Debts

QE3? Several Top Federal Reserve Officials Seem To Think That More Quantitative Easing Is Necessary

The end of QE2 is still several months away and yet quite a few top Federal Reserve officials are already hinting that more quantitative easing may be necessary.  Apparently the U.S. economy is not moving forward as rapidly as they would like.  So it looks like “QE3” could be on the way.  But did anyone out there actually believe that quantitative easing would come to a complete stop in June?  Whether they call it “QE3” or something else entirely, the reality of the matter is that we have now come to a time when the Federal Reserve is going to be continually purchasing a significant percentage of all new U.S. government debt.  This is essentially a gigantic Ponzi scheme, but sadly there is just not enough money in the rest of the world to be able to continue to feed the U.S. government’s voracious appetite for debt.  Right now Ben Bernanke and his cohorts are trying to break the news to us gently, but anyone with half a brain can see what is happening.  The only way for the game to keep going is for the Federal Reserve to print lots more money, and that is going to be incredibly bad for the U.S. economy in the long run.

The other day James Bullard, President of the Federal Reserve Bank of St. Louis, made national headlines when he declared that Fed officials should “never say never” when it comes to QE3 and more quantitative easing.  But the truth is that other Fed officials have been dropping public hints about the “need” for QE3 for several weeks now.  Just consider the following quotes from top Federal Reserve officials….

Federal Reserve Chairman Ben Bernanke in response to a question about the potential for QE3 at the National Press Club….

“In the end, we’ll just ask the same questions. Where’s the economy going, and what do various inflation indicator look like? We’ll ask those questions. If unemployment is still too low, then we may continue. If we’re moving towards full employment, then we won’t need to stimulate more.”

William Dudley, President of the Federal Reserve Bank of New York during a recent speech at New York University….

“The economy can be allowed to grow rapidly for quite some time before there is a real risk that shrinking slack will result in a rise in underlying inflation.”

James Bullard, President of the Federal Reserve Bank of St Louis during a recent speech at the Bowling Green Area Chamber of Commerce….

“The natural debate now is whether to complete the program, or to taper off to a somewhat lower level of asset purchases. Quantitative easing has been an effective tool, even while the policy rate is near zero. The economic outlook has improved since the program was announced.”

Charles Evans, President of the Federal Reserve Bank of Chicago during a recent interview with The Financial Times….

“The message that comes out of what I think of as high-quality research on this subject is that policy ought to remain accommodative for really quite a while, even a while after conditions start to improve.”

So how in the world did things get to the point where the Federal Reserve feels forced to recklessly print gigantic piles of money?

Well, it didn’t happen overnight.  Back during the 1980s and 1990s there were many people that desperately tried to warn about what would happen if U.S. government debt was not brought under control.

Unfortunately, our politicians did not heed those warnings.

Today, the U.S. national debt has reached a grand total of $14,137,541,098,872.71.  It is 14 times larger than it was just 30 years ago.  It is the largest single debt in the history of the world.

So why don’t our politicians just balance the budget now so that we don’t keep having to borrow so much money?

Well, there are some huge problems.  First of all, when you combine entitlement programs such as Social Security and Medicare with interest on the national debt, it comes to approximately 64 percent of all federal government spending.

But that is not the bad news.

In the years ahead, entitlement spending and interest on the national debt are both projected to absolutely explode.

We are rapidly approaching a time when spending on entitlement programs and interest on the national debt will be significantly greater than all of the revenue that the federal government brings in each year.  All federal revenues will be spoken for even before a single penny is spent on defense, education, running the government or anything else.

Either entitlement programs are going to have to be seriously reformed or the U.S. government is going to have to come up with a massive amount of extra money from somewhere or the U.S. government is going to have to borrow increasingly large piles of money from someone.

Unfortunately, there are no easy solutions and most of our politicians are scared to death to touch entitlement programs because it will mean that they will lose votes.

But our entitlement programs were never meant to be as massive as they are today.  Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, one out of every 6 American is on Medicaid.

Obviously something has to be done, because the debt that we are passing on to future generations is absolutely criminal.

For example, every single child born in America today inherits $45,000 in U.S. government debt.

Isn’t that lovely?

Of course our liberal friends believe that the answer is just to raise taxes.

Oh really?

The truth is that our taxation system is deeply broken.

Small business owners and middle class Americans are being taxed into oblivion while those at the top of the food chain often pay no federal taxes whatsoever.

For example, did you know that Citigroup did not pay a dime of federal taxes in the third quarter?  Meanwhile, their executives continue to bring in bonus packages worth millions.

Did you know that even though Boeing receives billions in federal subsidies every year and even though it has a bunch of juicy government contracts it did not pay a single penny in federal corporate income taxes from 2008 to 2010?

Did you know that while Exxon-Mobil did pay $15 billion in taxes in 2009, not a single penny went to the U.S. government?  Meanwhile, their CEO brought in over 29 million dollars in total compensation that year.

You can find a lot more examples of this phenomenon right here.

Those at the top of the food chain are experts at avoiding federal taxes.  So liberals can raise rates all they want but it won’t do much good.

As I have written about previously, the truth is that approximately a third of all the wealth in the world is now held in “offshore” banks.  The ultra-wealthy and the monolithic predator corporations that dominate the global economy don’t mess around when it comes to paying taxes.  They don’t care if they aren’t paying their “fair share”.  They simply know how to play the game and they laugh at all the rest of us.

Our entire system is broken beyond repair and needs to be reconstructed from the ground up.

But of course that simply is not going to happen.

So what can be done?

Not a whole heck of a lot.

The truth is that the U.S. economy is on the verge of a major collapse.

Marc Faber, the author of the Gloom, Boom and Doom report recently gave a speech in which he declared that the U.S. financial system is in such disastrous shape that only a “reboot” will be able to save it….

I think we are all doomed. I think what will happen is that we are in the midst of a kind of a crack-up boom that is not sustainable, that eventually the economy will deteriorate, that there will be more money-printing, and then you have inflation, and a poor economy, an extreme form of stagflation, and, eventually, in that situation, countries go to war, and, as a whole, derivatives, the market, and everything will collapse, and like a computer when it crashes, you will have to reboot it.

But can we just “reboot” the system and expect things to go back to normal?

Of course not.

The truth is that when the rest of the world completely loses faith in the U.S. dollar and in U.S. Treasuries the dominoes are going to start to fall.  Eventually we are going to see a financial panic that is going to make 2008 look like a Sunday picnic.  Our economic system will massively implode as all of the gigantic mountains of debt and paper money collapse like a house of cards.

Right now the Federal Reserve is desperately trying to hold the system together by “papering over” all of the mistakes.  But in the end it is not going to work.  In fact, what we are witnessing now are the very early stages of hyperinflation.  A lot of other nations in the past have thought that they could just print their way out of trouble, but many of those “experiments” ended in total disaster.

