Debts

24 Reasons Why Millennials Are Screaming Mad About Our Unfair Economy

November 25, 2014November 11, 2014 by Michael

Do you want to know why Millennials seem so angry? We promised them that if they worked hard, stayed out of trouble and got good grades that they would be able to achieve the “American Dream”. We told them not to worry about accumulating very high levels of student loan debt because there would be good jobs waiting for them at the end of the rainbow once they graduated. Well, it turns out that we lied to them. Nearly half of all Millennials are spending at least half of their paychecks to pay off debt, more than 30 percent of them are living with their parents because they can’t find decent jobs, and this year the homeownership rate for Millennials sunk to a brand new all-time low. When you break U.S. adults down by age, our long-term economic decline has hit the Millennials the hardest by far. And yet somehow we expect them to bear the burden of providing Medicare, Social Security and other social welfare benefits to the rest of us as we get older. No wonder there is so much anger and frustration among our young people. The following are 24 reasons why Millennials are screaming mad about our unfair economy…

#1 The current savings rate for Millennials is negative 2 percent. Yes, you read that correctly. Not only aren’t Millennials saving any money, they are actually spending a good bit more than they are earning every month.

#2 A survey conducted earlier this year found that 47 percent of all Millennials are using at least half of their paychecks to pay off debt.

#3 For U.S. households that are headed up by someone under the age of 40, average wealth is still about 30 percent below where it was back in 2007.

#4 In 2005, the homeownership rate for U.S. households headed up by someone under the age of 35 was approximately 43 percent. Today, it is sitting at about 36 percent.

#5 One recent survey discovered that an astounding 31.1 percent of all U.S. adults in the 18 to 34-year-old age bracket are currently living with their parents.

#6 At this point, the top 0.1 percent of all Americans have about as much wealth as the bottom 90 percent of all Americans combined. Needless to say, there aren’t very many Millennials in that top 0.1 percent.

#7 Since Barack Obama has been in the White House, close to 40 percent of all 27-year-olds have spent at least some time unemployed.

#8 Only about one out of every five 27-year-olds owns a home at this point, and an astounding 80 percent of all 27-year-olds are paying off debt.

#9 In 2013, the ratio of what men in the 18 to 29-year-old age bracket were earning compared to what the general population was earning reached an all-time low.

#10 Back in the year 2000, 80 percent of all men in their late twenties had a full-time job. Today, only 65 percent do.

#11 In 2012, one study found that U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.

#12 Another study released back in 2011 discovered that U.S. households led by someone 65 years of age or older are 47 times wealthier than U.S. households led by someone 35 years of age or younger.

#13 Half of all college graduates in America are still financially dependent on their parents when they are two years out of college.

#14 In 1994, less than half of all college graduates left school with student loan debt. Today, it is over 70 percent.

#15 At this point, student loan debt has hit a grand total of 1.2 trillion dollars in the United States. That number has grown by about 84 percent just since 2008.

#16 According to the Pew Research Center, nearly four out of every ten U.S. households that are led by someone under the age of 40 are currently paying off student loan debt.

#17 In 2008, approximately 29 million Americans were paying off student loan debt. Today, that number has ballooned to 40 million.

#18 Since 2005, student loan debt burdens have absolutely exploded while salaries for young college graduates have actually declined…

The problem developing is that earnings and debt aren’t moving in the same direction. From 2005 to 2012, average student loan debt has jumped 35%, adjusting for inflation, while the median salary has actually dropped by 2.2%.

#19 According to CNN, 260,000 Americans with a college or professional degree made at or below the federal minimum wage last year.

#20 Even after accounting for inflation, the cost of college tuition increased by 275 percent between 1970 and 2013.

#21 In the years to come, much of the burden of paying for Medicare for our aging population will fall on Millennials. It is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025. In addition, it has been estimated that Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for every single household in the United States.

#22 In the years to come, much of the burden of paying for our exploding Medicaid system will fall on Millennials. Today, more than 70 million Americans are on Medicaid, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

#23 In the years to come, much of the burden of paying for our massive Ponzi scheme known as Social Security will fall on Millennials. Right now, there are more than 63 million Americans collecting Social Security benefits. By 2035, that number is projected to soar to an astounding 91 million. In 1945, there were 42 workers for every retiree receiving Social Security benefits. Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.

#24 Our national debt is currently sitting at a grand total of $17,937,617,036,693.09. It is on pace to roughly double during the Obama years, and Millennials are expected to service that debt for the rest of their lives.

Yes, there are certainly some Millennials that are flat broke because they are lazy and irresponsible.

But there are many others that have tried to do everything right and still find that they can’t get any breaks. For example, Bloomberg recently shared the story of a young couple named Jason and Jessica Alinen…

The damage inflicted on U.S. households by the collapse of the housing market and recession wasn’t evenly distributed. Just ask Jason and Jessica Alinen.

The couple, who live near Seattle, declared bankruptcy in 2011 when the value of the house they then owned plunged to less than $200,000 from the $349,000 they paid for it four years earlier, just as the economic slump was about to start. Jason even stopped getting haircuts to save money.

