Debts

The Federal Reserve Must Go

If you want to permanently fix America’s economy, there really is no other choice.  Even before Ron Paul’s rallying cry of “End The Fed” shook America during the peak of the Tea Party movement, I was a huge advocate of shutting down the Federal Reserve.  Because no matter how hard we try to patch it up otherwise, the truth is that our debt-based financial system has been fundamentally flawed from the very beginning, and the Federal Reserve is the very heart of that system.  The following is a free preview of an upcoming book that I am working on about how to turn this country is a more positive direction…

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As the publisher of The Economic Collapse Blog, there have been times when I have been criticized for focusing too much on our economic problems and not enough on the solutions.  But I believe that in order to be willing to accept the solutions that are necessary, people need to have a full understanding of the true severity of our problems.  It isn’t by accident that we ended up 20 trillion dollars in debt.  In 1913, a bill was rushed through Congress right before Christmas that was based on a plan that had been secretly developed by very powerful Wall Street bankers.  G. Edward Griffin did an amazing job of documenting the development of this plan in his groundbreaking book “The Creature from Jekyll Island: A Second Look at the Federal Reserve”.  At that time, most Americans had no idea what a central bank does or what one would mean for the U.S. economy.  Sadly, even though more than a century has passed since that time, most Americans still do not understand the Federal Reserve.

The Federal Reserve was designed to create debt, and of course the Wall Street bankers were very excited about such a system because it would make them even wealthier.  Since the Fed was created in 1913, the U.S. national debt has gotten more than 5000 times larger and the value of the U.S. dollar has declined by about 98 percent.  So the Federal Reserve is doing what it was originally designed to do.  In fact, it has probably worked better than the original designers ever dreamed possible.

There is often a lot of confusion about the Federal Reserve, because a lot of people think that it is simply an agency of the federal government.  But of course that is not true at all.  In fact, as Ron Paul likes to say, the Federal Reserve is about as “federal” as Federal Express is.

The Fed is an independent central bank that has even argued in court that it is not an agency of the federal government.  Yes, the president appoints the leadership of the Fed, but the Fed and other central banks around the world have always fiercely guarded their “independence”.  On the official Fed website, it is admitted that the 12 regional Federal Reserve banks are organized “much like private corporations”, and they very much operate like private entities.  They even issue shares of stock to the private banks that own them.

In case you were wondering, the federal government has zero shares.

The American people are constantly being told that Fed decisions must be “above politics” because they are “too important” to be politicized.  So even though everything else in our society is up for political debate, somehow we have become convinced that the Federal Reserve should be off limits.

Today, the Federal Reserve has more power over the performance of the U.S. economy than anyone else does, and that includes the president.  The Fed has become known as “the fourth branch of government”, and a single statement from the chairman of the Fed can send global financial markets soaring or tumbling.

So even though presidents tend to get most of the credit or most of the blame for how the U.S. economy is doing, the truth is that the Fed is actually the one pulling most of the strings.  In conjunction with Congress, presidents can monkey around with regulations and tax rates, but at the end of the day their influence over the economy pales in comparison to what the Fed is able to do.

For those that have never encountered this material before, this can be difficult to grasp at first, so let’s start with something very simple.

Go to your wallet or purse and pull out a dollar bill.

At the very top, you will notice that it says “Federal Reserve Note” in big, bold letters.

If you ask 99 percent of the people in the United States where money comes from, they will not be able to tell you.  Our money is actually created and issued by the Federal Reserve, but that is not what our founders intended.  According to Article I, Section 8 of the U.S. Constitution, Congress was expressly given the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.

So why is the Federal Reserve doing it?

Many Americans are still operating under the assumption that the federal government has a “printing press” and that if we ever get into too much debt trouble the government could simply create and spend lots more money into circulation.

But that is not the way that our system currently operates.

Instead, it is the Federal Reserve that creates all new money.  Once that new money is created, the federal government then borrows it and spends it into circulation.

Previously, I have written about how this works…

When the U.S. government decides that it wants to spend another billion dollars that it does not have, it does not print up a billion dollars.

Rather, the U.S. government creates a bunch of U.S. Treasury bonds (debt) and takes them over to the Federal Reserve.

The Federal Reserve creates a billion dollars out of thin air and exchanges them for the U.S. Treasury bonds.

(http://theeconomiccollapseblog.com/archives/why-donald-trump-must-shut-down-the-federal-reserve-and-start-issuing-debt-free-money)

This doesn’t seem to make any sense at all.

Why does the U.S. government have to borrow money that the Federal Reserve creates?  Why can’t they just create the money themselves?

This is the big secret that nobody is supposed to know about.

Theoretically, the federal government doesn’t have to borrow a penny.  Instead of borrowing money the Federal Reserve creates, it could just create money directly and spend it into circulation.

But then we wouldn’t be 20 trillion dollars in debt.

Once the Federal Reserve has received U.S. Treasury bonds in exchange for the “Federal Reserve Notes” that the federal government has requested, the Fed auctions off those bonds to the highest bidder.  But as I have noted so many times before, this process always creates more debt than it does money…

The U.S. Treasury bonds that the Federal Reserve receives in exchange for the money it has created out of nothing are auctioned off through the Federal Reserve system.

But wait.

There is a problem.

Because the U.S. government must pay interest on the Treasury bonds, the amount of debt that has been created by this transaction is greater than the amount of money that has been created.

So where will the U.S. government get the money to pay that debt?

Well, the theory is that we can get money to circulate through the economy really, really fast and tax it at a high enough rate that the government will be able to collect enough taxes to pay the debt.

But that never actually happens, does it?

And the creators of the Federal Reserve understood this as well. They understood that the U.S. government would not have enough money to both run the government and service the national debt. They knew that the U.S. government would have to keep borrowing even more money in an attempt to keep up with the game.

