt payment treadmill for good.

The entire global economy is on the verge of collapse, so now is a great time to renounce consumerism.  Instead, we need to be preparing ourselves and our families for the hard times that are coming.

So what do you all think about the outrageous interest rates that the credit card companies are charging these days?  Feel free to post your thoughts in the comments section below….

The American People Don’t Need More Handouts – What They Need Are Good Jobs

Without millions more good jobs, the U.S. economy is simply never, ever going to recover.  But at this point, there is every indication that the U.S. economy is going to continue to bleed jobs.  In the past, employment would bounce up and down as the economy went through various cycles.  But today what we are witnessing is something much different.  Over the past 30 or 40 years, literally millions of good jobs have been shipped off to China, India and to dozens of third world nations where half-starving workers are more than happy to slave away for big global corporations for less than a dollar an hour.  In the new “global economy” that we were promised would be so good for us, the expensive American worker is obsolete.  The giant global predator corporations that now dominate our economy do not exist to provide you and your family with a nice home, two cars and college educations for all your children.  No, their goal is to keep costs as low as possible so that their profits will be as high as possible.  For many of these giant global predator corporations, that means that paying workers as close to zero as possible is the best decision for the bottom line. 

The truth is that the American people were never told that “free trade” and a “global economy” would mean that they would soon be lumped into a giant global labor pool and would be forced to compete for jobs with people on the other side of the globe.

No, we were just told that we should enjoy all of the cheap plastic crap made overseas that all of the “big box” retail stores were pushing us to buy.

Well, the party was fun while it lasted.  Americans ran up unprecedented amounts of debt on their credit cards buying all this stuff, while our once great manufacturing cities degenerated into rotted-out war zones.

But isn’t it a good thing to get all these products at such a cheap price?

After all, who wants to pay substantially more for things?

Well, running an economy this way is kind of like tearing off pieces of your house in order to keep your fire going.  Sure the fire will burn brightly for a while, but eventually you will have torn down your entire house.

One way or another, we end up paying dearly for the jobs we have shipped overseas.

You see, the millions of Americans who are now chronically unemployed because of “free trade” have to be supported by the U.S. government.

That means that it is the U.S. taxpayers who end up footing the bill.

You didn’t think that we were going to let all of those unemployed workers starve in the streets, did you?

Without good jobs, an increasing number of Americans are becoming completely dependent on government handouts.

Already, state governments across the United States are going broke trying to pay out unemployment benefits to the hordes of Americans who don’t have a job and can’t find a job.

In addition, for the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.

Also, according to one new study, somewhere around 21 percent of all children in the United States are living below the poverty line in 2010, which is the highest rate in 20 years.

The truth is that more Americans are dependent on direct payments from the federal government than ever before.

But how long can we afford to support the millions upon millions of Americans who have been impoverished by this new “global economy”?

The U.S. government budget deficit was a record $1.4 trillion in 2009.  Now the White House says that we will exceed that figure in 2010 and again in 2011.

So just how long can we afford to run deficits equivalent to 10 percent of GDP?

Anyone with half a brain knows that these kind of debts are not anywhere close to sustainable.

So where is the money going to come from to pay for these exploding government programs?

Well, from you of course.

Recently I dubbed 2011 “the year of the tax increase”.  A whole slew of new taxes is scheduled to go into effect starting next year that will impact every single American taxpayer.

It is almost enough to make you want to stop working and start collecting government handouts instead.

But the American people don’t need even more handouts.

Handouts are only a temporary solution to a long-term problem.

What the American people need are good jobs.

But where in the world are these jobs going to come from?

The reality is that in the new “global economy”, the United States is a very unattractive place to do business.

If you were a global corporation, would you rather open a new facility in the third world where there are very few rules and regulations and where people will work for less than a dollar an hour, or would you rather open a new facility in the United States where there are literally thousands of laws and regulations to comply with and where you are going to have to pay workers at least ten times as much?

It doesn’t take a genius to see where all of this is headed.

For decades, an increasing number of Americans have been forced into lower paying service jobs, but now there aren’t even nearly enough of those to go around. 

