Economic Reality

The Dow Hits An All-Time High! Translation: A Bubble Is Always Biggest Right Before It Bursts

March 5, 2013 by Michael

Reckless money printing by Federal Reserve Chairman Ben Bernanke has pumped up the Dow to a brand new all-time high. So what comes next? Will the Dow go even higher? Hopefully it will. In fact, it would be great if the Dow was able to hit 15,000 before it finally came crashing down. That would give all of us some more time to prepare for the nightmarish economic crisis that is rapidly approaching. As you will see below, the U.S. economy is in far, far worse shape than it was the last time the Dow reached a record high back in 2007. In addition, all of the long-term trends that are ripping our economy to shreds just continue to get even worse and our debt just continues to explode. Unfortunately, the Dow has become completely divorced from economic reality in recent years because of Fed manipulation. All of this funny money that the Federal Reserve has been cranking out has made the wealthy even wealthier, but this bubble will not last for too much longer. What goes up must come down. And remember, a bubble is always biggest right before it bursts.

Fortunately, it looks like an increasing number of people out there are starting to recognize that the primary reason why stocks have been going up is because of the Fed. Just check out this excerpt from a recent article by the USA Today editorial board…

The Federal Reserve’s purchases have driven interest rates to near zero. This has stimulated the economy but not without cost. Savers, particularly older ones trying to live on income from their investments, are starved for safe options. They’ve been forced into stocks, which is one reason the market has been acting as if it’s on steroids. Further, with borrowing costs low, Congress and the White House have less incentive to rein in the national debt. Rock-bottom interest rates have also distorted markets.

The best indication that the Fed’s bond-buying purchases are pushing stocks up artificially is that investors run for cover whenever there is a hint that the Fed might change course, as happened recently. On Monday, billionaire superinvestor Berkshire Hathaway CEO Warren Buffett told CNBC that markets are on a “hair trigger” waiting for signs of change from the Fed. The market is “hooked on the drug” of easy money, Dallas Fed President Richard Fisher told Reuters.

Fisher’s comparison of Fed policies to a drug is apt. Markets might not like the idea of the drug being withdrawn now, when the Fed holds a portfolio of $3 trillion. But the withdrawal symptoms will be a lot worse once the portfolio grows to $4 trillion, or more.

Those sentiments were echoed by Gordon Charlop, a trader at Rosenblatt Securities, during a recent appearance on CNBC…

“The Wizard of the Fed, Ben [Bernanke], has done a great job propping up the market, but the question is how does the wizard move the pin from the balloon without blowing the whole thing up?” said Charlop. “This is getting out of balance and he’s got to figure out a way to justify the levels that we’ve gotten to and draw back on some of the stimulus.”

Of course, in the end, the bursting of this bubble is going to be very messy.

The Fed has dramatically distorted the market in an attempt to make things look good, but now the financial markets are completely and totally addicted to easy money. Is there any chance that the Fed will be able to take away that easy money without causing disaster?

There are only a few ways that this current scenario can play out. The following is what Stanley Druckenmiller recently told CNBC…

“I don’t know when it’s going to end, but my guess is, it’s going to end very badly; and it’s going to end very badly because, again, when you get the biggest price in the world, interest rates, being manipulated you get a misallocation of resources and this is going to end in one of two ways – with a malinvestment bust which we got in ’07-’08 (we didn’t get inflation). We got a malinvestment bust because of the bubble that was created in housing. Or it could end with just monetizing the debt and off we go in inflation. So that’s a very binary outcome – they’re both bad.”

What the Fed has done to the money supply in recent years has been absolutely unprecedented. Just check out how our money supply has skyrocketed since the last financial crisis…

So what happens when the amount of money in an economy rises rapidly?

Well, if I remember Econ 101 correctly, that would mean that prices should go up.

And that is exactly what has happened. And since most of the money that the Fed has created has gone into the financial system first, it should not be a surprise that we have seen a bubble in financial assets.

In a previous article that I wrote last September, I warned that QE3 would cause stocks to go up…

So what have the previous rounds of quantitative easing accomplished? Well, they have driven up the prices of financial assets. Those that own stocks have done very well the past couple of years. So who owns stocks? The wealthy do. In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans. Those that have invested in commodities have also done very nicely in recent years. We have seen gold, silver, oil and agricultural commodities all do very well. But that also means that average Americans are paying more for basic necessities such as food and gasoline. So the first two rounds of quantitative easing made the wealthy even wealthier while causing living standards to fall for all the rest of us. Is there any reason to believe that QE3 will be any different?