(http://theeconomiccollapseblog.com/archives/why-donald-trump-must-shut-down-the-federal-reserve-and-start-issuing-debt-free-money)

Beginning in 1913, this process has created an endless debt spiral that has resulted in the U.S. being 20 trillion dollars in debt.  It is the biggest mountain of debt in the history of the world, and it didn’t have to happen.

In fact, if we had been using debt-free money all this time we could theoretically be completely out of debt.

A lot of conservatives out there are still under the illusion that if we could just grow the economy fast enough that we could possibly pay back all of this debt someday, but as I have demonstrated in a previous article, this is mathematically impossible.  (http://theeconomiccollapseblog.com/archives/it-is-mathematically-impossible-to-pay-off-all-of-our-debt)

All of this debt threatens to destroy the bright future that our children and our grandchildren were supposed to have.  It is absolutely immoral to pass such a large debt on to future generations, but we are doing it anyway.

Of course the United States is far from alone in this regard.  Today, more than 99.9% of the population of the world lives in a country that has a central bank.

There is literally nothing else that the entire planet agrees upon almost unanimously, and yet somehow virtually the whole globe has chosen to adopt debt-based central banking.

Do you think that this is just a coincidence?

A handful of extremely small nations such as the Federated States of Micronesia still do not have a central bank, but the only large country not to have one is North Korea.

I don’t understand why more people are not talking about this.  If we really want to reform how things are done economically, it should start with central banking.

The truth is that we do not need a central bank.

Let me say that again.

We do not need a central bank.

The greatest period of economic growth in all of U.S. history was when there was no income tax and no central bank. (http://theeconomiccollapseblog.com/archives/during-the-best-period-of-economic-growth-in-u-s-history-there-was-no-income-tax-and-no-federal-reserve)

Such a system would be unimaginable to many people today, but it is entirely possible.

Instead of a central bank creating debt-based currency for us, the federal government could create debt-free money directly.

And instead of socialist central planners setting our interest rates for us, we could allow the free market to set our interest rates.

We are supposed to be a free market nation with a free market economy, and so we don’t need Fed bureaucrats to run it for us.

The free market will always do a better job in the long run then bureaucrats will.  As I noted earlier, the greatest period of economic growth in U.S. history was right before the Federal Reserve was created in 1913, but since that time there have been 18 distinct recessions or depressions: 1918, 1920, 1923, 1926, 1929, 1937, 1945, 1949, 1953, 1958, 1960, 1969, 1973, 1980, 1981, 1990, 2001, 2008.

Now we stand poised on the brink of another major downturn, and people still aren’t getting it.

As long as the Federal Reserve exists, there will be “booms” and “busts” like this.

It is time for a change.

During the good times, criticism of the Fed tends to subside.  And without a doubt, the bubble following the end of the last recession lasted much longer than a lot of people initially would have thought, but all Fed-created bubbles eventually end.

We desperately need to get free from this system, and a huge step in that direction would be a rejection of debt-based currency.

If you don’t think that this can happen, you should consider what happened in 1963.  President John F. Kennedy signed Executive Order 11110 which authorized the U.S. Treasury to issue debt-free “United States Notes” which were directly created by the federal government.

Unfortunately, he was assassinated shortly after that executive order was signed.

You can still find debt-free “United States Notes” in circulation today, and they are often for sale on auction sites such as eBay because people like to collect them.

At any time, the White House could do something similar today.

All it takes is the willingness to do so.

The borrower is the servant of the lender, and the debt-based Federal Reserve system has turned all of us into debt slaves.

If we do not want future generations of Americans to be enslaved to debt, we need to shut down the Federal Reserve and start using debt-free currency.  Any essential functions that the Fed is currently performing can ultimately be taken over by the U.S. Treasury, and of course we can make the transition gradual so that we don’t completely panic global financial markets.

The global elite are using central banking and debt-based currencies to dominate the planet.  Today, the total amount of debt in the world has shot past 150 trillion dollars, and it will only continue to grow until humanity wakes up and realizes the insanity of using a debt-based financial system.

Here in the United States, we need people in government that understand these things and that are willing to do something about it.

The Federal Reserve must go, and I will never make any apologies for saying that.

U.S. Auto Sales Plunge Dramatically As The Consumer Debt Bubble Continues To Collapse

One sector of the economy that is acting as if we were already in the middle of a horrible recession is the auto industry.  We just got sales figures for the month of April, and every single major U.S. auto manufacturer missed their sales projections.  And compared to one year ago, sales were way down across the entire industry.  When you add this latest news to all of the other signals that the U.S. economy is slowly down substantially, a very disturbing picture begins to emerge.  Either the U.S. economy is steamrolling toward a major slowdown, or this is one heck of a head fake.

One analyst that has been waiting for auto sales to start declining is Graham Summers.  According to Summers, the boom in auto sales that we witnessed in previous years was largely fueled by subprime lending, and now that subprime auto loan bubble is starting to burst…

Auto-loan generation has gone absolutely vertical since 2009, rising an incredible 56% in seven years. Even more incredibly roughly 1/3 of this ~$450 billion in new loans are subprime AKA garbage.

In the simplest of terms, this is Subprime 2.0… the tip of the $199 TRILLION debt iceberg, just as subprime mortgages were for the Housing Bubble.

I’ve been watching this industry for months now, waiting for the signal that it’s ready to explode.

That signal just hit.

The signal that Summers is referring to is a persistent decline in U.S. auto sales.  It would be easy to dismiss one bad month, but U.S. auto sales have been falling for a number of months now, and the sales figures for April were absolutely dismal.  Just check out how much sales declined in April compared to one year ago for the biggest auto manufacturers…

General Motors: -5.8 percent

Ford: -7.1 percent

Fiat Chrysler: -7.0 percent

Toyota: -4.4 percent

Honda: -7.0 percent

For auto manufacturers, those are truly frightening numbers, and nobody is really projecting that they will get better any time soon.