“We thought we’d have a white picket fence, two kids, two dogs, and we’d have $100,000 in equity,” said Jason, 33, who does have two children. “It’s just really frustrating.”

Can you identify with them?

Most young Americans just want to work hard, buy a home and start a family.

But for millions of them, that dream might as well be a million miles away right now.

Unfortunately, most of them have absolutely no idea why this has happened.

Many of them end up blaming themselves. Many of them think that they are not talented enough or that they didn’t work hard enough or that they don’t know the right people.

What they don’t know is that the truth is that decades of incredibly foolish decisions are starting to catch up with us in a major way, and they just happen to be caught in the crossfire.

Sadly, instead of becoming informed about what is happening to our country, a very large percentage of our young people are absolutely addicted to entertainment instead.

Below, I want to share with you a video that I recently came across. You can find it on YouTube right here. A student at Texas Tech University recently asked some of her classmates a series of questions. When they were asked about Brad Pitt or Jersey Shore they knew the answers right away. But when they were asked who won the Civil War or who the current Vice-President of the United States is, they deeply struggled. I think that this video says a lot about where we are as a society today…

So what do you think about all of this?

Please feel free to add to the discussion by posting a comment below…

The Economy Of The Largest Superpower On The Planet Is Collapsing Right Now

November 5, 2014 by Michael

How do you fix a superpower with exploding levels of debt, that has a rapidly aging population, that consumes far more wealth than it produces, and that has scores of zombie banks that could collapse at any moment. You might think that I am talking about the United States, but I am actually talking about Europe. You see, the truth is that the European Union has a larger population than the United States does, it has a larger economy than the United States does, and it has a much larger banking system than the United States does. Most of the time I write about the horrible economic problems that the U.S. is facing, but without a doubt economic conditions in Europe are even worse at the moment. In fact, there are many (including the Washington Post) that are calling what is happening in Europe a full-blown “depression”. Sadly, this is probably only just the beginning. In the months to come things in Europe are likely to get much worse.

First of all, let’s take a look at unemployment. If the U.S. was using honest numbers, the official unemployment rate would probably be somewhere close to 10 percent. But in many nations in Europe, the official unemployment rate is already above the ten percent mark…

France: 10.2%

Poland: 11.5%

Italy: 12.6%

Portugal: 13.1%

Spain: 23.6%

Greece: 26.4%

The official unemployment rate for the eurozone as a whole is currently 11.5 percent. The lack of good jobs is causing the middle class to shrink all over Europe, and more people than ever are becoming dependent on government assistance. European nations are well known for their generous welfare programs, but all of this spending is causing debt to GDP ratios to absolutely explode…

Spain: 92.1%

France: 92.2%

Belgium: 101.5%

Portugal: 129.0%

Italy: 132.6%

Greece: 174.9%

At the same time, the value of the euro has been steadily declining over the last six months. This is significantly reducing the purchasing power that European families have…

Many believe that the euro will ultimately go much lower than this. Nations such as Greece and Spain are already experiencing deflation, and the inflation rates in Germany and France are both currently below one percent. If the European Central Bank starts injecting lots of fresh euros into the system to combat this perceived problem, that will lift the level of inflation but it will also further erode the value of the euro.

In the long run, it would not be a surprise to see the U.S. dollar at parity with the euro.

When it happens, remember where you heard it.

The Europeans are scared to death of a deflationary depression, but that is precisely where the long-term economic trends are taking them right now. The following is from a recent Forbes article…

Market consensus believes that the eurozone is edging toward that moment when the scourge of deflation actually becomes a crippling reality. Eurozone data is constantly reminding investors that the region’s economy is barely limping along, as companies slash selling prices in a vain attempt to improve sales in the face of a weakening economy and evaporating new orders. Corporate deflationary reactions like this only hurt a company’s bottom line by squeezing profit margins even further. The obvious knock-on effect will limit resources for hiring and investing, which in turn only dampens any chances of an economic rebound, again putting the region into a bigger hole.

In a desperate attempt to avoid widespread deflation in Europe, the ECB will inevitably take action at some point.

It may not happen immediately, but when it does it will be yet another salvo in the emerging global currency war.

Speaking of currencies, it is being reported that Russia is actually considering legislation that will ban the circulation of the U.S. dollar in that nation. The following is from an article that was posted on Infowars…

Russia may ban the circulation of the United States dollar.

The State Duma has already been submitted a relevant bill banning and terminating the circulation of USD in Russia, APA’s Moscow correspondent reports.

If the bill is approved, Russian citizens will have to close their dollar accounts in Russian banks within a year and exchange their dollars in cash to Russian ruble or other countries’ currencies.

Otherwise their accounts will be frozen and cash dollars levied by police, customs, tax, border, and migration services confiscated.

That is not good news for the U.S. dollar at all.

Expect wild shifts in the foreign exchange markets in the months and years to come. Turbulent times are ahead for the dollar, the euro and the yen.

Getting back to Europe, let us hope that things stabilize over there – at least for a while.

But that might not happen. In fact, things could take a turn for the worse at any moment.

Most people don’t realize this, but European banks are even shakier than U.S. banks, and that is saying a lot.