Of course not.

So will stocks continue to go up indefinitely?

No way.

As I have also written about previously, the money printing that the Fed is doing right now is not nearly enough to stop the mammoth derivatives crisis that is coming.

A derivatives crisis was one of the primary reasons for the financial crash of 2008, but most Americans still have no idea what derivatives are.

They can be very complex, but I think that it is easiest just to think of them as side bets.

When someone buys a derivative, they are not buying anything real. They are simply betting that something will or will not happen.

For example, if you bet $100 that the Chicago Cubs will win the World Series this year, would you be “investing” in anything real?

Of course not.

Well, it is the same with most derivatives.

Today, Wall Street has become the biggest casino in the entire world and trillions of dollars of very reckless bets have been made.

In fact, most Americans would be absolutely shocked to learn how exposed to derivatives some of our largest financial institutions are. The following is an excerpt from one of my previous articles entitled “The Coming Derivatives Panic That Will Destroy Global Financial Markets“…

It would be hard to overstate the recklessness of these banks. The numbers that you are about to see are absolutely jaw-dropping. According to the Comptroller of the Currency, four of the largest U.S. banks are walking a tightrope of risk, leverage and debt when it comes to derivatives. Just check out how exposed they are…

JPMorgan Chase

Total Assets: $1,812,837,000,000 (just over 1.8 trillion dollars)

Total Exposure To Derivatives: $69,238,349,000,000 (more than 69 trillion dollars)

Citibank

Total Assets: $1,347,841,000,000 (a bit more than 1.3 trillion dollars)

Total Exposure To Derivatives: $52,150,970,000,000 (more than 52 trillion dollars)

Bank Of America

Total Assets: $1,445,093,000,000 (a bit more than 1.4 trillion dollars)

Total Exposure To Derivatives: $44,405,372,000,000 (more than 44 trillion dollars)

Goldman Sachs

Total Assets: $114,693,000,000 (a bit more than 114 billion dollars – yes, you read that correctly)

Total Exposure To Derivatives: $41,580,395,000,000 (more than 41 trillion dollars)

That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 362 times greater than their total assets.

When the derivatives crash happens, there won’t be enough money in the entire world to fix it.

So enjoy this little stock market bubble while you can.

It will end soon enough.

And of course stocks should not be this high in the first place. The underlying economic fundamentals do not justify these kinds of stock prices whatsoever.

A recent CNN article noted that the last time the Dow hit a record high that unemployment in the U.S. was much lower…

Consider this. When the Dow hit its now old record high back in October 2007, the economy was still in good shape — although it was just a few months away from the beginning of the Great Recession.

The unemployment rate in October 2007 was 4.7%. In January of this year, the unemployment rate was 7.9%.

And that same article also pointed out that GDP growth and housing prices were also much stronger back in 2007…

Gross domestic product grew 3% in the third quarter of 2007. Revised figures from the government last week showed that GDP in the fourth quarter of 2012 rose a scant 0.1%. But I guess that’s good news considering the first estimate showed a 0.1% decline.

And despite all the hoopla about the steady recovery in the housing market over the past year, real estate is still in a bear market. The most recent level of the S&P Case-Shiller 20-City Home Price Index, one of the most widely watched gauges of the health of housing, is still 24% below where it was in October 2007.

We have never even come close to recovering from the last economic crisis. Most Americans seem to have forgotten how good things were back then, but a recent Zero Hedge article included some more points of comparison between October 2007 and today…

Dow Jones Industrial Average: Then 14164.5; Now 14164.5
Regular Gas Price: Then $2.75; Now $3.73
GDP Growth: Then +2.5%; Now +1.6%
Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
Americans On Food Stamps: Then 26.9 million; Now 47.69 million
Size of Fed’s Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
US Deficit (LTM): Then $97 billion; Now $975.6 billion
Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
US Household Debt: Then $13.5 trillion; Now 12.87 trillion
Labor Force Particpation Rate: Then 65.8%; Now 63.6%
Consumer Confidence: Then 99.5; Now 69.6

And of course anyone that reads my site regularly knows that the U.S. economy has been in a state of persistent decline over the past several years.

Just consider the following data points…

-The percentage of the civilian labor force in the United States that is actually employed has been steadily declining every single year since 2006.

-In 2007, the unemployment rate for the 20 to 29 age bracket was about 6.5 percent. Today, the unemployment rate for that same age group is about 13 percent.