At the same time, unsold vehicles continue to pile up on dealer lots at a staggering pace…

Meanwhile, inventory days are still trending higher as OEMs continue to push product on to dealer lots even though sale through to end customers has seemingly stalled.

GM, one of the few OEMs to actually disclose dealer inventories in monthly sales releases, reported that April inventories increased to 100 days (935,758 vehicles) from 98 days at the end of March and just 71 days (681,402 vehicles) in April 2016.

So why is this happening?

Of course there are a lot of factors, but one of the main reasons for this crisis is the fact that U.S. consumers are already drowning in debt and are simply tapped out…

Now, a new survey from Northwestern Mutual helps to shed some light on why Americans are completely incapable of saving money.

First, roughly 50% of Americans have debt balances, excluding mortgages mind you, of over $25,000, with the average person owing over $37,000, versus a median personal income of just over $30,000.

Therefore, it’s not difficult to believe, as Northwestern Mutual points out, that 45% of Americans spend up to half of their monthly take home pay on debt service alone.…which, again, excludes mortgage debt.

When you are already up to your eyeballs in debt, it is hard just to make payments on that debt.  So for many American families a new car is simply out of the question.

And it isn’t just the U.S. auto industry that is in trouble.  The credit card industry is also starting to show signs of distress…

Synchrony Financial – GE’s spin-off that issues credit cards for Walmart and Amazon – disclosed on Friday that, despite assurances to the contrary just three months ago, net charge-off would rise to at least 5% this year. Its shares plunged 16% and are down 27% year-to-date.

Credit-card specialist Capital One disclosed in its Q1 earnings report last week that provisions for credit losses rose to $2 billion, with net charge-offs jumping 28% year-over-year to $1.5 billion.

If you didn’t understand all of that, what is essentially being said is that credit card companies are starting to have to set aside more money for bad credit card debts.

Previously I have reported that consumer bankruptcies and commercial bankruptcies are both rising at the fastest rate that we have seen since the last recession.  This trend is starting to spook lenders, and so many of them are starting to pull back on various forms of lending.  For example, Bloomberg is reporting that lending by regional U.S. banks was down significantly during the first quarter of 2017…

Total loans at the 15 largest U.S. regional banks declined by about $10 billion to $1.73 trillion in the first quarter, compared with the previous three-month period, the first such drop in four years, according to data compiled by Bloomberg. All but two of those banks missed analysts’ estimates for total loans, as a slump in commercial and industrial lending sapped growth.

This is how a credit crunch begins.  When the flow of credit starts restricting, that slows down economic activity, and in turn that usually results in even more credit defaults.  Of course that just causes lending to get even tighter, and pretty soon you have a spiral that is hard to stop.

Just about everywhere you look, there are early warning signs of a new economic downturn.  And just like we saw prior to the great crash of 2008, those that are wise are getting prepared for what is coming ahead of time.  Unfortunately, most people usually end up getting blindsided by economic downturns because they believe the mainstream media when they insist that everything is going to be just fine.

Thankfully, there are at least a few people that are telling the truth, and one of them is Marc Faber.  Just a few days ago, he told CNBC that the U.S. economy is “terminally ill”…

“Dr. Doom” Marc Faber says the U.S. economy is “terminally ill,” and the current outlook doesn’t seem to be improving.

“The U.S. has run a deficit for [so long],” he said Tuesday on CNBC’s “Futures Now.” “The conditions today are more fragile than they were ever before, and unless somebody comes and introduces minus 5 percent interest rates, I think the economy is really not in such a great shape.”

“I’m actually amazed that people are so optimistic,” the editor and publisher of the “Gloom, Boom & Doom Report” added.

I have to agree with Faber on this point.

We are more primed for a major economic downturn and a horrifying stock market crash than we were back in 2008.

It isn’t going to take much to push us over the edge, and with our world becoming more unstable with each passing month, it appears that our day of reckoning is likely to come sooner rather than later.

11 Reasons Why U.S. Economic Growth Is The Worst That It Has Been In 3 Years

Those that were predicting that the U.S. economy would be flying high by now have been proven wrong.  U.S. GDP grew at the worst rate in three years during the first quarter of 2017, and many are wondering if this is the beginning of a major economic slowdown.  Of course when we are dealing with the official numbers that the federal government puts out, it is important to acknowledge that they are highly manipulated.  There are many that have correctly pointed out to me that if the numbers were not being doctored that they would show that we are still in a recession.  In fact, John Williams of shadowstats.com has shown that if honest numbers were being used that U.S. GDP growth would have been consistently negative going all the way back to 2005.  So I definitely don’t have any argument with those that claim that we are actually in a recession right now.  But even if we take the official numbers that the federal government puts out at face value, they are definitely very ugly…

Economic growth slowed in the first quarter to its slowest pace in three years as sluggish consumer spending and business stockpiling offset solid business investment. Many economists write off the weak performance as a byproduct of temporary blips and expect healthy growth in 2017.

The nation’s gross domestic product — the value of all goods and services produced in the USA — increased at a seasonally adjusted annual rate of 0.7%, the Commerce Department said Friday, below the tepid 2.1% pace clocked both in the fourth quarter and as an average throughout the nearly 8-year-old recovery. Economists expected a 1% increase in output, according to a Bloomberg survey.

Even if you want to assume that it is a legitimate number, 0.7 percent economic growth is essentially stall speed, and this follows a year when the U.S. economy grew at a rate of just 1.6 percent.

So why is this happening?

Of course the “experts” in the mainstream media are blaming all sorts of temporary factors…

Economists blamed the weather. It was too warm this time around, rather than too cold, which is the usual explanation for Q1 debacles.

And they blamed the IRS refund checks that had been delayed due to last year’s spectacular identity theft problem. Everyone blamed everything on these delayed refund checks, including the auto industry and the restaurant industry. But by mid-February, a veritable tsunami of checks went out, and by the end of February, the IRS was pretty much caught up. So March should have been awash in consumer spending. But no. So we’ll patiently wait for that miracle to happen in second quarter.