Marc Faber is certainly right about one thing – all of this money printing is going to give us substantial inflation to go along with the high unemployment that we already have.  This is called “stagflation” and anyone that remembers the 1970s knows that it is not a lot of fun.

But the Federal Reserve seems absolutely determined to print more money.  Fed officials are doing the same thing now that they did right before QE2.  They are dropping hints about QE3 and they are trying to break it to us gently.

Well, it is about time that someone told the American people the truth.  All of this money printing is going to end in disaster and so you had better get prepared.

Even Donald Trump Is Warning That An Economic Collapse Is Coming

In a shocking new interview, Donald Trump has gone farther than he ever has before in discussing a potential economic collapse in America.  Using phrases such as “you’re going to pay $25 for a loaf of bread pretty soon” and “we could end up being another Egypt”, Trump explained to Newsmax that he is incredibly concerned about the direction our economy is headed.  Whatever you may think of Donald Trump on a personal level, it is undeniable that he has been extremely successful in business.  As one of the most prominent businessmen in America, he is absolutely horrified about what is happening to this nation.  In fact, he is so disturbed about the direction that this country is heading that he is seriously considering running for president in 2012.  But whether he decides to run in 2012 or not, what Trump is now saying about the U.S. economy should be a huge wake up call for all of us.

Trump says that the U.S. government is broke, that all of our jobs are being shipped overseas, that other nations are heavily taking advantage of us and that the value of the U.S. dollar is being destroyed.  The following interview with Trump was originally posted on Newsmax and it is really worth watching….

Now, you may or may not think much of Donald Trump as a politician, but when a businessman of his caliber starts using apocalyptic language to describe where the U.S. economy is headed perhaps we should all pay attention.

The following are 12 key quotes that were pulled out of Trump’s new interview along with some facts and statistics that show that what Trump is saying is really happening.

#1 “If oil prices are allowed to inflate and keep inflating, if the dollar keeps going down in value, I think there’s a very distinct possibility that things could get worse.”

Donald Trump is exactly right – we are headed for big trouble if we continue to allow the Federal Reserve to pump hundreds of billions of new dollars into the system.  As I have written about previously, all of this new money will give us the illusion of short-term economic growth and it will pump up the stock market, but in the end all of the inflation the new money is gong to cause is going to be very painful.  Just look at how rapidly M1 has been skyrocketing over the last couple of years.  Is there any way that we are going to be able to avoid paying a very serious price for all of this reckless money printing?….

Already all of this money printing has had a very serious affect on world financial markets.  The price of agricultural commodities is skyrocketing and the price of oil has almost reached $100 a barrel once again.  The last time that the price of oil soared above $100 a barrel was in the early part of 2008, and we all remember the horrific financial collapse that followed in the fall of 2008.

#2 “….you’re going to pay $25 for a loaf of bread pretty soon. Look at what’s happening with our food prices. They’re going through the roof. We could end up being another Egypt. You could have riots in our streets also.”

The price of corn has risen 88 percent over the past year and the price of wheat has soared a whopping 114 percent over the past year.  Let’s hope that we don’t have to pay $25 for a loaf of bread in the United States any time soon, but in some areas of the world that is what it now feels like.

Approximately 3 billion people in the world today live on the equivalent of $2 a day or less, and most of that money ends up getting spent on food.  When food prices go up 10 or 20 percent in deeply impoverished areas of the globe, suddenly the lives of millions are threatened.  The riots that we have seen in Egypt, Algeria, Tunisia and other nations recently were not entirely caused by rising food prices, but they were certainly a big factor.

#3 “I think gold will go up as long as people don’t have confidence in our president and our country. And they don’t have confidence in our president.”

Investors run to gold and other precious metals when they don’t feel secure.  We saw that happen a lot in 2010.  As confidence in the paper currencies and the financial systems of the world has rapidly diminished, precious metals have become increasingly attractive.

In fact, the price of gold has doubled since the beginning of the economic downturn in 2007.  As the global financial situation continues to become more unstable, the demand for precious metals is likely only going to become more intense.

#4 “The banks have really let us down. Number one, they did some bad things and caused some bad problems. Number two, if you have something that you want to buy, like a house, they’re generally not there for you.”

Banks were given massive bailouts with the understanding that they would open up the vaults and start lending money to average Americans again.

Well, that has not happened.

In particular, it has become much, much harder to get a mortgage in the United States today.  Not that the big banks didn’t need to make changes to their lending practices, but things have gotten so tight now that it is choking the real estate market to death.

#5 “I see $3.50 for a gallon of gas for cars, and cars are lined up trying to get it and it’s $3.50. It’s a shame, a ridiculous shame.”

Our lack of a cohesive energy policy is a national disgrace.  There is no way in the world that a gallon of gas should be $3.50 a gallon.

The U.S. has massive reserves of oil and natural gas that it should be using.  In addition, the lack of progress on developing alternative energy sources in light of our sickening dependence on foreign oil is very puzzling.  We should be very far along towards solving our energy problems by this point.

Meanwhile, we keep pouring billions into the pockets of foreign oil barons every single month.  Unfortunately, Trump was exactly correct in the interview – if something is not done the price of gas is going to keep going higher.

#6 “I think the biggest threat is that our jobs are being stolen by other countries. We’re not going to have any jobs here pretty soon.”

Donal Trump is one of the few prominent leaders that is openly speaking the truth about the predatory economic practices of some of our “trading partners”.  Most of our politicians have just kept endlessly promising us that free trade is “good for us” even as tens of thousands of factories and millions upon millions of jobs have been shipped overseas.

Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

Yes, computers and robots have replaced a lot of manual labor today, but technology does not account for most of the decline we have seen in manufacturing.

n 1959, manufacturing represented 28 percent of all U.S. economic output.  In 2008, it represented only 11.5 percent.  Meanwhile, manufacturing in the “developing world” has absolutely exploded.

#7 “We’re like a whipping post for other countries. We are standing there and just being beaten by South Korea, by Mexico, by China, by India.”

Most Americans have absolutely no idea how lopsided many of our “trade agreements” actually are.  Other nations openly manipulate their currencies in order to keep their exports dirt cheap and we allow it.  Other nations openly subsidize their domestic industries that are directly competing with businesses in the United States and we don’t complain.  Other nations make it incredibly difficult for American companies to do business in their countries while we allow foreign corporations to come on in and do pretty much whatever they want here.

Then there are certain nations (such as China) that brazenly rip off trade secrets from foreign corporations time after time after time and never get penalized for it.

Meanwhile, our economy continues to bleed jobs at a staggering pace.  The number of net jobs gained by the U.S. economy during this past decade was smaller than during any other decade since World War 2.

Fortunately, more Americans than ever seem to be waking up and are realizing that globalism is causing many of these problems.  A NBC News/Wall Street Journal poll conducted last year discovered that 69 percent of Americans now believe that free trade agreements have cost America jobs.

#8 “All of our jobs are going to China. We’re rebuilding China and other places.”