-According to one study, 60 percent of the jobs lost during the last recession were mid-wage jobs, but 58 percent of the jobs created since then have been low wage jobs.

-Median household income in America has fallen for four consecutive years. Overall, it has declined by more than $4000 during that time span.

-At this point, an astounding 53 percent of all American workers make less than $30,000 a year.

That is the other side of the Fed’s insidious money printing. Incomes in the United States are going down, but the cost of living is skyrocketing. This is squeezing millions of Americans out of the middle class…

When Debbie Bruister buys a gallon of milk at her local Kroger supermarket, she pays $3.69, up 70 cents from what she paid last year.

Getting to the store costs more, too. Gas in Corinth, Miss., her hometown, costs $3.51 a gallon now, compared to less than three bucks in 2012. That really hurts, considering her husband’s 112-mile daily round-trip commute to his job as a pharmacist.

Perhaps you can identify with this. Perhaps your paychecks are about the same as they used to be back in 2007 but the cost of living has gone up dramatically since then.

I wish I could tell you that things were going to get better, but unfortunately there are all kinds of indications that things are about to get even worse for the U.S. economy. If you doubt this, just read this article and this article.

Yes, the Dow is at an all-time high. But do you want to know what else has hit an all-time high up in New York?

Homelessness.

The following is from a recent report in the New York Times…

An average of more than 50,000 people slept each night in New York City’s homeless shelters for the first time in January, a record that underscores an unsettling national trend: a rising number of families without permanent housing.

And apparently families and children have been hit particularly hard over the past year…

More than 21,000 children—an unprecedented 1% of the city’s youth—slept each night in a city shelter in January, an increase of 22% in the past year, the report said, while homeless families now spend more than a year in a shelter, on average, for the first time since 1987. In January, an average of 11,984 homeless families slept in shelters each night, a rise of 18% from a year earlier.

Of course New York is far from alone. There has been a surge in homelessness all over the United States. In fact, at this point more than a million public school students in the United States are homeless. This is the first time that has ever happened in U.S. history.

But the Dow just hit a record high so we should all be wildly happy, right?

Hopefully we can get more Americans to understand that the “prosperity” that we are enjoying right now is just an illusion. It isn’t real. It is a bubble created by reckless money printing by the Fed and reckless borrowing by the U.S. government. If you can believe it, the U.S. government borrowed another 253 billion dollars during the month of February alone.

The Fed and the U.S. government will continue to engage in this kind of reckless behavior until the bubble eventually bursts.

So what should all the rest of us do?

We should be feverishly preparing for the hard times that are coming. As Daisy Luther recently wrote about, one of the most important things to do is to create an emergency fund. Instead of going out and blowing your money on the latest toys and gadgets, set some money aside so that you will have something to live on if the economy crashes and you suddenly lose your income.

Just remember what happened back in 2008. Millions of Americans suddenly lost their jobs, and because many of them had no financial reserves, a lot of Americans suddenly could not pay their mortgages and they lost their homes.

So put some money away in a place where it will be safe – and that does not mean the stock market.

Jim Cramer of CNBC and a lot of the other talking heads on the financial news channels are trying to encourage ordinary Americans to jump into “the bull market” right now and make some money, and many people will take their advice.

But the truth is that a bubble is always biggest right before it bursts.

This bubble is awfully big right now, and I don’t know how much larger it can possibly get.

The New Reality For U.S. Cities: No Money For Street Lights, Roving Packs Of Wild Dogs And Open-Air Drug Markets

October 19, 2011October 19, 2011 by Michael

If you want to know what the early stages of an economic collapse look like, just walk around some of the downtown areas of our major cities. Today, nearly all large U.S. cities are either flat broke or they are on the way to being flat broke. Yes, New York City and Washington D.C. (and a few others) are still doing fairly well, but for most U.S. cities economic reality is catching up with them very quickly. Right now, there are a number of major cities that are so broke that they cannot keep the street lights operating. Down in St. Louis, parents in some areas are carrying golf clubs with them as they walk their kids to school in order to fend off roving packs of wild dogs. In other major U.S. cities, open-air drug markets conduct business without fear. All over the United States, cities that used to be clean and prosperous and full of hope are now being transformed into post-industrial wastelands. We are certainly not in “Mad Max” territory yet, but it doesn’t take too much imagination to see where all of this is headed.

I have previously written about how Detroit is literally coming apart at the seams. Well, now in many areas of the city they can’t even keep the street lights on anymore. There simply is not enough money, and even if there was, thieves are stealing the copper wiring out of the street lights faster than the city can repair them.