They always want us to think that “boom times” for the U.S. economy are right around the corner, but those “boom times” have never materialized since the end of the last financial crisis.

Instead, we have had year after year of economic malaise and stagnation, and it looks like 2017 is going to continue that trend.  The following are 11 reasons why U.S. economic growth is the worst that it has been in 3 years…

#1 The weak economic growth in the first quarter was the continuation of a long-term trend.  Barack Obama was the only president in history not to have a single year when the U.S. economy grew by at least 3 percent, and this is now the fourth time in the last six quarters when economic growth has been less than 2 percent on an annualized basis.  So essentially this latest number signals that our long-term economic decline is continuing.

#2 Consumer spending drives the U.S. economy more than anything else, and at this point most U.S. consumers are tapped out.  In fact, CBS News has reported that three-fourths of all U.S. consumers have to “scramble to cover their living costs” each month.

#3 The job market appears to be slowing.  The U.S. economy only added about 98,000 jobs in March, and that was approximately half of what most analysts were expecting.

#4 The flow of credit appears to be slowing as well.  In fact, this is the first time since the last recession when there has been no growth for commercial and industrial lending for at least six months.

#5 Last month, U.S. factory output dropped at the fastest pace that we have witnessed in more than two years.

#6 We are in the midst of the worst “retail apocalypse” in U.S. history.  The number of retailers that has filed for bankruptcy has already surpassed the total for the entire year of 2016, and at the current rate we will smash the previous all-time record for store closings in a year by nearly 2,000.

#7 The auto industry is also experiencing a great deal of stress.  This has been the worst year for U.S. automakers since the last recession, and seven out of the eight largest fell short of their sales projections in March.

#8 Used vehicle prices are falling “dramatically”, and Morgan Stanley is now projecting that used vehicle prices “could crash by up to 50%” over the next several years.

#9 Commercial bankruptcies are rising at the fastest pace since the last recession.

#10 Consumer bankruptcies are rising at the fastest pace since the last recession.

#11 The student loan bubble is starting to burst.  It is being reported that 27 percent of all student loans are already in default, and some analysts expect that number to go much higher.

And of course some areas of the country are being harder hit than others.  The following comes from CNBC…

Four states have not yet fully recovered from the Great Recession. As of the third quarter of last year, the latest data available, the economies of Louisiana, Wyoming, Connecticut and Alaska were still smaller than when the recession ended in June 2009.

Other states that have recovered have seen their economic recoveries stall out. Those include Minnesota, North Dakota, New Mexico, Oklahoma, South Dakota and West Virginia.

We should be thankful that we are not experiencing a full-blown economic meltdown just yet, but it is undeniable that our long-term economic decline continues to roll along.

And without a doubt the storm clouds are building on the horizon, and many believe that the next major economic downturn will begin in the not too distant future.

11 Facts That Prove That The U.S. Economy In 2017 Is In Far Worse Shape Than It Was In 2016

There is much debate about where the U.S. economy is ultimately heading, but what everybody should be able to agree on is that economic conditions are significantly worse this year than they were last year.  It is being projected that U.S. economic growth for the first quarter will be close to zero, thousands of retail stores are closing, factory output is falling, and restaurants and automakers have both fallen on very hard times.  As economic activity has slowed down, commercial and consumer bankruptcies are both rising at rates that we have not seen since the last financial crisis.  Everywhere you look there are echoes of 2008, and yet most people still seem to be in denial about what is happening.  The following are 11 facts that prove that the U.S. economy in 2017 is in far worse shape than it was in 2016…

#1 It is being projected that there will be more than 8,000 retail store closings in the United States in 2017, and that will far surpass the former peak of 6,163 store closings that we witnessed in 2008.

#2 The number of retailers that have filed for bankruptcy so far in 2017 has already surpassed the total for the entire year of 2016.

#3 So far in 2017, an astounding 49 million square feet of retail space has closed down in the United States.  At this pace, approximately 147 million square feet will be shut down by the end of the year, and that would absolutely shatter the all-time record of 115 million square feet that was shut down in 2001.

#4 The Atlanta Fed’s GDP Now model is projecting that U.S. economic growth for the first quarter of 2017 will come in at just 0.5 percent.  If that pace continues for the rest of the year, it will be the worst year for U.S. economic growth since the last recession.

#5 Restaurants are experiencing their toughest stretch since the last recession, and in March things continued to get even worse…

Foot traffic at chain restaurants in March dropped 3.4% from a year ago. Menu prices couldn’t be increased enough to make up for it, and same-store sales fell 1.1%. The least bad region was the Western US, where sales inched up 1.2% year-over-year and traffic fell only 1.7%, according to TDn2K’s Restaurant Industry Snapshot. The worst was the NY-NJ Region, where sales plunged 4.6% and foot traffic 6.3%.

This comes after a dismal February, when foot traffic had dropped 5% year-over-year, and same-store sales 3.7%.

#6 In March, U.S. factory output declined at the fastest pace in more than two years.

#7 According to the Bureau of Labor Statistics, not a single person is employed in nearly one out of every five U.S. families.

#8 U.S. government revenues just suffered their biggest drop since the last recession.

#9 Nearly all of the big automakers reported disappointing sales in March, and dealer inventories have now risen to the highest level that we have seen since the last recession.

#10 Used vehicle prices are absolutely crashing, and subprime auto loan losses have shot up to the highest level that we have seen since the last recession.

#11 At this point, most U.S. consumers are completely tapped out.  According to CNN, almost six out of every ten Americans do not have enough money saved to even cover a $500 emergency expense.

Just like in 2008, debts are going bad at a very alarming pace.  In fact, things have already gotten so bad that the IMF has issued a major warning about it…

In America alone, bad debt held by companies could reach $4 trillion, “or almost a quarter of corporate assets considered,” according to the IMF. That debt “could undermine financial stability” if mishandled, the IMF says.