China is doing great.  China is now the number one producer in the world of wind and solar power.  They now possess the fastest supercomputer on the entire globe.  China also now has the world’s fastest train and the world’s biggest high-speed rail network.

Most Americans don’t realize that China is literally kicking the crap out of us.

Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.

Every single month we buy about 4 times as much stuff from them as they buy from us.  Our trade deficit with China has ballooned to enormous proportions.  In fact, the U.S. trade deficit with China during this past August was more than 4,600 times larger than the U.S. trade deficit with China was for the entire year of 1985.

So when Donald Trump says that we are rebuilding China he is not joking around.

Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.

Yes, that is how serious things have become.

#9 “We are a laughingstock throughout the world.”

Donald Trump has said on several occasions that his friends and business partners in China just laugh and laugh at us.  They can’t even believe what they are getting away with.

We have become an incompetent giant that is the butt of all the jokes.

According to Stanford University economics professor Ed Lazear, if the U.S. economy and the Chinese economy continue to grow at current rates, the average Chinese citizen will be wealthier than the average American citizen in just 30 years.

Our formerly great industrial cities are slowly becoming ghost towns.  The number of long-term unemployed Americans is at an all-time high.  Tens of millions of Americans can’t even survive without government assistance anymore.  The number of Americans on food stamps set a new all-time record every single month during 2010, and now well over 43 million Americans are enrolled in the program.

We really have become a joke.

#10 “The federal government has no money.”

Unfortunately, our federal government has continued to borrow and spend like there is no tomorrow.

According to the Congressional Budget Office, the U.S. government will have the biggest budget deficit ever recorded (approximately 1.5 trillion dollars) this year.

So much for fiscal discipline, eh?

It is being projected that the U.S. national debt will increase by $150,000 per U.S. household between 2009 and 2021.

Do you have an extra $150,000 to contribute for your share?

By 2015 our national debt will be somewhere in the neighborhood of 20 trillion dollars.

It is the biggest mountain of debt in the history of the world by far, and it is the gift that we are going to pass down to future generations of Americans.

If there are any future generations of Americans.

#11 “I hate what is happening to this country.”

We should all hate what is happening to this country.  Our economic guts are being ripped out, we are being abused by the rest of the world, America’s infrastructure is being sold off piece by piece, our federal government is drowning in debt, our state governments are drowning in debt and our local governments are drowning in debt.

The only way we can even keep going is to run around to the rest of the world and beg them to keep lending us more money.

The mainstream media keeps proclaiming that we are the greatest economy on earth, but the truth is that we are being transformed into a pathetic loser and our politicians are just standing there with their hands in their pockets letting it happen.

All red-blooded Americans should be horrified by what is happening to this nation.  We have been betrayed by corrupt and incompetent leaders.  As a nation, we have become fat, lazy and stupid.

Hopefully what Donald Trump and others are saying about a coming economic collapse will serve as a huge wake up call and the sleeping giant will arise once again.

If the sleeping giant does not arise, we are in a massive amount of trouble, because right now the road we are on is leading to the biggest economic collapse the world has ever seen.

The Internet Kill Switch – One Of The Favorite New Tools Of Tyrannical Governments All Over The Globe

This past week was a perfect example of how the “Internet kill switch” is rapidly becoming one of the favorite new tools of tyrannical governments all over the globe. Once upon a time, the Internet was a bastion of liberty and freedom, but now nation after nation is cracking down on it. In fact, legislation has been introduced once again in Congress that would give the president of the United States an “Internet kill switch” that he would be able to use in the event of war or emergency. Of course there would be a whole lot of wiggle room in determining what actually constitutes a true “emergency”. The members of Congress that are pushing this “Internet kill switch” bill want the U.S. to become more like China in this regard. In China, the Internet is highly controlled, highly regulated and highly censored. In fact, China has shut down the Internet in entire regions when they have felt it necessary. So what Egypt did in shutting down the Internet this past week is not unprecedented – but it was quite shocking.

Organizers of the protests in Egypt had been using the #Jan25 hashtag on Twitter and had been communicating with each other via Facebook, and so the Mubarak regime thought that they could significantly derail the protest movement by shutting down the Internet.

It has been widely reported that approximately 88 percent of the Internet in Egypt was shut down at one point.  Jim Cowie, the chief technology officer of an Internet monitoring firm known as Renesys, described on his blog just how complete and total this Internet shutdown in Egypt actually was….

“Every Egyptian provider, every business, bank, Internet cafe, website, school, embassy, and government office that relied on the big four Egyptian ISPs for their Internet connectivity is now cut off from the rest of the world.”

So how was this all done?  How could such a large section of the Internet be taken offline so rapidly?  Well, a recent article on MSNBC described how it works….

According to David Clark, an MIT computer scientist whose research focuses on Internet architecture and development, a government’s ability to control the Internet depends on its control of Internet Service Providers (ISPs), the private sector companies that grant Internet access to customers.

“ISPs have direct control of the Internet, so what happens in any country depends on the control that the state has over those ISPs,” Clark told Life’s Little Mysteries in an e-mail. “Some countries regulate the ISPs much more heavily. China has in the past ‘turned off’ the Internet in various regions.”

Whenever the subject of Internet censorship comes up, China always seems to be involved in the conversation.  China has more Internet users than anyone else in the world, but they also have the tightest controls.

The Chinese government is absolutely obsessed with “maintaining order” and it has shown that it will go to extreme lengths to quell dissent.

For example, the government of China cut off the entire Xinjiang region from the Internet for nearly a year after civil unrest erupted there in 2009.

The Chinese government is so sensitive to political dissent that they even began censoring the word “Egypt” on a number of micro-blogging websites this past week.

A recent article posted on Raw Story explained what happened….

On the sina.com and sohu.com sites, the Chinese equivalents of Twitter, which is censored in China, a query with the word “Egypt” returned the response: “According to the laws in force, the results of your search cannot be given.”

Isn’t that bizarre?

Nothing like that would ever happen in the United States, right?

Well, don’t be so sure.

Last year, U.S. Senator Joe Lieberman made the following statement to CNN’s Candy Crowley….

“Right now China, the government, can disconnect parts of its Internet in case of war and we need to have that here too.”

That statement should chill you to your bones.

U.S. Senator Joe Lieberman wants Chinese-style Internet censorship to come to the United States.

In fact, as mentioned above, legislation that would give the president of the United States an “Internet kill switch” has been introduced in the Senate once again, and in fact it has already been approved by a Senate panel.

The legislation has bipartisan support, and it is being pushed this time by Maine Senator Susan Collins, who is a ranking member on the Homeland Security and Governmental Affairs Committee.

This bill, S.3480, is entitled “The Protecting Cyberspace As A National Asset Act of 2010“.  It would create a brand new government agency (as if we needed more of those) known as the National Center for Cybersecurity and Communications.

This new agency would be given extraordinary power over the Internet – including the power to completely shut down the Internet for 30 days.