But it isn’t just the jobs that have been shipped overseas that are depressing wages and causing unemployment to skyrocket.  The millions of illegal immigrants that have flooded unchecked across the border have depressed wages and fundamentally changed the employment picture in industries such as construction and food service. 

Not only that, but in this environment not even high tech workers are safe.  In fact, there are some corporations in the high tech industry that have been openly abusing worker visas to ship in large numbers of foreign workers to replace more expensive American employees.

What all this means is that it is becoming much more difficult to live a middle class lifestyle in the United States.

Perhaps that is why one of my articles struck such a nerve recently.  An article that I originally wrote for The American Dream blog and adapted by Business Insider has gone mega-viral and has ended up on Yahoo Finance.  The article was entitled “The Middle Class In America Is Radically Shrinking – Here Are The Stats To Prove it” and it has received over 9000 comments on Yahoo.

So why did it provoke such an extraordinary response?

Well, because it hits people where they live.

Today, millions of American families are really struggling.  Record numbers of middle class Americans are receiving foreclosure notices and record numbers of middle class Americans are going bankrupt.

In fact, more Americans than ever find themselves just trying to survive.

According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.

You see, the truth is that most American families are not concerned with saving for retirement or even with planning for next year.  In this economic environment, most American families are worried about how they are going to survive until next month.

So who has been doing well in the new global economy?

The very, very wealthy of course.

According to Harvard Magazine, 66% of the income growth between 2001 and 2007 went to the top 1% of all Americans.

Now, the truth is that there is absolutely nothing wrong with making money, but by any reasonable standard an economic system that produces such skewed results is horribly broken.

So will “redistributing the wealth” solve things?

No, it won’t.

At best, “redistributing the wealth” is only a temporary solution and it always ends up creating a lot of long-term problems.

What the American people really need are millions more good jobs.

But as we have seen, the current imbalances in the new “global economy” make it more likely that the American people will continue to lose millions more good jobs rather than gaining them.

Unless something is done, the standard of living for middle class Americans will continue to be forced down as labor increasingly becomes a global commodity.

So are you just going to accept that, or are you going to start demanding that your representatives change things?

The choice is up to you.

79 Percent Of American Voters Say They Think The U.S. Economy Could Collapse – And They Are Absolutely Right

An overwhelming majority of American voters now believe that the United States could experience a total economic collapse.  According to the latest Fox News poll, 79 percent of U.S. voters believe “it’s possible the nation’s economy could collapse”, and the poll found that this belief in the fragility of the American economy cuts across the entire political spectrum.  The truth is that the American people, at least on some level, know that a day of reckoning is at hand.  For decades, America has been enjoying the biggest party in the history of the world, but unfortunately that party was fueled by a gigantic mountain of debt, and now the bills are starting to come due.  Unfortunately for those trying to do something about this economic mess, the American people are starting to realize that the U.S. economy is now basically a house of cards, and that could lead to massive financial panic when things really start to fall apart.

Normally when a poll is taken, you can see big differences in the responses based on the party affiliation of those being surveyed.  But in this poll everyone seems to agree – the U.S. economy could experience a complete and total collapse.

Not only did the poll find that 84 percent of Republicans believe the U.S. economy could fall apart, 80 percent of Independents did as well, as did 72 percent of Democrats.

Only 18 percent of the respondents to the survey believed that the economy is “so big and strong it could never collapse.”

It is very rare these days when a large majority of the American people will agree on something.

But unfortunately, they are completely and totally correct.

The U.S. economy is in a death spiral.

So how in the world did we get here?

The answer can be summed up in one word.

Debt.

The United States has piled up household, corporate and government debt at a pace that is mind blowing.

Once upon a time, the United States was the wealthiest nation in the history of the world.

But that was not enough for us.

We had to have more.

So we went out and squandered the wealth of this nation but that wasn’t enough either.

So we started spending hundreds of billions and then trillions of dollars that belong to future generations.

All of this to fuel the greatest party the world has ever seen.

And it has been a great party.

But you can turn out the lights because the party is almost over.

It is very easy to blame the U.S. government for getting into so much debt, but they are not the only ones who have been piling up debt at an insane pace.