The percentage of “weak,” “vulnerable” or “challenged” debt held as assets by US firms has almost arrived at the same level it was right before the 2008 crisis.

We are seeing so many parallels to the last financial crisis, and many are hoping that our politicians in Washington can fix things before it is too late.

On Monday, the most critical week of Trump’s young presidency begins.  The administration will continue working on tax reform and a replacement for Obamacare, but of even greater importance is the fact that if a spending agreement is not passed by Friday a government shutdown will begin at the end of the week…

Trump has indicated that he wants to tackle the repeal and replacement of Obamacare and introduce his “massive” tax plan in the next week, all while a shutdown of parts of federal government looms Friday.

By attempting three massive political undertakings in one week, investors will have a sense of whether or not Trump will be able to deliver on pro-growth policies that would be beneficial for markets.

If Trump can pull off the trifecta, it could restore faith that policy proposals like tax cuts and infrastructure spending are on the way. If not, look out.

Members of Congress are returning from their extended two week spring vacation, and now they will only have four working days to get something done.

And I don’t believe that they will be able to rush something through in just four days.  The Republicans in Congress, the Democrats in Congress, and the Trump administration all want different things, and ironing out all of those differences is not going to be easy.

For example, the Trump administration is insisting on funding for a border wall, and the Democrats are saying no way.  The following comes from the Washington Post…

President Trump and his top aides applied new pressure Sunday on lawmakers to include money for a wall on the U.S.-Mexico border in a must-pass government funding bill, raising the possibility of a federal government shutdown this week.

In a pair of tweets, Trump attacked Democrats for opposing the wall and insisted that Mexico would pay for it “at a later date,” despite his repeated campaign promises not including that qualifier. And top administration officials appeared on Sunday morning news shows to press for wall funding, including White House budget director Mick Mulvaney, who said Trump might refuse to sign a spending bill that does not include any.

And of course the border wall is just one of a whole host of controversial issues that are standing in the way of an agreement.  Those that are suggesting that all of these issues will be resolved in less than 100 hours are being completely unrealistic.  And even though the Trump administration is putting on a brave face, the truth is that quiet preparations for a government shutdown have already begun.

The stage is being set for the kind of nightmare crisis that I portrayed in The Beginning Of The End.  The stock market bubble is showing signs of being ready to burst, and an extended government shutdown would be more than enough to push things over the edge.

Let us hope that this government shutdown is only for a limited period of time, because an extended shutdown could potentially be catastrophic.  In the end, either the Trump administration or the Democrats are going to have to give in on issues such as funding for Obamacare, the border wall, Planned Parenthood, defense spending increases, etc.

It will be a test of the wills, and it will be absolutely fascinating to see who buckles under the pressure first.

Will You Turn Away Family, Friends And Neighbors At Your Door When America’s Day Of Disaster Arrives?

How will you handle all of the people that will show up at your door when a major crisis strikes because they haven’t been making any preparations of their own?  Earlier today somebody asked me about this on Facebook, and I thought that it was a very good question, because thousands of my readers will be faced with this precise dilemma at some point.  When America’s day of disaster arrives, it is inevitable that most of us that are prepping will have family, friends and neighbors showing up at our door asking for help.  When that happens, what will you do?

There are some people out there that are very honest about the fact that they do not plan to share what they have stored up with anyone, and that even close family members will be greeted with a shotgun if they show up unannounced.

Personally, I could never do that.  My wife and I have always had the philosophy that we need to work extra hard to prepare because there will be people that need to depend on us when times get really hard.  And turning away those that are in desperate need would go against everything that we stand for.  After all, I am even writing a book that is all about the true meaning of love, and so it would be quite hypocritical of me to turn away those that I care about when they need me the most.

And even if I wanted to be cold-hearted, my wife would never let me get away with it.  She has such a soft heart that she literally can’t bear to even see a bug die.  We often have spiders invade our place, and when she sees one she gently captures it and sets it free outside.  I tell her that they will just breed and come back in even bigger numbers, but that doesn’t seem to matter to her.  So needless to say we are going to have to find a non-violent way to deal with our spider problem.

But I certainly understand the frustrations of those that have been trying to warn family and friends about what is coming for years and they never seem to listen.

And it is true that resources are limited.  For the vast majority of us, there is only so much money and energy that we can put into prepping, and so why should those that have refused to listen to the warnings and prepare in advance be able to benefit from all of our hard work?

Unfortunately, life is not always fair.  And we also need to realize that there is a tremendous amount of deception going on out there these days.  Some of the deceptions that are currently circulating are very strong, and it can be very easy to be sucked into them.  So we need to have compassion for those that have been led into confusion.

Look, there are literally thousands of watchmen all across this country that have never wavered from warning America about what is coming even for a moment.  That is because they are standing on the truth and not on wishful thinking that is the product of overactive imaginations.

The ingredients for the “perfect storm” that so many watchmen have been warning about for ages are starting to come together right before our eyes.  We are closer to World War III than we have been in decades, our politicians are openly admitting that our relations with Russia are at “an all-time low”, the federal government is 20 trillion dollars in debt, our nation is on the verge of being torn apart by strife and civil unrest, the financial markets are primed for a crash of epic proportions, there are mass die-offs of animals all over the globe, and natural disasters are happening with frightening regularity as the crust of our planet rattles and shakes.

But we are somehow supposed to believe that “everything is going to be wonderful” even though we continue to kill babies on an industrial scale, just about every form of sexual immorality that you can possibly imagine is exploding all around us, our “entertainment” industry is an open sewer, and we lead the world in both legal and illegal drug use.

I’ve got dozens more facts that I could quote regarding our moral decay, but I think that you get the point.

If we actually changed our behavior, I could understand why it would make sense for America to be blessed.

But we haven’t changed our behavior, and there are no signs that this is going to happen any time soon.

As humans, we have the freedom to choose, but those choices inevitably have consequences.