For example, the largest bank in the strongest economy in Europe is Deutsche Bank. At this point, Deutsche Bank has approximately 75 trillion dollars worth of exposure to derivatives. That amount of money is about 20 times the size of German GDP, and it is more exposure than any U.S. bank has.

And Deutsche Bank is far from alone. All over Europe there are zombie banks that are essentially insolvent. Many of them are being propped up by their governments. Those governments know that if those banks failed that it would make their economic problems even worse.

Just like in the United States, most economic activity in Europe is fueled by debt. So those banks are needed to provide mortgages, loans and credit cards to average citizens and businesses. Unfortunately, bad debt levels and business failures continue to shoot up all over Europe.

The system is breaking down, and nobody is quite sure what is going to happen next.

So keep an eye on Europe. In particular, keep an eye on Italy. I have a feeling that big economic news is about to start coming out of Italy, and it won’t be good.

In 2014, we have been experiencing “the calm before the storm”.

But 2015 is right around the corner, and it promises to be extremely “interesting”.

Guess How Much Americans Plan To Spend On Christmas And Halloween This Year…

October 27, 2014October 27, 2014 by Michael

It is that magical time of the year for retailers. The period between mid-October and late December can often make the difference between success or failure in the retail industry, and this year will be no exception. As you will see below, it is being projected that Americans will spend a massive amount of money this holiday season. In fact, what Americans plan to spend on Christmas this year is greater than the yearly GDP of the entire nation of Sweden. So isn’t this good economic news? Shouldn’t we be happy that Americans are opening up their wallets so eagerly? Well, it depends how you look at it. Even though our spending is increasing, our incomes are not. As I discussed the other day, 50 percent of American workers make less than 28,031 dollars a year and incomes have been stagnant for years. That means that any increases in spending must be funded by more debt, and that is not good news at all.

In 2014, approximately 70 percent of all Americans will participate in Halloween. It seems like with each passing year this dark holiday become even more popular, and before it is all said and done it is being projected that Americans will spend a whopping 7.4 billion dollars this time around…

Kicking off the end of year spending season is Halloween. Just how much do Americans spend on trick-or-treating and other Halloween festivities? The National Retail Federation (NRF) forecasts total Halloween spending—including candy, costumes, and decorations—to come in at $7.4 billion this year.

That 7.4 billion dollars includes 2 billion dollars for Halloween candy and 350 million dollars for pet Halloween costumes.

Yes, you read that correctly. We are collectively going to spend 350 million dollars on Halloween costumes for our cats and dogs.

Overall, spending on Halloween has risen by more than 55 percent since 2005. It just seems like Americans can’t get enough of this particular holiday.

But of course what Americans spend on Halloween is not even worth comparing to what Americans spend on Christmas.

According to the National Retail Federation, more than 90 percent of Americans celebrate either Christmas, Kwanza or Hanukkah.

And Christmas in particular has become virtually synonymous with materialism. This year, the National Retail Federation is projecting that Americans will spend more than 600 billion dollars just on Christmas.

That represents a huge chunk of our GDP as a nation.

Most of that money will be spent on Christmas gifts. According to a Gallup survey that was just released, the average U.S. adult plans to spend 781 dollars on Christmas gifts this year, which is significantly up from last year…

Americans’ initial estimates of the total amount they will spend on Christmas gifts this year point to an above-average holiday season for the nation’s retailers. While Gallup’s October spending forecast is a warm-up to its key measure in November, it finds Americans expecting to spend $781, on average, up from $704 last November.

Of course holiday spending does not end there. There are trees to put up, packages to send out and decorations to buy. The following numbers are from a Forbes article about what an average American typically spends during a Christmas season…

Christmas Tree: $41.50

Cards And Postage: $32.43

Floral Arrangements: $22.61

Food And Candy: $95.04

Decorations: $51.43

Travel: $960.50

So where is all of this money coming from?

That is a key question.

If our incomes were going up, all of this spending might be good news. But as the following chart from the Federal Reserve demonstrates, that is not the case…

Our incomes are stagnant at best. But Americans always like to party as if it were the best of times. So they will pull out their credit cards and spend what they feel they need to spend in order to feel happy once again this year.

But deep down most people realize that this debt-fueled party cannot last forever.

Deep down most people realize that we have some incredibly serious long-term problems that need to be fixed.

Sadly, no matter which political party occupies the White House, and no matter which political party controls Congress, our long-term problems only seem to get even worse.

As our problems have multiplied, over time Americans have become angrier and angrier.

And right now is election season, and so that is very bad news for Democrats…

Nearly 7 in 10 Americans are angry at the direction the country is headed and 53% of Americans disapprove of President Barack Obama’s job performance, two troubling signs for Democrats one week before the midterm elections, a new CNN/ORC International Poll shows.

Democrats are battling to try and save the Senate majority, while hoping to prevent more losses in the House, which the GOP controls by a 234 to 201 margin.

In the Senate, Republicans need a net gain of six seats, and several state polls in the past month of contested races show that Democrats are in danger of losing control of the majority, and thus Congress.

If the Republicans do take control of both houses of Congress, will that fundamentally change the direction of the country?