In fact, millions of individual Americans have been living beyond their means for decades.  Just check out the chart below which shows the growth of household debt since the mid-1960s….

Now tens of millions of Americans are massively overextended and are crying to the U.S. government for help.  But nobody forced them to get mortgages that they couldn’t afford.  Nobody forced them to max out their credit cards.  Nobody forced them to fill up their garages with luxury vehicles.

In large part, we did this to ourselves.  U.S. credit card debt per household only crossed the $1,000 threshold in the mid-1980s.  Now it is over $8,000 per household….

But the corporate world should shoulder plenty of the blame as well.  Corporate debt has been exploding at an exponential rate while profits have remained relatively flat.  There is no way that this ratio of corporate debt to profits is sustainable….

And of course the biggest culprit of all is the U.S. government.  They have piled up the biggest mountain of debt in the history of the world, but are we not at fault for continuing to elect leaders who keep putting us into so much debt?  However, there are some signs that the American people are starting to wake up about this.  According to the Fox News poll, by a nearly three-to-one margin, voters believe that the national debt (65 percent) is a greater threat to America’s future than terrorism is (23 percent).

So will this change anything when the next elections come around?

We will see.

Meanwhile, the damage has already been done.  The U.S. Congress recently approved an increase in the federal government debt cap to 14.3 trillion dollars.  In 2010, the United States government is projected to issue almost as much new debt as the rest of the governments of the world combined.  Thanks to the horrifyingly bad management of our finances by our nation’s leaders, the legacy that we are leaving to future generations is the biggest mountain of debt that humanity has ever seen….

Unfortunately, instead of learning from the past and trying to reduce debt, the U.S. government just keeps spending money and piling up debt faster and faster.

But if they stop all of this reckless spending the U.S. economy could plunge right into a depression of unprecedented magnitude and pretty much everyone would be voted out of office.

But if they keep on with all of this reckless spending the long-term consequences will be catastrophic beyond anything that any of us can even imagine.

Either way, this thing is going to end really, really badly.

Whether you want to face it or not, there is no economic future for the United States under the current system.

Enjoy things while they are still relatively good, because this is as good as things are going to get.  Incredibly hard times are coming and we all need to start getting ready.

Has The United States Become A Nation With No Economic Spine?

What are hard working Americans who have scrimped and saved and have done everything “right” financially for decades supposed to think about all of these “bailouts” and of the massive financial mess in Washington?  How are people who have handled their own finances admirably supposed to feel now that the foolishness of others is leading us all towards a horrific economic collapse?  Well, a reader named “Mae” recently left a comment that I think does a good job of communicating what a lot of hard working Americans are feeling right now: My situation is this – we have lived our lives playing by the rules: never carried debt on a credit card that we couldn’t pay off by the due date. If we couldn’t afford the item, we didn’t buy it. We always had a Christmas Club which enabled us to pay cash for the holiday. We payed ourselves first after every paycheck whether it was $10 or $100, whatever we could afford. We made double payments on our mortgage when we could which helped us to pay off our modest home 10 years early. We knew that we couldn’t afford to “have it all” so we made our choices early on and stuck with it. We sacrificed the fancy vacations in order to do large home repairs (like a new roof) ourselves. We didn’t buy expensive cars and now own one outright and carry a small loan on another. That’s our only debt besides monthly bills. We chose jobs that provided health care benefits. We did everything right…we saved and saved and saved to have a decent retirement but of course last year took half the value of our 401k.

Now, I’m expected to sit back and watch Bush, Congress and Obama bail everyone out because they didn’t have the fiscal discipline to manage their money?? I’m supposed to feel bad for people who bought homes they couldn’t afford? or cars they couldn’t pay for? or $1000 cell phone bills? or $20,000 in credit card debt? HELL NO! I’m livid! If I ran my checkbook the way Washington is running the national checkbook, I’d be thrown in jail!