At this point, there are some neighborhoods in Detroit where up to 50 percent of the street lights are not functioning.

The following is from a recent article in The Detroit News about this crisis….

The war to keep the lights on in Detroit is a serious one. Thieves, antiquated equipment and a lack of funding have made it impossible for city officials to catch up to the problem.

City officials estimate 15-20 percent of the 88,000 lights in the Motor City are not working, and they acknowledge that figure could be as high as 50 percent in some neighborhoods.

But it is not just Detroit that is having a major problem. Over in Highland Park, Michigan the majority of the street lights have been repossessed because the city was not keeping up with the electricity bill.

So what are residents of Highland Park supposed to do?

Are they supposed to lock themselves in their own homes at night?

In Fresno, California the theft of copper wire from street lights has become a total nightmare. At this point, the loss of copper wire and the cost of repairing the street lights is costing Fresno about $50,000 a month. So far, approximately 2,500 street lights have been stripped of their wiring.

Down in St. Louis they are having a different problem. In some of the worst areas of the city, roving packs of wild dogs are a serious threat to children that are walking to school.

A recent report by the local CBS affiliate in St. Louis described the situation this way….

…Lewis Reed is sounding the alarm. “I’ve witnessed packs of dogs, 10 and 15 dogs running together, and I’ve seen all these dogs I’m talking about they don’t have collars, they don’t have tags, these are truly wild dogs,” he said.

Reed says stray dogs are terrorizing the north side. “It’s obscene that parents have to walk their kids to school, in some parts of the city, with a golf club to fend off wild dogs.”

Can you imagine that?

They say that they are going to try to put more money into animal control efforts if they can find it. But like most major U.S. cities, St. Louis is a financial basket case.

Moving west a bit, Las Vegas is a different kind of a problem. It was once a mighty symbol of American luxury and decadence, but now it is a microcosm of everything that has gone wrong with our economy.

The following description of the decline of Las Vegas comes from a recent article in The Telegraph….

But Las Vegas’s days as a boom town are long gone. At 14 percent, unemployment is the highest in America (the national average is 9.1 per cent). House prices have fallen 58.1 per cent since their 2006 high – the biggest losses of anywhere in America, while according to the website RealtyTrac, which specialises in foreclosed properties, Las Vegas is the nation’s foreclosure capital. Some 70 per cent of homes in Las Vegas are thought to be ‘under water’, or in negative equity, meaning their value is worth less than the amount owed on the mortgage, while foreclosure notices have been served on one in 16 properties. A survey last year by the local Las Vegas Review-Journal and Channel 8 News Now found that 34 per cent of locals would leave Las Vegas if they could find a job elsewhere, or if they weren’t underwater on their home loan.

Last year, I wrote a piece entitled “The Death of Las Vegas“. Since then, things have gotten even worse for the city in many ways.

Today, there are hundreds of people living in the tunnels underneath the streets of Las Vegas. You can see CNN video of some of these people right here.

But at least the “tunnel people” have a “roof” over their heads.

Over in “Lost Angeles”, homelessness is absolutely exploding and there are thousands of people living in the streets.

The following is from a recent article by Nick Allen….

In Skid Row, a grimy pocket of downtown Los Angeles, the prostrate forms of homeless people lie strewn across the pavements.

The lucky ones have tents for shelter but others make do with a sliver of cardboard for a bed and a supermarket trolley to carry their rags.

At the last police count 1,662 people live on these streets, twice as many as a year ago.

And now amid the drug addicts and the drunks there are families who not so long ago had homes and ordinary suburban lives.

Wait, wasn’t the economy supposed to be getting better?

So why has the number of people living on Skid Row doubled over the past year?

Los Angeles, like much of California, is rapidly falling apart. Decades of very foolish policies have turned the “California Dream” into the “California Nightmare“.

Unemployment is rampant, crime is seemingly everywhere and the gangs appear to be getting bolder by the day. For example, 21 machine guns were recently stolen right out of an LAPD training facility.

But there are cities in California that are in even worse shape than Los Angeles is. If you go east of Los Angeles about 100 miles, you will come to the city of San Bernardino. 34.6 percent of the residents of San Bernardino are currently living below the poverty line. Among major U.S. cities, only Detroit has a worse poverty rate.

Heading back to the east coast, the city of Camden, New Jersey is representative of the post-industrial hellholes that you will find all over the mid-Atlantic region and up into New England.