I wish that I could believe that, but at this point most Republicans are virtually indistinguishable from most Democrats.

In other words, it is very hard to tell them apart.

As a nation, we are steamrolling toward a date with oblivion, but everyone is trying to put such a happy face on things.

Well, enjoy this time of relative stability while you can, because it is going to end way too soon.

The U.S. Government Is Borrowing About 8 Trillion Dollars A Year

September 29, 2014September 29, 2014 by Michael

I know that headline sounds completely outrageous. But it is actually true. The U.S. government is borrowing about 8 trillion dollars a year, and you are about to see the hard numbers that prove this. When discussing the national debt, most people tend to only focus on the amount that it increases each 12 months. And as I wrote about recently, the U.S. national debt has increased by more than a trillion dollars in fiscal year 2014. But that does not count the huge amounts of U.S. Treasury securities that the federal government must redeem each year. When these debt instruments hit their maturity date, the U.S. government must pay them off. This is done by borrowing more money to pay off the previous debts. In fiscal year 2013, redemptions of U.S. Treasury securities totaled $7,546,726,000,000 and new debt totaling $8,323,949,000,000 was issued. The final numbers for fiscal year 2014 are likely to be significantly higher than that.

So why does so much government debt come due each year?

Well, in recent years government officials figured out that they could save a lot of money on interest payments by borrowing over shorter time frames. For example, it costs the government far more to borrow money for 10 years than it does for 1 year. So a strategy was hatched to borrow money for very short periods of time and to keep “rolling it over” again and again and again.

This strategy has indeed saved the federal government hundreds of billions of dollars in interest payments, but it has also created a situation where the federal government must borrow about 8 trillion dollars a year just to keep up with the game.

So what happens when the rest of the world decides that it does not want to loan us 8 trillion dollars a year at ultra-low interest rates?

Well, the game will be over and we will be in a massive amount of trouble.

I am about to share with you some numbers that were originally reported by CNS News. As you can see, far more debt is being redeemed and issued today than back during the middle part of the last decade…

2013

Redeemed: $7,546,726,000,000

Issued: $8,323,949,000,000

Increase: $777,223,000,000

2012

Redeemed: $6,804,956,000,000

Issued: $7,924,651,000,000

Increase: $1,119,695,000,000

2011

Redeemed: $7,026,617,000,000

Issued: $8,078,266,000,000

Increase: $1,051,649,000,000

2010

Redeemed: $7,206,965,000,000

Issued: $8,649,171,000,000

Increase: $1,442,206,000,000

2009

Redeemed: $7,306,512,000,000

Issued: $9,027,399,000,000

Increase: $1,720,887,000,000

2008

Redeemed: $4,898,607,000,000

Issued: $5,580,644,000,000

Increase: $682,037,000,000

2007

Redeemed: $4,402,395,000,000

Issued: $4,532,698,000,000

Increase: $130,303,000,000

2006

Redeemed: $4,297,869,000,000

Issued: $4,459,341,000,000

Increase: $161,472,000,000

The only way that this game can continue is if the U.S. government can continue to borrow gigantic piles of money at ridiculously low interest rates.

And our current standard of living greatly depends on the continuation of this game.

If something comes along and rattles this Ponzi scheme, life in America could change radically almost overnight.

In the United States today, we have a heavily socialized system that hands out checks to nearly half the population. In fact, 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government each month according to the U.S. Census Bureau. And it is hard to believe, but Americans received more than 2 trillion dollars in benefits from the federal government last year alone. At this point, the primary function of the federal government is taking money from some people and giving it to others. In fact, more than 70 percent of all federal spending goes to “dependence-creating programs”, and the government runs approximately 80 different “means-tested welfare programs” right now. But the big problem is that the government is giving out far more money than it is taking in, so it has to borrow the difference. As long as we can continue to borrow at super low interest rates, the status quo can continue.

But a Ponzi scheme like this can only last for so long.

It has been said that when the checks stop coming in, chaos will begin in the streets of America.

The looting that took place when a technical glitch caused the EBT system to go down for a short time in some areas last year and the rioting in the streets of Ferguson, Missouri this year were both small previews of what we will see in the future.

And there is no way that we will be able to “grow” our way out of this problem.

As the Baby Boomers continue to retire, the amount of money that the federal government is handing out each year is projected to absolutely skyrocket. Just consider the following numbers…

–Back in 1965, only one out of every 50 Americans was on Medicaid. Today, more than 70 million Americans are on Medicaid, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

–When Medicare was first established, we were told that it would cost about $12 billion a year by the time 1990 rolled around. Instead, the federal government ended up spending $110 billion on the program in 1990, and the federal government spent approximately $600 billion on the program in 2013.

–It is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

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

–In 1945, there were 42 workers for every retiree receiving Social Security benefits. Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.

–Right now, there are approximately 63 million Americans collecting Social Security benefits. By 2035, that number is projected to soar to an astounding 91 million.

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

–The U.S. government is facing a total of 222 trillion dollars in unfunded liabilities during the years ahead. Social Security and Medicare make up the bulk of that.

Yes, things seem somewhat stable for the moment in America today.