All we can do now is educate as many people as possible about what is happening and hopefully vote all these s.o.b.’s out of office and replace them with fiscally conservative candidates who will vote for term limits. The days of a career politician are over. I don’t know if we can turn any of this around – it will take a lot of hard work to make the tough decisions, but they have to be made if we’re to survive. How many people have the guts to work through this? Not many…we’ve become a spoiled, selfish, arrogant and hypocritical nation with no spine.

Liberty Silver Coins

The Credit Card Trap: How U.S. Credit Card Companies Are Sucking The Financial Life Out Of The American Consumer

There have been very few things more damaging to American consumers over the past couple of decades than credit card debt.  Easy credit has enabled many of us to live absolutely fabulous lifestyles, but outrageously high interest rates, ridiculous penalties and predatory fees have sucked the financial life out of millions of American families.  It is very easy to blame the rapidly exploding debt of the U.S. government for the economic collapse that we are now experiencing, but the truth is that tens of millions of Americans have created their own personal economic disasters by overusing credit cards.  The temptation of easy credit has been too much for millions of Americans to resist, but now all of that easy credit is proving to be incredibly difficult to pay back, and massive debt problems are literally tearing many American families apart.

It is hard to underestimate how devastating credit card debt can be to a family.

According to the credit card repayment calculator, if you owe $6000 on a credit card with a 20 percent interest rate and only pay the minimum payment each time, it will take you 54 years to pay off that credit card.

During that time you will pay $26,168 in interest rate charges in addition to the $6000 in principal that you are required to pay back.

That does not even account for any penalties or fees you may have to pay.

Are you starting to get the picture?

The reality is that credit cards are one of the greatest inventions for sucking the wealth out of middle class American families ever invented.

Just consider the following facts….

*According to the United States Census Bureau, there are approximately 1.5 billion credit cards in use in the United States.

*At the end of 2008, the total credit card debt piled up by American consumers was over 972 billion dollars.  This is an amount that is greater than the GDP of the world’s 122 poorest nations combined.

*78 percent of American households had at least one credit card at the end of 2008.

*The top 10 credit card issuers control approximately 88 percent of the credit card market.

*The average U.S. college graduate leaves school with more than $2,000 in credit card debt.

So is Congress doing anything to protect American consumers?

Well, some of the key provisions of The Credit Card Accountability, Responsibility and Disclosure Act, commonly known as the CARD Act, go into full effect for all credit card providers on February 22nd.  In particular, starting on the 22nd limits will be imposed on when credit card issuers can raise rates on existing card balances.

But the truth is that this new law doesn’t really do much to protect us.  U.S. credit card companies will continue to be able to engage in highly predatory practices.  The following are just three examples….

#1) According to Pamela Banks of Consumers Union, the nonprofit publisher of Consumer Reports, there are no current federal laws that cap credit card interest rates.  In fact, CNN is reporting that interest rates on some major bank credit cards are now as high as 36 percent.

#2) New laws only address the existing fees charged by credit card companies.  So credit card companies are working hard to invent all kinds of new fees and penalties that will get around the new laws so that they can keep sticking it to American consumers.  For example, Citibank is now charging some consumers with a fee if they put less than $2,400 on their card annually.

#3) In anticipation of the CARD Act going into effect, many credit card companies have been aggressively bumping up the minimum payments for many of their customers.  Chase, one of the biggest credit card providers, recently increased the mandatory minimum payment for many consumers by 150 percent.  MBNA, Citibank and Bank of America have announced that they are doubling minimum monthly payments on credit card balances for many of their customers.  These increases have been absolutely devastating for many families who are on a tight budget.

The bottom line is that we all need to get out of debt and we all need to stop using credit cards.  It is financial insanity to end up paying two, three, four or five times as much for an item as it cost in the store.  We have been making the big banks rich by spending money that we do not have.

So if we are going to accuse the U.S. federal government of horribly wasting our money, we have got to be certain that we are geting our own financial houses in order.

But for many American families it is already too late.  It is hard to pay off debt if you don’t have a job and you are about to lose your home.  In fact, many American families find themselves literally being torn apart by financial stress.

Unfortunately, economic times are not going to get any easier.  If you are able, get out of debt while you still can.  Now is the time to tighten our belts and to prepare ourselves and our families for what is ahead.

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