Collins insists that this new law is necessary because it would enable us to protect the Internet against “cyber threats” before they could cause serious damage.

While that may sound good on paper, the reality is that giving the government an “Internet kill switch” would create opportunities for tremendous government abuse.

Wired recently ran an article that detailed some of these concerns….

A congressional white paper (.pdf) on the measure said the proposal prohibits the government from targeting websites for censorship “based solely on activities protected by the First Amendment of the United States Constitution.”

Oddly, that’s exactly the same language in the Patriot Act used to test whether the government can wiretap or investigate a person based on their political beliefs or statements.

Of course we all know how that turned out.

It has been revealed time after time after time that the U.S. government has been investigating large numbers of people based on their political beliefs.

The Internet is a great way for people to express and share their political thoughts and ideas, but it is also providing a way for governments around the world to watch and track dissenters.

For example, major news websites in China now require users to register their true identities before they are able to leave any comments.  This enables the government to be able to identify (and potentially deal with) anyone that does not express the “right” views.

In the same manner, the Obama administration is now proposing the introduction of a “universal Internet ID” for Americans.  The program is being touted as “voluntary”, but how long do you think it would be before a whole host of government agencies started to use these universal Internet IDs to watch, monitor, track and control the Internet activities of tens of millions of Americans?

The following is a video news report from CBS News about these new universal Internet IDs….

So where does all of this Internet censorship end?

Well, the truth is that it is only going to get tighter and tighter as the years go by.

Eventually you will probably need a government-issued license to put up websites such as this one, and in fact someday you will probably need a government-issued license before you can even log on to the Internet.

So enjoy this era of relatively unlimited Internet freedom while you can, because it is rapidly coming to an end.  Tyrannical governments all over the globe are realizing that in order to maintain “control” they must place a much tighter grip on the flow of information on the Internet.

If you live in the United States or another nation where there is still at least a limited amount of liberty and freedom, it is going to be important to let your representatives know that you do not want Internet censorship and you certainly do not want any sort of an Internet kill switch.

Liberties and freedoms are incredibly precious, and once they are taken away they are very difficult to get back.

Warning Signs

Do you see all of the warning signs that are flashing all around you?  These days it seems like there is more bad economic news in a single week than there used to be in an entire month.  2011 is already shaping up to be a very dark year for the world economy.  The price of food is shooting through the roof and we have already seen violent food riots in countries like Egypt, Algeria and Tunisia.  World financial markets are becoming increasingly unstable as the sovereign debt crisis continues to get worse.  Meanwhile, the number of Americans applying for unemployment benefits is up, foreclosures are up and poverty continues to spread like a plague throughout the United States.  What we are starting to see around the globe is a lot like the “stagflation” of the 1970s.  All of the crazy money printing that has been going on is overheating prices for agricultural commodities and precious metals, but all of this new money is not doing much to help the average man or woman on the street.

Do you remember what the economy was like in America during the 70s?  We had high unemployment and high inflation at the same time.  It was horrible.  Well, all the warning signs are there for a stagflation repeat.  Unemployment is at epidemic levels and it isn’t showing any signs of decreasing much any time soon.  Meanwhile, the crazy money printing that the Federal Reserve and other central banks have been doing is starting to cause significant inflation.  The price of oil is about to cross the 100 dollar a barrel mark and the UN is forecasting that the global price of food is going to increase by 30 percent by the end of the year.

So, yes, there are some really, really good reasons to be incredibly concerned about the global economy in 2011.

Meanwhile, the only solutions that our global leaders seem to be offering are more money printing, more government debt and more financial control by international organizations.

The truth is that we have a real mess on our hands.  The following are 20 economic warning signs that should be of great concern to all of us….

#1 Over the past seven days, the price of wheat has risen by 11 percent as concerns about food shortages continue to grow around the world.

#2 The price of corn is up a staggering 94 percent since last June.

#3 The United Nations is projecting that the global price of food will increase by 30 percent in 2011.

#4 According to the U.S. Department of Labor, the number of Americans applying for unemployment benefits rose last week to the highest level since last October.

#5 According to the Pew Charitable Trusts, of the 14 million Americans “officially” unemployed in December, 30% of them had been unemployed for one year or longer.

#6 Beginning in the month of March, the U.S. Postal Service will begin shutting down up to 2,000 post offices across the United States.

#7 In an absolutely stunning move, Standard & Poor’s has downgraded Japanese government debt from AA to AA-.

#8 72 percent of the major metropolitan areas in the United States had more foreclosures in 2010 than they did in 2009.

#9 Approximately 5 million homeowners in the United States are at least two months behind on their mortgages, and it is being projected that over a million American families will be booted out of their homes this year alone.

#10 According to the Congressional Budget Office, the Social Security system will run a deficit of 45 billion dollars this year.  When the new payroll tax breaks are factored in, the projected “Social Security deficit” for this year swells to 130 billion dollars.

#11 The U.S. money supply has been rising at a pace that is absolutely unprecedented.

#12 Right now, money is flowing out of bonds at an absolutely staggering pace.

#13 The U.S. Bureau of Labor Statistics says that the price of food increased 50 percent faster than the overall rate of inflation during 2010.

#14 According to the U.S. Conference of Mayors, visits to soup kitchens are up 24 percent over the past year.

#15 During the last school year, almost half of all school children in the state of Illinois came from families that were considered to be “low-income”.

#16 Those living in the town of Discovery Bay, California will soon not be permitted to use cash to pay for any public services.  Could this be another disturbing step in the direction of a cashless society?

#17 French President Nicolas Sarkozy says that the IMF should be given the power to enforce new rules that would be designed to prevent “global economic imbalances” from happening.

#18 The U.S. government is currently borrowing about 40 cents of every single dollar that it spends.

#19 According to the Congressional Budget Office, the U.S. government will have the biggest budget deficit ever recorded (approximately 1.5 trillion dollars) this year.

#20 It is being projected that the U.S. national debt will increase by $150,000 per U.S. household between 2009 and 2021.

So is there any good news?

Well, yes there is.

U.S. Representative Ron Paul has introduced a new bill to audit the Federal Reserve.  Let us hope that the move to audit the Fed fares better in the 112th Congress than it did in the 111th Congress.  It would be wonderful if the American people could actually learn what has been going on inside the Fed all this time.

But mostly the news about the global economy is really bad.  There have been some people that have been warning for decades that all of this money printing and all of this government debt would eventually catch up with us.  Now we have almost reached the moment of reckoning that the doomsayers have been warning about for so long, and it is going to be really painful to go through it.

Thanks to the greatest debt bubble in the history of the world, we have been living beyond our means for decades.  When “times were good” it was not because either the Republicans or the Democrats were doing something right.  The truth is that both political parties have been horribly addicted to government debt.  The debt-fueled prosperity that our politicians purchased for us is starting to come to an end, and an economic implosion is coming that most Americans will never see coming.

But hopefully most of the readers of this article are much wiser than the average American.  The warning signs are there.  Now is the time to take action and get prepared.