The same thing is true for our nation as a whole.  We have made a whole bunch of exceedingly bad choices, and those choices are going to result in some incredibly painful consequences.

So you can do whatever you want, but my wife and I are going to continue to get prepared.  America is headed for a date with disaster, and those that are suggesting otherwise are not being honest with you.

Credit Card Nation: Why The Facebook Killer And The U.S. Congress Have A Great Deal In Common

Most Americans have seemingly convinced themselves that as a society we will never pay a great price for going into so much debt and that we will never pay a great price for the horrendous crimes against humanity that we are committing on a daily basis.  If you don’t understand what I am talking about, just keep reading the rest of this article.  Just as there are consequences for our actions individually, so there are also consequences for our actions as a society.  And although our national day of reckoning has been put off for quite some time, when it does finally arrive the pain is going to be absolutely unimaginable.

Just recently, I was astounded to learn that the total amount of credit card debt in the United States has crossed the trillion dollar mark.  It boggles my mind that so many Americans could be so foolish, because credit card debt is one of the worst forms of debt in existence, and financial experts all over the country have spent an extraordinary amount of time and energy trying to get this message across to people.

But even though people know that going into credit card debt is bad, they just keep on doing it anyway.  We have become a “buy now, pay later” society that gives very little consideration to long-term consequences.

On a national level, we are now nearly 20 trillion dollars in debt, and a historic showdown over government spending and debt threatens to absolutely paralyze the federal government at the end of this month.  At this point many believe that it will be virtually impossible for Congress to avoid a government shutdown on April 29th, and once it begins Donald Trump’s entire agenda will come to a complete and total crashing halt until the crisis is resolved.  The following comes from David Stockman…

In the meanwhile, everything else — health care reform, tax cuts, infrastructure — will become backed-up in an endless queue of legislative impossibilities. Accordingly, there will be no big tax cut in 2017 or even next year. For all practical purposes Uncle Sam is broke and his elected managers are paralyzed.

The Treasury will be out of cash and up against a hard stop debt limit of $19.8 trillion in a matter of months. But long before that there will be a taste of the Shutdown Syndrome on April 28 owing to the accumulating number of “poison pill” “riders” to the CR.

These include the virtual certainty of riders to the House bill to “defund” Planned Parenthood and sanctuary cities. Other extraneous amendments will also possibly include funds demanded by the White House to start the Mexican Wall, enhance deportations and fund some of Trump’s $54 billion defense increase.

I am so glad that Stockman mentioned Planned Parenthood, because the decision whether or not to continue funding Planned Parenthood is going to be one of the central issues of this upcoming crisis.

Currently, the U.S. government gives Planned Parenthood roughly $500,000,000 a year.  By law, none of that money is supposed to be used to provide abortions, but everyone knows what the real deal is.

Some Planned Parenthood clinics do provide other services, but at the end of the day Planned Parenthood’s core business is abortion.  In fact, since Roe v. Wade was decided in 1973 they have killed far more babies than anyone else in the United States by a very wide margin.

And for decades, the U.S. government has been the number one source of funding for Planned Parenthood.  In fact, there are questions as to whether or not Planned Parenthood would be able to continue as a viable business without money from the federal government.

Over the years, when members of Congress have voted to shower Planned Parenthood with hundreds of millions of dollars a year, they have not done it in the heat of the moment.  Rather, their votes have been the result of cold, calculated decision-making processes.

In other words, the members of Congress that have been voting to keep funding Planned Parenthood year after year have the blood of millions of dead children on their hands, and there is very little difference between them and Facebook killer Steve Stephens.

When Stephens broadcast the cold-hearted murder of a 74-year-old man on Facebook on Sunday, he instantly became a worldwide celebrity.  And even though most people in the country have now seen his face, he continues to somehow elude authorities.

What Stephens has done is absolutely horrific, and when he is finally caught he will pay greatly for his crimes.

Just like Stephens, America is on the run today.  We keep thinking that we will never have to pay a price for the tens of millions of children that we have killed, and our government continues to fund the slaughtering of the innocents that goes on every single day in this nation.

But now Congress is going to be given one more chance to make the right decision.

The Republicans have control of the White House, the Senate and the House of Representatives.  They have the power to defund Planned Parenthood, but it is going to take a tremendous amount of resolve.

That is because under the current rules it is going to take 60 votes to get a spending agreement through the Senate, and so the Republicans will need at least 8 Democratic votes to get any bill to Trump’s desk.

Sadly, the Democrats are pledging to stretch out a government shutdown indefinitely if Republicans try to defund Planned Parenthood.

So what will the Republicans do?  Well, they could change the rules in the Senate to require only a simple majority vote on spending bills, and that would essentially be the “thermonuclear option”.

Or they could give in, but if they do that it would likely mean that Planned Parenthood will never be defunded, because the Republicans will never have a better opportunity than they do right now.

And I have a feeling that is what is going to happen.  I have a feeling that the Republicans are going to give in at some point and agree to keep giving Planned Parenthood half a billion dollars a year.

If that is indeed what happens, both the Democrats and the Republicans that help pass such a bill will be cold-blooded killers just like Facebook killer Steve Stephens, only those Democrats and those Republicans will have far more blood on their hands than Stephens does.

Most people do not realize this, but without a doubt this is one of the most critical moments in modern American history.  And if the funding of Planned Parenthood continues, I have a feeling that is going to mean that our national day of reckoning is much closer than most people would dare to imagine.

If we do not stop what we are doing, someday our crimes will catch up to us, and the debt that we will owe at that point will be far beyond what we can bear to pay.

The Debt Crisis Of 2017: Once Their Vacation Ends, Congress Will Have 4 Days To Avoid A Government Shutdown On April 29

April 2017 could turn out to be one of the most important months in U.S. history that we have seen in a very long time.  On April 6th, Donald Trump attacked Syria on the 100th anniversary of the day that the U.S. officially entered World War I, and now at the end of this month we could be facing an unprecedented political crisis in Washington.  On Friday, members of Congress left town for their two week “Easter vacation”, and they won’t resume work until April 25th.  What this means is that Congress will have precisely four days when they get back to pass a bill to fund government operations or there will be a government shutdown starting on April 29th.