But the same thing could have been said about 2007. The stock market was soaring, the economy seemed like it was rolling right along and people were generally optimistic about the future.

Then the financial crisis of 2008 erupted and it seemed like the world was going to end.

Well, the truth is that another great crisis is rapidly approaching, and we are in far worse shape financially than we were back in 2008.

Don’t get blindsided by what is ahead. Evidence of the coming catastrophe is all around you.

The U.S. National Debt Has Grown By More Than A Trillion Dollars In The Last 12 Months

September 14, 2014September 14, 2014 by Michael

The idea that the Obama administration has the budget deficit under control is a complete and total lie. According to the U.S. Treasury, the federal government has officially run a deficit of 589 billion dollars for the first 11 months of fiscal year 2014. But this number is just for public consumption and it relies on accounting tricks which massively understate how much debt is actually being accumulated. If you want to know what the real budget deficit is, all you have to do is go to a U.S. Treasury website which calculates the U.S. national debt to the penny. On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32. As I write this, the U.S. national debt is sitting at $17,742,108,970,073.37. That means that the U.S. national debt has actually grown by more than a trillion dollars in less than 12 months. We continue to wildly run up debt as if there is no tomorrow, and by doing so we are destroying the future of this nation.

The chart that I have posted below shows the exponential growth of the U.S. national debt over the past several decades. Anyone that would characterize this as “under control” is lying to you…

This is the greatest government debt bubble in the history of the world, but very few people seem to have any desire to do anything about this anymore. We are literally gorging on debt, and most Americans seem to think that it is just fine and dandy.

Perhaps that it is because we have never really experienced any serious consequences for going into so much debt yet.

But when it comes to running up debt, a day of reckoning always comes eventually.

Just ask Greece.

And the absolutely insane spending policies of this administration and this Congress are hastening the day when our day of reckoning will arrive.

Consider the following facts…

-The U.S. national debt has increased by more than 7 trillion dollars since Barack Obama has been in the White House. By the time Obama’s second term is over, we will have accumulated about as much new debt under his leadership than we did under all of the other U.S. presidents in all of U.S. history combined.

-The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first established in 1913.

-If the U.S. national debt was reduced to a stack of one dollar bills it would circle the earth at the equator 45 times.

-Right now, the United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.

-In August, the average rate of interest on the government’s marketable debt was 2.028 percent. In January 2000, the average rate of interest on the government’s marketable debt was 6.620 percent. If we got back to that level today, we would be paying well over a trillion dollars a year just in interest on the national debt.

-At this point the U.S. government has accumulated more than 200 trillion dollars of unfunded liabilities that will need to be paid in future years. In other words, we have made more than 200 trillion dollars worth of promises that we do not have money for yet.

Thomas Jefferson once said that “the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”

What we are doing to future generations is absolutely unconscionable. We are stealing trillions upon trillions of dollars from our children and our grandchildren, and we are willingly consigning them to a lifetime of debt slavery.

I have said this before, but it bears repeating. If future generations get the chance, they will look back and curse us for what we have done to them.

And shame on anyone that would dare to suggest that we should continue to run up more debt that future generations will be expected to repay.

But government debt is far from the only massive debt bubble that we are dealing with as a country.

40 years ago, the total amount of debt in our nation (all government debt plus all business debt plus all individual debt) was sitting at a grand total of about 2.3 trillion dollars.

Today, that total has grown to 59.4 trillion dollars.

As the chart posted below shows, our total debt bubble is now more than 25 times larger than it was just 40 years ago…

If you were to take all forms of debt in our country and divide it up equally to each person, the average family of four would owe approximately $735,000.

This is not anywhere close to being sustainable, but most Americans don’t seem to care. They just continue to recklessly run up even more debt.

However, there are signs that we are starting to hit a wall with all of this debt.

For example, an astounding 35 percent of all Americans have debts that are so overdue that they have been referred to collection agencies.

Our nation has become an ocean of red ink from sea to shining sea, and the only way to keep the bubble from bursting is for the total amount of debt to continue to grow much faster than the overall economy is growing.

Obviously this cannot happen indefinitely, and when this house of cards comes crashing down it is going to be absolutely horrific. For much more on all of this please see my previous article entitled “The United States Of Debt: Total Debt In America Hits A New Record High Of Nearly 60 Trillion Dollars“.

The big question is how long our “bubble economy” can keep going before it finally collapses.

It has gotten to the point where even some of the biggest banks in the world are admitting that what we have been doing is completely and totally unsustainable. Just consider the following excerpt from a recent article by Joshua Krause…

*****

Recently, strategists for Deutsche Bank released a startling study in regards to government debt. They decided to investigate whether or not the bond market is currently in a bubble. What they found was, unlike previous eras, the past 20 years has seen no lag between economic booms and busts:

It has long been our view that over the last couple of decades the global economy has rolled from bubble to bubble with excesses never fully being allowed to unravel. Instead aggressive policy responses have encouraged them to roll into new bubbles.

This has arguably kept the modern financial system as we know it a going concern. Clearly there have always been bubbles formed through history but has there been a period like the last 20 years where the bursting of one bubble has consistently led directly to the formation of the next?