Shut Down The Federal Reserve, Break Up The Big Banks And 16 Other Ideas Barack Obama Could Have Proposed If He Actually Wanted To Fix The Economy

How do we fix the economy?  That is a question that tens of millions of Americans are asking right now.  Republicans are harshly criticizing the empty economic proposals being put forward by Barack Obama and the Democrats, but the Republicans don’t seem to have any real solutions either.  There is talk of cutting taxes a little bit more, reducing federal spending a little bit and getting rid of a few useless federal regulations but doing any of those things would essentially be like spitting into Niagara Falls – the effect would not really be noticeable at all.  As this column has documented over and over and over, the economic and financial problems that we are facing are so enormous that radical solutions are needed.  In essence, what we need is not an “economic bandage” or two – what we need is major reconstructive surgery.  If dramatic action is not taken, our economy is going to completely collapse.

Is anything that Barack Obama is currently proposing going to help fix the economy?  No, of course not.  As I wrote about the other day, Obama’s address to the nation was packed with empty promises and a whole lot of inspirational nonsense.  There were no real solutions to the very real problems we are facing.

So is there anything that we could do to actually start fixing things?

Yes, but the solutions are radical.  They would cause quite a bit of chaos.  They would not be easy for people to accept.

But the truth is that our economy and our financial system have terminal cancer.  If something radical is not done quickly we are going to lose the patient.

The following are 16 ideas that Barack Obama could have proposed if he actually wanted to fix the economy….

#1 We Must Shut Down The Federal Reserve

If you are not willing to accept this, you may as well not read the rest of the solutions.  The truth is that the U.S. government will never be able to solve the national debt problem until the Federal Reserve is shut down.  The U.S. government should nationalize all Federal Reserve assets and start issuing currency that is completely and totally debt-free.

Under such a system, it is conceivable that U.S. budget deficits could be eliminated entirely and that over time the entire U.S. government debt could be retired.

One of the biggest threats of going to such a system would be inflation, but remember, the United States has only had a major, ongoing problem with inflation since the Federal Reserve was created back in 1913.  The U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created, and so it is hard to imagine that we would do even worse without the Federal Reserve.

In any event, it is the fundamental right of any sovereign nation to be able to issue and control its own currency.  This right was given to the U.S. government by the U.S. Constitution and it is time for the U.S. government to reclaim that right.

#2 We Must End Trade With All Nations That Allow Their Citizens To Be Paid Slave Labor Wages Or That Do Not Respect Basic Human Rights

This would dramatically reduce the “outsourcing” of our jobs and our industries almost overnight.  The truth is that it was never a good idea to put American workers in direct competition with hundreds of millions of workers that are making slave labor wages on the other side of the globe.

Trading with nations that have a similar wage structure to ours and that respect basic human rights (Canada, for example) is a very good thing.  However, all of the “free trade” agreements that politicians from both parties have been pushing down our throats for decades are literally wrecking the U.S. economy.

Since 2001, over 42,000 factories have been shut down in the United States.  This proposal would go a long way towards stopping the bleeding, and if some of these countries are willing to raise their wage levels significantly then we would be able to resume trade with them in the future on a much more level playing field.

#3 We Must Radically Reduce The Size Of The Federal Government

Our big, fat government is a big, fat drain on our economy.  We have millions of paper pushers that don’t contribute much of anything of real value.

Not only that, but some of the things that the U.S. government wastes money on are absolutely mind blowing.  There is a reason why our founders insisted that we have a very limited government.  It is time to get back to those principles.

The Congressional Budget Office is projecting that the U.S. government budget deficit for this year will be nearly $1.5 trillion.

Talk about ridiculous!

I estimate that we could easily cut the size of government in half without hampering how effective it is.

We could start by abolishing the Department of Education.  After that, there are several dozen other government agencies and institutions which are worthy candidates for elimination.

#4 We Must Provide Temporary Jobs For The American People During The Economic Transition

If the Federal Reserve is shut down and the size of the federal government is cut in half, it would cause quite a bit of economic chaos.  During this transition it will be important to help people survive.

Instead of just passing out a bunch of handouts, a better alternative would be getting the American people working on something constructive.

During this time, the U.S. government could use all of the untapped labor of the unemployed to build massive infrastructure projects.

According to the American Society of Civil Engineers, we need to spend approximately $2.2 trillion on infrastructure repairs and upgrades just to bring our existing infrastructure up to “good condition”.

So there is certainly a lot to do.

These jobs would just be temporary until new manufacturing facilities are set up and jobs in private industry are plentiful again.

Having the American people produce something of value is better than just handing them endless unemployment checks.

#5 We Must Ban All Short Selling

When you allow greedy individuals the opportunity to make lots of money by betting against the U.S. economy, it gives those individuals an incentive to make sure that those bets pay off.

Yes, this proposal is controversial, but it just makes sense.  If people want to make money, it should be because a company is doing well and not because someone is failing.

#6 We Must Ban Virtually All Derivatives

Once upon a time, derivatives were for hedging risk, but that is not what they are primarily being used for anymore.

Now derivatives are being used to bet on almost anything that you can possibly imagine.

Our financial markets have been turned into a gigantic financial casino.

The derivatives bubble is somewhere in the neighborhood of one quadrillion dollars and it could burst at any moment.

These weapons of financial mass destruction must be banned.

#7 We Must Break Up The Big Wall Street Banks

The big Wall Street banks have far too much power and far too much control.  They have come to dominate our entire financial system.

In a capitalist system, too much power concentrated in too few hands is not a good thing.  The corruption that has gone on at many of these institutions is absolutely unbelievable.

These banks need to be broken up into much smaller pieces for the good of our country.

#8 We Must Initiate A Massive Law Enforcement Crackdown On Our Financial Markets

As noted above, the corruption that has been going on down on Wall Street has been absolutely sickening.  We need a massive law enforcement crackdown on all of this fraud in order to restore faith in the financial system.

Just one small example of this corruption happened during the recent housing crash.  Goldman Sachs sold mortgage-related securities that were absolute junk to trusting clients at vastly overinflated prices and then made huge profits betting against those exact same securities.

So do you think that Goldman Sachs or any of the other major players on Wall Street will ever receive more than a slap on the wrist for all the things that have gone on in recent years?

Of course they won’t – unless the American people start demanding it.

#9 We Must Order U.S. Oil Companies To Use Untapped Oil Reserves In The United States And We Must Aggressively Develop Alternative Energy Sources

Right now, the price of oil is pushing up towards 100 dollars a barrel.  If oil passes that mark, it is going to put tremendous inflationary pressure on the entire global economy.

Sadly, there is no need for such a high price for oil.  There are vast, vast reserves of oil that are virtually untapped inside the United States.  These are mostly in the western states and up in Alaska.  We have enough to supply very cheap oil to the entire country for decades.

The U.S. government needs to order these oil companies to quit playing games and to start pumping this oil.