In an extraordinary article entitled “City of Ruins“, Chris Hedges did an amazing job of documenting how bad things have gotten in Camden. Today it is estimated that the actual rate of unemployment in Camden is somewhere around 30 or 40 percent. For most young people in Camden, there are very few legitimate opportunities for a better life, so many of them have resorted to selling drugs or selling their bodies in a desperate attempt to survive.

The following is a brief excerpt from “City of Ruins”….

There are perhaps a hundred open-air drug markets, most run by gangs like the Bloods, the Latin Kings, Los Nietos and MS-13. Knots of young men in black leather jackets and baggy sweatshirts sell weed and crack to clients, many of whom drive in from the suburbs. The drug trade is one of the city’s few thriving businesses. A weapon, police say, is never more than a few feet away, usually stashed behind a trash can, in the grass or on a porch.

The era of “American exceptionalism” is over. We have rejected the things that made us great. We have forsaken the truth and now we are paying the price.

At this point, we are rapidly becoming a joke to the rest of the world.

You know that things are bad when headlines such as this start showing up in major international publications: “America Must Manage Its Decline“.

Is that what we are going to tell our kids and our grandkids?

Are we going to tell them that we must “manage” our decline?

Most Americans also realize that something is fundamentally wrong. According to a recent Time Magazine poll, 81 percent of the American people believe that the country is on the wrong track.

So why don’t our cities just spend more money and fix all of these problems?

Well, it is because most of them are drowning in a sea of red ink. Instead of spending more money, most of them are desperately searching for more places to cut. If you can believe it, 72 percent of all U.S. cities are laying workers off this year.

The federal government has been pumping massive amounts of money into state and local governments in recent years, but that can’t last much longer. As I wrote about yesterday, the federal government is in debt up to its eyeballs. In fact, the national debt has become so large that it threatens to collapse our entire financial system.

Sadly, the cold, hard truth is that we are now going to pay the price for decades of financial foolishness.

We thought that it would be our children and our grandchildren that would pay the price for our financial recklessness, but the reality is that we are going to pay the price too.

America is in a serious state of decline and things are going to get a lot worse in the years to come.

Take advantage of the relative prosperity that we are enjoying now to prepare for the lean years which are ahead.

How To Find A Job: Just Be Willing To Flip Burgers And Work For Minimum Wage

April 4, 2011April 4, 2011 by Michael

Do you want to know how to find a job in America today? It’s easy. Just be willing to flip burgers, wait tables or welcome people to Wal-Mart. You must also be willing to work for close to minimum wage with no health benefits. It’s not that complicated. On April 19th, McDonald’s is going to be holding its first “national hiring day” and it will be attempting to fill 50,000 positions. Hundreds of thousands of applicants are expected, so if you are going to apply be ready for some stiff competition. McDonald’s held a similar event last year in its western region and 60,000 people applied for just 13,000 jobs. But if you are one of the lucky ones, you too may soon be flipping burgers for minimum wage. Who said that finding a job was hard and that the U.S. economy doesn’t work anymore? All of us just need to be “flexible” and we all need to be willing to adapt to the “new economic reality”.

Oh, you say that you can’t pay the mortgage and feed your family on what they would pay you at McDonald’s?

You say that you are looking for a “good job”?

Well, that is just too bad.

Good jobs are becoming increasingly scarce. In fact, there are 10% fewer “middle class jobs” in the United States today than there were a decade ago.

The competition for the few “middle class jobs” that are still available has become so intense that you might not want to steer clear. You just can’t afford to be too picky in today’s world.

After all, you don’t want to become one of those poor saps that is unemployed month after month after month. According to the U.S. Bureau of Labor Statistics, the average length of unemployment in the U.S. is now an all-time record 39 weeks.

Can you really afford to be out of work for almost a year?

Why not go after the “low hanging fruit”? For a position at McDonald’s or Wal-Mart you will probably only be competing against four or five other people for each job opening. Those odds aren’t that bad.

Things were not always like this in America, you say?

Once upon a time there were actually lots and lots of great jobs?

Well, this is part of the sacrifice that we must make for the emerging global economy. We must allow thousands of our factories to close and millions of our good paying jobs to be shipped overseas. Our politicians have all promised us that globalism will be incredibly good for us in the long run.

So don’t be alarmed when naysayers warn that the United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

Yes, American workers now must directly compete for jobs with millions of people willing to work for slave labor wages on the other side of the globe. But eventually their wages will come up slightly and our wages will go way down to their level and at that point we will all have equality.

You aren’t against “equality” are you?

Who could be against equality?