Up to this point, there has been very little urgency by either party to move a spending bill forward.  It is almost as if everyone is already resigned to the fact that a government shutdown will happen.  The Democrats will greatly benefit from a government shutdown because they can just blame the entire mess on the Republicans.  But for the GOP, this is essentially the equivalent of political malpractice.

To me, there is simply no way that Congress is going to be able to agree on a bill that funds the entire government in just four days.  And it turns out that this upcoming deadline comes exactly on the 100th day of Trump’s presidency…

The U.S. government is poised to shut down on Day 100 of Donald Trump’s presidency, unless Congress can pass a new spending bill or a continuing resolution before the current one expires on April 28.

Since Congress is currently on a two-week recess, there will be a sense of urgency to get a new bill passed once they reconvene on April 25. Leaders in both chambers would have four days to craft a new proposal that each side can agree on and get it on the president’s desk for Trump to sign.

If the Republicans control the White House, the Senate and the House of Representatives, why will it be so difficult to get an agreement on a spending bill?

Well, first of all, look at how difficult it was for the Republicans to agree on a bill to repeal and replace Obamacare.  At this point, it doesn’t look like that is going to happen at all.

More importantly, any bill to fund the government is going to require 60 votes in the Senate.  The “nuclear option” that the Republicans just used to push the Gorsuch Supreme Court nomination through is not available in this case under current Senate rules because a spending bill of this nature would not qualify.

So the Democrats have leverage, and they plan to use it to the maximum.  Senate Minority Leader Chuck Schumer is already promising to block any spending bill that includes funds for a border wall or that defunds Planned Parenthood…

The threat from Senate Minority Leader Chuck Schumer and other Democratic leaders sets up a climactic first showdown with the president, particularly with their inclusion of Trump’s signature border wall proposal.

“If Republicans insist on inserting poison pill riders such as defunding Planned Parenthood, building a border wall, or starting a deportation force, they will be shutting down the government and delivering a severe blow to our economy,” Schumer said in a statement.

Up until now, Trump hasn’t needed Democratic votes to stock his cabinet or advance the repeal of Obamacare, but a spending bill keeping the government open is subject to a 60-vote threshold in the Senate.

Do you understand what this means?

President Trump is going to be under an immense amount of pressure to end the government shutdown once it begins, but to do so will mean that he has to give up his goal of getting a border wall.

Do you think that Trump will just throw in the towel and forget about his beloved border wall after giving countless speeches promising one?

It is a game of chicken between Trump and the Democrats, and I don’t think that either side will give in easily.

Of even greater importance is the debate over the funding of Planned Parenthood.

There are members of the Freedom Caucus that will absolutely not vote for any spending bill that includes funding for Planned Parenthood.  But without the Freedom Caucus, there aren’t enough Republican votes to get a spending bill through the House of Representatives.

Alternatively, Senate Minority Leader Chuck Schumer is vowing that his party will block any funding bill that attempts to defund Planned Parenthood in the Senate.

If Planned Parenthood is not defunded now, it never will be defunded.  This is one of the most pivotal moments in recent U.S. political history, and the outcome is going to have extraordinary consequences for our nation.

For those that are optimistic that there will not be a government shutdown, do you actually expect me to believe that this battle over the funding of Planned Parenthood will somehow get resolved in just four days?

Give me a break.

And of course there are dozens of other major issues that have to be resolved as well.  For example, Senator McCain is promising note to vote for any bill unless it includes an enormous increase in military spending, while many Senate Democrats would be very much against such a move.

I don’t see any way that a government shutdown is going to be avoided at this point, and the longer it goes on the more financial markets are going to get rattled.

Meanwhile, we continue to get even more signs that a substantial slowdown has begun for the U.S. economy.  Last week, we learned that only 98,000 jobs were added in March, and that was only about half of what most analysts were expecting.

And since it takes approximately 150,000 jobs a month just to keep up with population growth, that means that we are losing ground.

At the same time, the Atlanta Fed’s GDPNow forecasting model is now projecting that U.S. GDP growth for the first quarter of 2017 will be just 0.6 percent on an annualized basis.

That is absolutely pathetic, and as I have said before, I wouldn’t be surprised at all if we actually end up with a negative number for the first quarter.

If we do indeed get a negative number for the first quarter and that is followed by another negative number for the second quarter, that will mean that a new recession has already started right now but we just haven’t gotten official confirmation yet.

And lots of other things are already happening which have not happened since the last recession.  For instance, this is the first time since the last financial crisis when there has been no growth for commercial and industrial lending for at least six months.

In addition, commercial bankruptcies spiked during the last recession, and now it is happening again…

Commercial bankruptcy filings, from corporations to sole proprietorships, spiked 28% in March from February, the largest month-to-month move in the data series of the American Bankruptcy Institute going back to 2012.

Of course consumer bankruptcies are rising at an alarming rate as well.  The following comes from Wolf Richter…

In December, bankruptcy filings rose 4.5% from a year earlier. In January they rose 5.4%. It was the first time consumer bankruptcies rose back-to-back since 2010. I called it “a red flag that’ll be highlighted only afterwards as a turning point.”

In March, consumer bankruptcy filings rose 4% year-over-year, to 77,900, the highest since March 2015, when 79,000 filings occurred, according to the American Bankruptcy Institute data.  The turning point has now been confirmed.

If you would like, I could keep talking about the bad economic news for a couple thousand more words.  U.S. credit card debt has just surpassed the one trillion dollar mark, a major crisis has arrived for the U.S. auto industry, thousands of retail stores are closing all over America, our pension funds are underfunded by trillions of dollars, and the U.S. national debt is now sitting at a grand total that is just shy of 20 trillion dollars.  The only reason that we have not crossed that 20 trillion dollar mark yet is because the debt ceiling deadline has already passed, and that is another thing that Congress needs to address very quickly if they want to avoid a major crisis.