However, it is undeniable that we also need to develop alternative energy sources.  In fact, we should set up a “Manhattan Project”-style team to aggressively pursue this goal.

In the past, U.S. oil and car companies have blatantly repressed alternative energy projects.  The U.S. government should tell U.S. corporate executives that if they ever even think of doing such a thing again that they will be locked away so fast that it will make their heads swim.

#10 We Must Stop Paying Farmers Not To Grow Food

Instead of paying farmers not to grow food, we need to find ways to encourage them to grow as much food as possible.  A horrible global food crisis is coming and we are going to need huge stockpiles of everything.

#11 We Must Secure The U.S. border With Mexico

Illegal immigration costs the U.S. economy tens of billions of dollars (conservatively) every single year.  We need to secure the border and make sure that all of our immigrants are coming through the “front door”.

#12 We Must Shut Down The IRS

Did you know that the United States has only had an income tax for less than 100 years?  For most of our history, the U.S. government got along just fine without taxing personal income.

The IRS is massive waste of time, energy and resources.  There are many alternatives that could easily replace the income tax and the ridiculous tax code that we have right now.

For example, a flat tax or a national sales tax could both potentially work, although both have their problems.

Personally, I am convinced that we could have a system that would not require any taxation of income by the U.S. government whatsoever.

Just imagine how much time, how much energy and how many resources would be saved!

#13 We Must Slash Red Tape And The Miles Of Ridiculous Regulations

In the United States today, you almost have to be insane to start up a new business.  When you consider all sources of taxation, U.S. businesses face one of the highest overall levels of taxation in the entire world.  Not only that, but U.S. businesses face miles and miles of absolutely ridiculous regulations and red tape.

As I wrote about in a previous article, if you want to do business in the United States today, you better be prepared for a regulatory nightmare….

If you plan to start a business in America today, you better get a hold of a good lawyer.  In fact, if you want to be safe, you better get a small army of lawyers.  You are going to need an expert on the federal regulations that apply to your business, you are going to need an expert on the state regulations that apply to your business and you are going to need an expert on the local regulations that apply to your business.

There are going to literally be thousands of regulations that apply to any business started inside the United States today.  There is no way that you will ever be able to learn them all.  Not only that, but the truth is that your lawyers will only be aware of a small fraction of them.

Until the regulatory environment in this country dramatically changes, companies are going to continue to be motivated to leave the United States.

#14 We Must Conduct A Massive Law Enforcement Crackdown On The Health Care Industry

It should not cost $30,000 for a one day stay in the hospital in this country.

The truth is that the American people are being ripped off big time.

We need to conduct a massive law enforcement crackdown on all the big hospitals and all the big health care companies.

We need to conduct a massive law enforcement crackdown on all the big health insurance companies.

We need to conduct a massive law enforcement crackdown on all the big pharmaceutical companies.

We also need massive medical malpractice reform.

Not only that, we also should end the monopoly of the AMA immediately.  We need to reintroduce honest, legitimate competition back into the medical system.

In addition, we need to make sure that natural health practitioners are able to compete on a fair and equal basis in this country.

As I have written about previously, the health care industry in the United States has become all about making as much money as possible.

That must change.

#15 We Must Stop Trying To Police The World

We will always need a very strong military force, but it is absolutely ridiculous that we have troops stationed in approximately 130 different countries today.

This is a tremendous drain on our national resources and we are spread way too thin militarily.  It is about time that many off these other countries started protecting themselves for a while.

#16 We Must Pull Out Of The United Nations And We Must Dramatically Reduce Foreign Aid

The United Nations is a massive waste of time, energy and resources.  We should have pulled the plug on that ridiculous globalist organization long before now.

In addition, we need to dramatically cut back on foreign aid until we get our own house in order.  We should only help the most desperate nations until we get our own economy back on track.

#17 We Must End All Of The Ridiculous Police State Measures Which Are Chasing Tourists Away From Our Soil

Tourism is a very, very important industry to the United States.  But today, all of the incredibly intrusive police state measures that the past few administrations have introduced are chasing millions of tourists away and are ruining our national reputation.

For example, there are many cultures around the globe where it would be unthinkable to have anonymous security goons feel up the private areas of women and children before they are allowed to get on an airplane.  Rather than put up with such nonsense, millions of tourists are simply going to choose to spend their money somewhere else.

#18 We Must Seize The Assets Of The Ultra-Wealthy Individuals And International Banks That Have Been Committing Fraud Against The U.S. Government For Decades

Once the Federal Reserve is shut down, it will be important to hold those that have been defrauding the U.S. government responsible.  Once a full audit of the Federal Reserve is conducted and evidence of criminal activity is uncovered, those involved should be arrested and all of their assets should be seized and frozen pending trial.

If the things that have been going on inside the Federal Reserve are ever fully exposed, it will make the whole Bernie Madoff scandal look like a nickel and dime operation.

But that is why there has never been a full, comprehensive audit of the Federal Reserve since it was created back in 1913.  The American people are not supposed to see what happens inside that institution.

Unfortunately, even though economic times are a little rough, things are still good enough that the vast majority of Americans are not ready to start demanding the kind of radical changes listed above.

Not only that, but the kind of radical changes listed above would be fought against by the establishment every step of the way.  Those with money and power are not going to step aside just because “justice” demands it.

What is probably going to happen is that the “establishment politicians” that the establishment has bought and paid for are just going to continue to propose half-baked solutions to our problems as this country continues to tumble towards economic oblivion.

So what do all of you readers think?  Is there hope that someday we will see some real economic solutions implemented in this country?

Economy News Nightmare: 20 Things That You Should Not Read If You Do Not Want To Become Very Angry

Today America is very, very frustrated.  In fact, we probably have not seen this level of anger in the country since World War 2 ended.  So why are so many Americans so frustrated and so angry right now?  Well, for most Americans it comes down to the economy.  Very few things are more frustrating than not being able to find a job that will enable you to pay the mortgage and feed your family.  Middle class Americans that do have a little bit of money are digging into their savings and investments at a staggering rate as they desperately try to keep their heads above water.  Millions of other families that do not have a “safety cushion” are on the verge of losing their homes or have already been callously tossed out onto the streets by big, greedy banks.  Meanwhile, our politicians continue to burden us with increasingly larger amounts of government debt and they stand idly by as our jobs and our industries are shipped overseas.  So even though the mainstream media seems absolutely puzzled by the growing anger in America, the truth is that it is not a great mystery.  The economy is an absolute nightmare, and if it gets even worse people are going to become even more angry.

The mainstream media and our top politicians are running around proclaiming that the economy has turned around, and yet all of the important long-term economic numbers continue to get worse.  Do they think that the American people are stupid?

Perhaps they are just trying to be “optimistic” and are trying to get us all to “believe” in the economic recovery.

Well, while it certainly does not hurt to “stay positive” and to “have faith” when there is some basis in reality for doing so, but what the mainstream media is asking us all to do is to stick our heads in the sand and to pretend that all of our horrific economic problems are not even there.