This is what globalism is all about – tearing down all the borders and gathering us all into one big, happy “global family”. Right now too many of the good jobs are in America so millions of them have to be shipped out of the country. Also, millions of legal and illegal immigrants must be allowed into the U.S. so that they can compete for American jobs as well.

But won’t that drive wages down?

Of course, but in the end the “global community” will benefit.

What did you think? Did you actually believe that the United States would be able to have a thriving middle class forever?

In the new “global economy“, the wealthy get to exploit slave labor on the other side of the world thus wiping out the American middle class.

Already we are seeing signs of an “economic recovery” with the ultra-rich leading the way. According to Moody’s Analytics, the wealthiest 5% of households in the United States now account for approximately 37% of all consumer spending.

That is some “change” that Wall Street can believe in!

But what about the rest of us?

All kidding aside, it is absolutely brutal out there right now.

American families just want jobs that will enable them to pay their mortgages, put food on the table and provide a decent standard of living for their families.

Unfortunately, those jobs are disappearing and they are being replaced by low paying service jobs.

According to a recent report from the National Employment Law Project, higher wage industries accounted for 40 percent of the job losses over the past 12 months but only 14 percent of the job growth. Lower wage industries accounted for just 23 percent of the job losses over the past 12 months and a whopping 49 percent of the job growth.

So yes, it has become extremely difficult to find a job that pays a decent wage.

In fact, half of all American workers now earn $505 or less per week.

Could your family survive on $505 a week?

One reader recently left a comment that detailed how this economy has left her without a job, without a home and feeling depressed….

Yup, Im depressed. If I would have known what the WTO protests were about here in Seattle in the 90s, I would have joined in. I knew a lot of folks were very angry, but I wasn’t sure why. I was a busy working mother of a toddler. Now fast forward 10+ years and I haven’t worked in 2 and a half years and only 4 job interviews in that time and 0 job offers. we are going to get paid by Chase to give them our home (gee thanks!) so we can move out… OK now what? things aren’t looking too good. I started a very small business that no where near comes even close to supporting us. So were going to stay in my brother’s house in Texas. and then? who knows. at least I don’t feel alone. there are millions of stories just like mine.

Sadly, there are millions more stories just like this. The U.S. economy has fundamentally changed and it simply does not work like it used to.

Millions of American families are experiencing severe economic pain right now, and millions more will be experiencing it very soon.

In a previous article entitled, “Where Are The Jobs?“, I explained why things are changing for American workers….

Most Americans don’t really care about the economic minutiae that many of us who study the U.S. economy love to pour over. When it comes to the economy, the typical American citizen just wants to be able to get a good job, make a decent living and put bread on the table for the family. For generations, this arrangement has worked out quite well. The U.S. economy has provided large numbers of middle class jobs and the American people have worked hard and have helped this nation prosper like no other. But now people are starting to notice that something has shifted. Millions of people are looking around and are realizing that the jobs that are supposed to be there are not there anymore. The American people are still working hard (and in many cases harder than ever) but all of that hard work is producing fewer and fewer rewards. Often politicians will placate voters by telling them that they are working harder and harder for less and less. That tends to ring true with voters because that is a very accurate description of what so many of them are actually experiencing, but what the politicians don’t tell us is that they are the ones to blame for the situation that we are in. As millions of jobs become obsolete because of technology and millions of other jobs are shipped overseas, our politicians tell us over and over that we can “compete” with anyone and that if we will just go out and get some more education we can make it happen. But those of us who are extremely over-educated know what a fraud that line is. The truth is that there are not nearly enough jobs for all of us no matter how “educated” we are. This is creating a lot of anger and frustration, and now even the IMF is warning that we could see “an explosion of social unrest” if high unemployment persists.

Unfortunately, most of our politicians do not have any answers. Bill Clinton greatly accelerated the shipping of our jobs overseas. George W. Bush was a complete and total disaster when it came to the economy. Barack Obama has been continuing most of the economic policies of those that came before him.

Unless we make some fundamental changes, millions of jobs will continue to be lost, the U.S. industrial base will continue to be dismantled, we will continue to go into astounding amounts of debt as a nation and more American families will slip into poverty every single day.

But waiting for Washington D.C. to change is kind of like waiting for hell to freeze over. The Federal Reserve is not going to help us either. In fact, the Fed is at the very heart of our economic problems.

No, the truth is that the U.S. economy is going to continue to go downhill. All of us need to try to become less dependent on the system, because when it collapses it is going to devastate the lives of tens of millions of American families.

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