Essentially, our current system has been dying a very slow death. It’s running out of steam.

*****

Sadly, most Americans have no idea that we are living in a giant debt-fueled bubble that has a limited lifespan.

Most Americans just assume that since the politicians tell them that everything is going to be okay that they don’t need to be concerned about any of this.

But every single day our debts get even larger and our long-term financial problems get even worse.

Someday this bubble is going to burst and then all hell will break loose.

It is just a matter of time.

21 Ways To End The Phrase ‘Americans Are So Broke…’

July 29, 2014 by Michael

Did you know that 77 million Americans have unpaid debts that are “in collections” and that Congress is actually thinking about letting post offices offer payday loans? We live in a country where almost everyone is drowning in debt and where most people are either flat broke or very close to flat broke. Years ago, “your Mama is so broke” jokes were all the rage, and at the rate we are going they could make a big comeback. Some of my favorites were “your Mama is so broke she went to McDonald’s and put a milkshake on layaway” and “your Mama is so broke your family ate cereal with a fork to save milk”. Unfortunately, the facts that I am about to share with you are not funny at all. In fact, they are quite sobering. Yes, things are going fairly well for the elitists that live in the good areas of New York City, Washington D.C. and San Francisco right now, but most of the country is deeply struggling as our economic fundamentals continue to crumble. Please share these numbers with as many people as you can, because we need people to understand that there has not been an “economic recovery” for most of America. In fact, in many ways things just continue to get even worse. The following are 21 ways to end the phrase “Americans are so broke”…

1. Americans are so broke that about a third of them have debt collectors on their heels. One recent study discovered that more than one out of every three adults in the United States has an unpaid debt that is “in collections“. That is a total of 77 million people. In other words, the debt collection business in America is absolutely booming.

2. Americans are so broke that Congress is now actually considering allowing post offices to provide payday loans and check cashing services.

3. Americans are so broke that they are keeping their vehicles longer than ever. The average age of vehicles on America’s roads recently set a new all-time high of 11.4 years.

4. Americans are so broke that car dealers are having to go to extreme lengths to get new customers. Last year, one out of every four auto loans in the United States was made to someone with subprime credit.

5. Americans are so broke that 52 percent of them cannot even afford the homes that they are living in right now.

6. Americans are so broke that they are falling farther behind on their student loans than ever. The total amount of student loan debt in the U.S. has now reached a whopping 1.2 trillion dollars, and approximately seven million Americans are in default on their student loans at this point.

7. Young Americans are so broke that half of all college graduates are still relying on their parents financially when they are two years out of school.

8. Young Americans are so broke that only 36 percent of American adults under the age of 35 currently own a home. That is the lowest level that has ever been recorded.

9. Americans are so broke that many of them can’t even afford to shop at Wal-Mart and dollar stores anymore…

Discount stores are slowly dying.

Yesterday, Dollar Tree announced it would buy Family Dollar, a chain that is in the process of closing hundreds of stores and firing workers.

Other discount stores have been struggling as well, writes Heidi Moore at The Guardian. Fashion discounter Loehmann’s filed for bankruptcy, while Wal-Mart’s sales have declined for the past five quarters.

“There’s just not enough money deployed by American families to keep all the discount chains in business,” Moore writes.

10. Americans are so broke that they are running up record levels of debt. Overall, U.S. households are 11.68 trillion dollars in debt right now.

11. Americans are so broke that the wealth of the “typical American household” has fallen by 36 percent over the past decade.

12. Americans are so broke that one out of every four part-time workers in America is living below the poverty line.

13. Americans are so broke that more than 37 million Americans are now being served by food pantries and soup kitchens.

14. Americans are so broke that there are 49 million Americans that are dealing with food insecurity.

15. Americans are so broke that the number of people on food stamps has increased by about 14 million while Obama has been in the White House. Ten years ago, the number of women in the U.S. that had jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin. But now the number of women in the U.S. on food stamps actually exceeds the number of women that have jobs.

16. Americans are so broke that the U.S. government has had to spend an astounding 3.7 trillion dollars on welfare programs over the past five years.

17. Americans are so broke that more than 20 percent of all children in the U.S. are living in poverty.

18. Americans are so broke that we have a record number of kids sleeping in the streets. In fact, we have more than a million public school children that are homeless at this point.

19. Americans are so broke that 76 percent of all Americans are living paycheck to paycheck.

20. Americans are so broke that 26 percent of Americans have absolutely no emergency savings whatsoever.

21. Americans are so broke that approximately two-thirds of all Americans do not have enough money saved up to cover six months of expenses if an emergency arose.

If things are this bad now, during the so-called “economic recovery”, how bad will things get during the next major economic downturn?

Unfortunately, most Americans have been lulled into a false sense of security. The financial crisis of 2008 seems like ancient history to most of them now, and most people appear to believe that our leaders have “fixed” whatever was wrong the last time.

Of course that is not the case at all. In fact, our long-term problems have just continued to grow since then.

The truth is that what we are experiencing right now is about as good as things are going to get for the U.S. economy. When the next crisis arrives, all of the numbers in the list above are going to rapidly get a lot worse.