Until we recognize exactly what our problems are and how bad they have gotten we will never be able to come up with the appropriate solutions.

Our economy does not just need a “tweak” or two.  Our economy is a total nightmare at this point.

The following are 20 things about our nightmare of an economy that you will not want to read if you do not want to become very, very angry….

#1 Today, millions of American families are digging deep into their savings and investments in a desperate attempt to stay afloat. Over the past two years, U.S. consumers have withdrawn $311 billion more from savings and investment accounts than they have put into them.

#2 15 billion dollars: the total amount of compensation that Goldman Sachs paid out to its employees for 2010.

#3 The number of American families that were booted out of their homes and into the streets set a new all-time record in 2010.

#4 Dozens of packages that we buy in the supermarket have been reduced in size by up to 20%.  For example, there are now 2 less slices of cheese in a typical package of Kraft American cheese, and there is now 9 percent less toilet paper in a typical package of Scott toilet paper.  So now, you may think that you are paying the same amount for these items that you always have, but the truth is that you have been hit with a large price increase.

#5 One Canadian company is making a ton of money shipping “millions and millions of dollars” worth of manufacturing equipment from factories that are being shut down in the United States over to new factories that are being set up in China.

#6 In America today, the wealthiest 20% own a whopping 93% of all the “financial assets” in the United States.

#7 Only 35 percent of Americans now have enough “emergency savings” to be able to cover three months of living expenses.

#8 47 percent of all Americans now believe that China is the number one economic power in the world.

#9 If the U.S. banking system is healthy, then why does the number of “problem banks” continue to keep increasing?  This past week the number of U.S. banks on the unofficial list of problem banks reached 937.

#10 According to former U.S. Labor Secretary Robert Reich, the wealthiest 0.1% of all Americans make as much money as the poorest 120 million.

#11 U.S. housing prices have now fallen further during this economic downturn than they did during the Great Depression of the 1930s.

#12 According to some very disturbing new research, 45 percent of U.S. college students exhibit “no significant gains in learning” after two years in college.

#13 Americans now owe more than $884 billion on student loans, which is a new all-time record.

#14 The United Nations says that the global price of food hit an all-time record high in December, and the price of oil is surging towards $100 a barrel, but the U.S. government continues to insist that we barely have any inflation at all.

#15 The more Americans that are on food stamps the more profits that JP Morgan makes.  Today, an all-time record of 43.2 million Americans are on food stamps, and JP Morgan is making a lot of money processing millions of those benefit payments.

#16 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

#17 Dozens of U.S. states are either implementing tax increases in 2011 or are considering proposals to raise taxes.

#18 The United States has had a negative trade deficit every single year since 1976.

#19 The U.S. national debt has crossed the $14 trillion mark for the first time, and at some point during 2011 it will cross the $15 trillion mark.

#20 What the U.S. economy really needs is for the government to get off all of our backs, but instead they continue to tighten their grip on us.  In fact, the Obama administration is proposing a “universal Internet ID” that would watch, track, monitor and potentially control everything that you do on the Internet.

Huge Numbers Of Dead Animals, Dead Birds And Dead Fish – What In The World Is Happening Out There?

Just what in the world is going on out there? Large groups of animals are keeling over dead, thousands of birds are falling out of the sky dead and millions of dead fish are washing ashore all over the globe.  Something is happening.  Do any of you know what is causing all this, because I sure don’t.  This all seemed to start around the end of December when mass bird deaths and mass fish deaths began to be reported all around the world.  Normally “weird” news stories like this kind of fade away after a time, but reports of bird deaths and fish deaths continue to come in and now there are even reports of large groups of land animals suddenly dropping dead.  As these reports from all over the globe continue to pile up, it doesn’t take a “conspiracy theorist” to figure out that something very much out of the ordinary is going on.  Unfortunately, at this point we have a whole lot more questions than we do answers.

A couple good summaries of the mass bird and fish deaths that we witnessed during the first few weeks of this crisis can be found here and here.  Unfortunately, large groups of animals, birds and fish continue to keep dying.  The following is just a handful of the reports that have poured in from all over the globe during the past week or so….

-“10,000 Cattle Dead In Vietnam: Cows, Buffalo Part Of Mass Die-Off”

-“Beijing reports mass bird deaths”

-“Hundreds of dead seals in Labrador”

-“55 buffalo die mysteriously on southern Cayuga County farm”

-“Two Million Dead Fish Appear in Chesapeake Bay”

-“Another Massive Bird Kill in the Tennessee Valley”

-“Trapped in ice, ‘thousands’ of fish die in Detroit River”

-“Dead birds from north Ala. being sent to Auburn for testing”

-“40,000 Dead Crabs Wash Ashore in U.K.”

-“371 Dead Birds Fall from Sky on LA’s Sunset Blvd; Similar to California, Arkansas, Louisiana Bird Drops”

-“First Birds & Fish, Now Hundreds of Cows are Dying”

It was easy enough to brush off one or two “mass death” news stories, but when they start coming in day after day after day it really starts to get your attention.

So does anyone know why all of this is happening all of a sudden?

Well, there certainly are a lot of theories being floated around out there.  When things like this start happening people start coming up with all sorts of really wild ideas.  Posted below is a list of some of the most common theories about these mass death.  Some of the theories seem to have some substance to them, while others seem just downright bizarre.

Theories That Have Been Put Forward To Explain The Huge Numbers Of Dead Animals, Dead Birds And Dead Fish Around The Globe

*Changes In The Magnetic Field Of The Earth

*Extreme Weather

*A Pole Shift

*Pesticides

*HAARP

*Other Secret Government Programs

*Cold Weather

*”Global Warming”

*The Approach Of 2012

*Methane Gas

*Loud Noises

*Disease

*UFOs Are Responsible

*Effects Of The BP Oil Spill

*The Second Coming Of Jesus

*Birds Are Dying Because Of Indigestion

*Increased Radiation From The Sun

*Large Groups Of Animals Always Die And This Is All Normal

Now, it must be noted that a couple of the recent “mass death episodes” can actually be explained.  For example, the U.S. government has admitted being responsible for the deaths of several hundred birds in South Dakota.

But what about the dozens of other “mass death” reports that have been pouring in from all around the earth?  How do we explain all of those?

That is something to think about.

Hopefully all this will end up being nothing.

Hopefully it will turn out that all of this can be easily explained.

We certainly don’t need any more problems right now.

As I wrote about the other day, the entire world financial system is on the verge of collapse.  At this point any kind of major event could be the “tipping point” that pushes the global economy into chaos.

The world as we know it can literally change overnight.  Today a reader emailed me the following video.  It is entitled “The Day After The Dollar Crashes”, and it takes the viewer through what a potential unraveling of the global financial system might look like.  As you watch this, keep in mind that any type of “big event” could set off a panic like this….