Needless to say, the last thing that we need at this point is another war or two on top of everything else.

Unfortunately, a U.S. aircraft carrier strike group headed by the USS Carl Vinson is heading toward North Korea right at this moment, and Russia and Iran are promising to “respond with force” to any new U.S. attacks on Syria.  I will be writing quite a bit more about all of this on End Of The American Dream later today.

Those that were hoping for some sort of “reprieve” under Donald Trump can forget all about that now.  The pace of global events is really starting to accelerate, and the U.S. is already in a more precarious position than it was at any point in 2016.

The clouds have been building for a very long time, and now the storm is almost upon us.  I hope that you have been getting prepared, because a day of reckoning for the United States of America is closing in very rapidly.

The Next Subprime Crisis Is Here: 12 Signs That A Day Of Reckoning Has Arrived For The U.S. Auto Industry

In 2008, subprime mortgages almost single-handedly took down the entire financial system, and now a new subprime crisis is here.  In recent years, the auto industry has been able to boost sales by aggressively pushing people into auto loans that they cannot afford.  In particular, auto loans made to consumers with subprime credit have been accounting for an increasingly larger percentage of the market.  Unfortunately, when you make loans to people that should not be getting them, eventually a lot of those loans are going to start to go bad, and that is precisely what is happening now.  Meanwhile, automakers and dealers are starting to panic as sales have begun to fall and used car prices have started to crash.  If you work in the auto industry, you might remember how horrible the last recession was, and this new downturn could eventually turn out to be even worse.  The following are 12 signs that a day of reckoning has arrived for the U.S. auto industry…

#1 Seven out of the eight largest automakers in the United States fell short of their sales projections in March.

#2 Overall, U.S. auto sales so far in 2017 have been described as a “disaster” despite record spending on consumer incentives by automakers.

#3 Dealer inventories are now at the highest level that we have seen since the last financial crisis.  Why this is so troubling is because there are a whole lot of unsold vehicles just sitting there doing nothing, and this is becoming a major financial problem for many dealers.

#4 It now takes an average of 74 days before a dealer is able to sell a new vehicle.  This number is also the highest that it has been since the last financial crisis.

#5 Not only is Ford projecting that sales will fall this year, they are also projecting that sales will fall in 2018 as well.

#6 Used vehicle prices are already starting to decline dramatically…

The used-vehicle price index from the National Automobile Dealers Association posted a 3.8% decline in February compared to the prior month. NADA also said wholesale prices fell 1.6%.

#7 As I discussed yesterday, Morgan Stanley is projecting that used car prices “could crash by up to 50%” over the next four or five years.

#8 Right now, more than a million Americans are behind on their payments on their auto loans.  This is something that has not happened since the last financial crisis.

#9 In 2017, U.S. consumers are more “underwater” on their auto loans than they have ever been before.

#10 Subprime auto loan losses have soared to their highest level since the last financial crisis, and the delinquency rate on those loans has risen to the highest level that we have seen since the last financial crisis.  By now, I am sure that you are starting to notice a pattern in these data points.

#11 At this moment, approximately $200,000,000,000 has been loaned out by auto lenders to consumers with subprime credit.

#12 Just like with subprime mortgages in the run up to the last financial crisis, subprime auto loans have been bundled together and sold as “securities” to investors.  And just like last time around, this has turned out to be a recipe for disaster…

Many auto loans, including those considered subprime, are securitized and sold to investors. But Morgan Stanley recently reported that the share of auto securities tied to “deep subprime” loans – those given to borrowers with a FICO credit score below 550 — has risen from 5.1 percent in 2010 to 32.5 percent today. It said defaults on those bonds have risen significantly in the past five years.

Almost a quarter of the more than $1.1 trillion in U.S. auto loan debt is owed by subprime borrowers, and delinquency rates have hit their highest point in seven years.

In the old days, you could always count on the U.S. auto industry to bounce back eventually because of the economic strength of average U.S. consumers.

Unfortunately, the middle class in America is being systematically hollowed out by long-term economic trends that our leaders in Washington D.C. have consistently ignored.

We have become a nation of economic extremes.  There are more millionaires in this country than ever before, but meanwhile poverty is exploding in communities all over the country.

If you live in a prosperous area, things may be going great where you live for the moment.  But as Gallup has discovered, an all-time record high percentage of Americans are worrying “a great deal” about hunger and homelessness these days…

Over the past two years, an average of 67% of lower-income U.S. adults, up from 51% from 2010-2011, have worried “a great deal” about the problem of hunger and homelessness in the country. Concern has also increased among middle- and upper-income Americans, but they still worry far less than do lower-income Americans.

You may have plenty of money in your bank account, and so for you hunger and homelessness are not very big issues.  But for those that are just scraping by from month to month, having enough food and a place to sleep at night are top priorities.  Here is more from Gallup…

Americans at all income levels are expressing greater concern about hunger and homelessness, and it is the top worry among lower-income Americans, who are most likely to struggle to pay for adequate food and housing.

In addition to the woes of the auto industry, the retail industry is going through the worst wave of store closings in modern American history, pension funds are melting down all over the nation, and stocks are primed for a crash of epic proportions.  Things are lining up just right for the kind of scenario that I laid out in The Beginning Of The End, but unfortunately most people are not listening to the warnings.

The same thing happened just before the great financial crisis of 2008.  All of the warning signs were there well in advance, and many of the experts were warning about what was coming as early as 2005.  But because it did not happen immediately, a lot of people greatly mocked the warnings.

But then the fall of 2008 arrived and all of the mockers suddenly went silent.

As you can see from the numbers that I shared above, a new crisis has already arrived.

The only question now is how bad it will ultimately turn out to be.

As always, let us hope for the best, but let us also get prepared for the worst.

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