So enjoy the rest of this “bubble” while you still can. It certainly will not last for too much longer.

America’s Insatiable Demand For More Expensive Cars, Larger Homes And Bigger Debts

June 2, 2014 by Michael

One of the things that this era of American history will be known for is conspicuous consumption. Even though many of us won’t admit it, the truth is that almost all of us want a nice vehicle and a large home. They say that “everything is bigger in Texas”, but the same could be said for the entire nation as a whole. As you will see below, the size of the average new home has just hit a brand new record high and so has the size of the average auto loan. In the endless quest to achieve “the American Dream”, Americans are racking up bigger debts than ever before. Unfortunately, our paychecks are not keeping up and the middle class in the United States is steadily shrinking. The disparity between the lifestyle that society tells us that we ought to have and the size of our actual financial resources continues to grow. This is leading to a tremendous amount of frustration among those that can’t afford to buy expensive cars and large homes.

I remember the days when paying for a car over four years seemed like a massive commitment. But now nearly a quarter of all auto loans in the U.S. are extended out for six or seven years, and those loans have gotten larger than ever…

In the latest sign Americans are increasingly comfortable taking on more debt, auto buyers borrowed a record amount in the first quarter with the average monthly payment climbing to an all-time high of $474.

Not only that, buyers also continued to spread payments out over a longer period of time, with 24.8 percent of auto loans now coming with payment terms between six and seven years according to a new report from Experian Automotive.

That’s the highest percentage of 6 and 7-year loans Experian has ever recorded in a quarter.

Didn’t the last financial crisis teach us about the dangers of being overextended?

During the first quarter 0f 2014, the size of the average auto loan soared to an all-time record $27,612.

But if you go back just five years ago it was just $24,174.

And because we are taking out such large auto loans that are extended out over such a long period of time, we are now holding on to our vehicles much longer.

According to CNBC, Americans now keep their vehicles for an average of six years and one month.

Ten years ago, it was just four years and two months.

My how things have changed.

And consumer credit as a whole has also reached a brand new all-time record high in the United States.

Consumer credit includes auto loans, but it doesn’t include things like mortgages. The following is how Investopedia defines consumer credit…

Consumer credit is basically the amount of credit used by consumers to purchase non-investment goods or services that are consumed and whose value depreciates quickly. This includes automobiles, recreational vehicles (RVs), education, boat and trailer loans but excludes debts taken out to purchase real estate or margin on investment accounts.

As you can see from the chart below, Americans were reducing their exposure to consumer credit for a little while after the last financial crisis struck, but now it is rapidly rising again at essentially the same trajectory as before…

Have we learned nothing?

Meanwhile, America also seems to continue to have an insatiable demand for even larger homes.

According to Zero Hedge, the size of the average new home in the United States has just hit another brand new record high…

There was a small ray of hope just after the Lehman collapse that one of the most deplorable characteristics of US society – the relentless urge to build massive McMansions (funding questions aside) – was fading. Alas, as the Census Bureau today confirmed, that normalization in the innate desire for bigger, bigger, bigger not only did not go away but is now back with a bang.

According to just released data, both the median and average size of a new single-family home built in 2013 hit new all time highs of 2,384 and 2,598 square feet respectively.

And while it is known that in absolute number terms the total number of new home sales is still a fraction of what it was before the crisis, the one strata of new home sales which appears to not only not have been impacted but is openly flourishing once more, are the same McMansions which cater to the New Normal uberwealthy (which incidentally are the same as the Old Normal uberwealthy, only wealthier) and which for many symbolize America’s unbridled greed for mega housing no matter the cost.

There is certainly nothing wrong with having a large home.

But if people are overextending themselves financially, that is when it becomes a major problem.

Just remember what happened back in 2007.

And just like prior to the last financial crisis, Americans are treating their homes like piggy banks once again. Home equity lines of credit are up 8 percent over the past 12 months, and homeowners are increasingly being encouraged to put their homes at risk to fund their excessive lifestyles.

But there has been one big change that we have seen since the last financial crisis.

Lending standards have gotten a lot tougher, and many younger adults find that they are not able to buy homes even though they would really like to. Stifled by absolutely suffocating levels of student loan debt, many of these young adults are putting off purchasing a home indefinitely. The following is an excerpt from a recent CNN article about this phenomenon…

The Millennial generation is great at many things: texting, social media, selfies. But buying a home? Not so much.

Just 36% of Americans under the age of 35 own a home, according to the Census Bureau. That’s down from 42% in 2007 and the lowest level since 1982, when the agency began tracking homeownership by age.

It’s not all their fault. Millennials want to buy homes — 90% prefer owning over renting, according to a recent survey from Fannie Mae.

But student loan debt, tight lending standards and stiff competition have made it next to impossible for many of these younger Americans to make the leap.

This is one of the primary reasons why homeownership in America is declining.

A lot of young adults would love to buy a home, but they are already financially crippled from the very start of their adult lives by student loan debt. In fact, the total amount of student loan debt is now up to approximately 1.1 trillion dollars. That is even more than the total amount of credit card debt in this country.