Which Of The Currencies Of The World Is Going To Crash First?

Last year was an absolutely fascinating time for world currency markets.  The yen, the dollar and the euro all took their turns in the spotlight.  Each experienced wild swings at various times, but the overall theme that we saw was that faith in paper currencies is dying.  The biggest reason for this is the horrific sovereign debt crisis that has swept the globe.  The United States, Japan and a whole host of European nations are all drowning in debt.  The U.S. and Japan are both steamrolling toward insolvency, and several European nations would have already defaulted on their debts if they had not been bailed out.  So which of the major currencies of the world is going to crash first?  Will one (or more) of the big currencies fall before the end of 2011?  Once one major currency collapses will the rest start to fall like dominoes?  The truth is that the world has never seen a sovereign debt crisis of this magnitude in all of human history.  Almost the entire globe is drowning in a sea of red ink and it has brought us right to the brink of financial disaster.

So which of the currencies of the world is going to be the first to come crashing down?  Well, let’s take a quick look at the yen, the euro and the dollar….

The Yen

Japan has the 3rd biggest economy in the world, but they are also deeply swamped in debt.  At well over 200%, the Japanese government has the biggest debt to GDP ratio of all of the major industrialized nations.  In fact, it is estimated that this massive pile of Japanese government debt amounts to approximately 7.5 million yen for every person living in the entire nation of Japan.

So why hasn’t Japan defaulted yet?  Well, a big reason is because Japan has one of the highest personal savings rates on the entire globe, and Japanese citizens have been more than happy to gobble up huge amounts of Japanese government debt at very, very low interest rates.

However, Standard & Poor’s has warned that they may have to slash Japan’s credit rating if the debt gets much bigger, and once confidence starts to falter Japan is going to have to start paying higher interest rates.

At some point Japan is going to be facing a financial meltdown, but for the moment they are hanging in there.

The Euro

Several large European nations would have already defaulted on their debts if they had not been bailed out last year.  Greece, Portugal, Ireland, Italy, Belgium and Spain are all on very shaky ground right now.  Several of them have already had their credit ratings slashed.

Bond yields all over Europe have been absolutely soaring in recent months.  It is getting really expensive for many of these nations to take on new debt.  Interest rates on 10-year Greek bonds went from 6 percent up to 13 percent in just a single month at one point in 2010.  In fact, even some of the nations that aren’t in the most danger are even feeling the pain.  For example, the cost of insuring French debt hit a new record high on December 20th.

Right now there are all kinds of rumblings that more European nations are going to need bailouts very soon.  Professor Willem Buiter, the chief economist at Citibank, is warning that quite a few EU nations could financially collapse in the next few months if they are not rapidly bailed out….

“The market is not going to wait until March for the EU authorities to get their act together. We could have several sovereign states and banks going under. They are being far too casual.”

So where is all of this bailout money coming from?  Well, a lot of it is coming from Germany and a significant amount of it is actually coming from the United States.

But will wealthy nations such as Germany be willing to pour hundreds of billions of euros into these financial black holes indefinitely?

Are the Germans going to accept a situation where they are permanently bailing out the “weak sisters” all over the rest of the continent?

Already some prominent politicians in Europe are calling for the European “bailout fund” to be doubled in size to about 2 trillion dollars.  Other analysts believe that it is going to take at least 4 or 5 trillion dollars to properly bail out all of the European nations that need it.

In any event, the truth is that the situation is really, really bad.  If at some point the bailouts stop, the defaults are going to begin.

The Dollar

The United States has the biggest national debt of all.  The 14 trillion dollar threshold has just been crossed, and the national debt is now less than 300 billion dollars away from the 14.294 trillion dollar debt ceiling.  If the U.S. Congress does not raise the debt ceiling, the U.S. government will shortly begin to default on its debts.  Of course everyone fully expects that the U.S. Congress will indeed raise the debt ceiling just like they have every time before.

However, U.S. politicians are not going to be able to keep kicking the can down the road forever.  Today the U.S. national debt is more than 14 times larger than it was just 30 years ago.  Everyone around the world is beginning to realize that this debt is not even close to sustainable.  Investors are beginning to become more hesitant about loaning the United States money.  The Federal Reserve has been forced to step in and “buy” more and more of the debt the U.S. government is issuing.

Yields on U.S. Treasuries have been moving up in recent months and this could eventually become a huge problem.

Why?

Well, the sad truth is that the U.S. government has been increasingly using short-term debt.

At this point, the average maturity of U.S. government bonds has fallen to 4.4 years.  The is the lowest figure of all the major industrialized nations. That means that the U.S. government must constantly roll over massive amounts of debt.

As a point of comparison, UK government debt has an average maturity of approximately 13 years.  That obviously gives them a lot more breathing room.

For the United States, the situation could become incredibly dire if interest rates start to go up.

If interest rates on U.S. government debt reach an average of 7 percent, interest payments on the debt would gobble up approximately 45 percent of the tax revenue that the U.S. government takes in each year.

Yes, at that point the game would be over.

But what the United States has going for it that the European nations do not is that the United States can just have the Federal Reserve keep printing currency.  Unfortunately for the nations involved in the euro, they do not have that option.

That is why an increasing number of analysts believe that it will be the euro that will crash and burn first.

But only time will tell.

There are even many that believe that authorities at the highest level actually want the dollar, euro and yen to fail.

Why?

Well, many of the same individuals and groups that brought us NAFTA, the WTO, the IMF, the OECD and the World Bank believe that it would be absolutely wonderful for humanity if we could all have a single, united global currency.  The “chaos” produced by the fall of our existing global currencies could provide the perfect “opportunity” to provide the grand “solution” that they have been hoping to introduce all along.

All over the world top politicians and financiers have been very open about the fact that a world currency is coming.  In fact, men like George Soros are openly talking about these things.  The United Nations has been publicly calling for the U.S. dollar to be replaced with a new global currency for some time now.  Just this week Chinese President Hu Jintao stated that “the current international currency system is the product of the past.”

So will the American people just sit back and accept it when their dollars are replaced with a new global currency?

Well, sadly, when things go badly most Americans seem to be willing to accept just about anything if it will mean that things will go back to “normal”.  When the global economy falls to pieces, and there already lots of signs that we are on the verge of such a collapse, will the American people be willing to say goodbye to the dollar if politicians from both major political parties tell them that the new global currency is the “answer” to our problems?

Hopefully the American people will wake up and will realize that “globalism” is rapidly wiping away almost everything that it means to be an “American”.  Now even many of our children and teens are primarily identifying themselves as “citizens of the world” rather than “citizens of the United States”.

Even if the U.S. dollar does collapse, it is absolutely imperative that we continue to have our own national currency.  The U.S. Constitution does not make any provision for any sort of “world currency”.  If we allow the globalists to push a truly global currency down our throats it will be another giant step towards the creation of a totalitarian one world system.

So what do you think about all of this?  Please feel free to leave a comment with your thoughts below….

+ More