We live in a debt-based system which is incredibly fragile.

We experienced this firsthand during the last financial crisis.

But we just can’t help ourselves.

We have always got to have more, and society teaches us that if we don’t have enough money to pay for it that we should just go into even more debt.

Unfortunately, just as so many individuals and families have found out in recent years, eventually a day of reckoning arrives.

And a day of reckoning is coming for the nation as a whole at some point as well.

You can count on that.

19 Signs That The U.S. Consumer Is Tapped Out

March 13, 2014 by Michael

You can’t get blood out of a rock. Traditionally the United States has had a consumer-driven economy, but now years of declining incomes and rising debts are really starting to catch up with us. In order to have an economy that is dependent on consumer spending, you need to have a large middle class. Unfortunately, the U.S. middle class is steadily shrinking, and unless that trend is reversed we are going to see massive economic changes in this country. For example, in poor neighborhoods all over America we are seeing bank branches, car dealerships and retail stores close down at an alarming rate. If you didn’t know better, you might be tempted to think that “Space Available” was the hottest new retailer in some areas of the nation. On the other hand, if you live in San Francisco, New York City or Washington D.C., things are pretty good for the moment. But as a whole, the condition of the U.S. consumer continues to decline. Incomes are going down, the cost of living is going up, and debts are skyrocketing. The following are 19 signs that the U.S. consumer is tapped out…

#1 Real disposable income per capita continues to fall. In the fourth quarter of 2012, it was sitting at $37,265. By the time that the fourth quarter of 2013 had come around, it had dropped to $36,941. That means that average Americans have less money to go shopping with than they did previously.

#2 In January, real disposable income in the U.S. experienced the largest year over year decline that we have seen since 1974.

#3 As disposable income decreases, major retailers are closing thousands of stores all over the country. Some are even calling this “a retail apocalypse“.

#4 From September 2013 to January 2014, the personal saving rate in the United States dropped by a staggering 16 percent.

#5 During the fourth quarter of 2013, we witnessed the largest increase in consumer debt in this country that we have seen since 2007.

#6 Fewer Americans are applying for mortgages these days. In fact, the MBA Purchase Applications Index is now the lowest that it has been since 1995.

#7 Overall, the rate of homeownership in the United States has fallen for eight years in a row.

#8 Many Americans are finding it increasingly difficult to afford a new car or truck. The following comes from a recent CNBC article…

A new study shows the average household in 24 of America’s 25 largest metropolitan areas cannot afford to pay for the average priced new car or truck.

“Just because you can manage the monthly payment doesn’t mean you should let a $30,000 or $40,000 ride gobble up such a huge share of your paycheck,” said Mike Sante, managing editor of Interest.com. “Many people are spending money on a car payment that they could be saving.”

#9 Incredibly, 56 percent of all Americans now have “subprime credit” at this point.

#10 Total consumer credit has risen by a whopping 22 percent over the past three years.

#11 In the third quarter of 2007, the student loan delinquency rate was 7.6 percent. Today, it is up to 11.5 percent.

#12 Overall, U.S. consumers are $11,360,000,000,000 in debt.

#13 While Barack Obama has been in the White House, median household income in the United States has fallen for five years in a row.

#14 U.S. workers are taking home the smallest share of the income pie that has ever been recorded.

#15 One recent study found that about 60 percent of the jobs that have been “created” since the end of the last recession pay $13.83 or less an hour.

#16 Middle-wage jobs accounted for 60 percent of the jobs lost during the last recession, but they have accounted for only 22 percent of the jobs created since then.

#17 According to one recent survey, only 35 percent of all Americans say that they are better off financially than they were a year ago.

#18 In 2008, 25 percent of all Americans in the 18 to 29-year-old age bracket considered themselves to be “lower class”. In 2014, an astounding 49 percent of them do.

#19 The poverty rate in America has been at 15 percent or above for 3 consecutive years. That is the first time that has happened since 1965.

Despite what the mainstream media keeps telling them, most Americans know on a gut level that there is something fundamentally wrong with our economy.

According to Gallup, “Unemployment/Jobs” is the number one issue that Americans care about these days and the “Economy in general” is the number three issue that Americans care about these days.

Most people just want to work hard, make a decent living and take care of their families.

Sadly, that is becoming increasingly difficult to do.

And the numbers that I have shared above only tell part of the story. For a more personal side to all of this, I encourage you to read my previous article entitled “10 Stories From The Cold, Hard Streets Of America That Will Break Your Heart” if you have not done so already.

The really bad news is that this is about as good as things are going to get for the U.S. economy. The long-term trends that are eating away at our economy like cancer are intensifying, and our “leaders” just continue to act as if “business as usual” will somehow get the job done.

Most of them don’t even realize that time is running out.

As I discussed yesterday, there is a lot of evidence that the massive financial bubble that the Federal Reserve has inflated is getting ready to burst.

When the next great financial crisis does strike, it is going to be absolutely disastrous. We are in far worse financial shape than we were back then, and this next round of financial trauma could truly be the “knockout blow” for the U.S. economy.

Let us hope for the best, but let us also prepare for the worst.

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