So how in the world did we get to this point?  A few decades ago, the United States was the unchallenged economic powerhouse of the world and China was essentially a third world country.

So what happened?

Well, we entered into a whole bunch of extremely unfavorable “free trade” agreements, and countries such as China began to aggressively use “free trade” as an economic weapon against us.

Over the past decade, we have lost tens of thousands of businesses and millions of jobs to China.  When the final numbers for 2012 come out, our trade deficit with China for the year will be well over 300 billion dollars, and that will be the largest trade deficit that one country has had with another country in the history of the world.

Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars.  That 2.3 trillion dollars could have gone to U.S. businesses and U.S. workers, and in turn taxes would have been paid on all of that money.  But instead, all of that money went to China.

Rather than just sitting on all of that money, China has been lending much of it back to us – at interest.  We now owe China more than a trillion dollars, and our politicians are constantly pleading with China to lend more money to us so that we can finance our exploding debt.

Today, the U.S. government pays China approximately 100 million dollars a day in interest on the debt that we owe them.  Those that say that the U.S. debt “does not matter” are being incredibly foolish.

So thanks to our massive trade deficit and our exploding national debt, China is systematically getting wealthier and the United States is systematically getting poorer.

And now China is starting to use a lot of that wealth to aggressively expand their power and influence around the globe.

But isn’t it more than a bit far-fetched to suggest that China may be planning to establish Chinese cities and special economic zones in America?

Not really.

Just look at what has already happened up in Canada.  It is well-known that the Chinese population of Vancouver, Canada has absolutely exploded in recent years.  In fact, the Vancouver suburb of Richmond is now approximately half Chinese.  The following is an excerpt from a BBC article…

Richmond is North America’s most Asian city – 50% of residents here identify themselves as Chinese. But it’s not just here that the Chinese community in British Columbia (BC) – some 407,000 strong – has left its mark. All across Vancouver, Chinese-Canadians have helped shape the local landscape.

A similar thing is happening in many communities along the west coast of the United States.  In fact, Chinese citizens purchased one out of every ten homes that were sold in the state of California in 2011.

But in other areas of the United States, the Chinese are approaching things much more systematically.

For example, as I have written about previously, a Chinese group identified as “Sino-Michigan Properties LLC” has purchased 200 acres of land near the town of Milan, Michigan.  Their stated goal is to build a “China City” that has artificial lakes, a Chinese cultural center and hundreds of housing units for Chinese citizens.

In other instances, large chunks of real estate in major U.S. cities that are down on their luck are being snapped up by Chinese investors.  Just check out what a Fortune article from a while back says has been happening over in Toledo, Ohio…

In March 2011, Chinese investors paid $2.15 million cash for a restaurant complex on the Maumee River in Toledo, Ohio. Soon they put down another $3.8 million on 69 acres of newly decontaminated land in the city’s Marina District, promising to invest $200 million in a new residential-commercial development. That September, another Chinese firm spent $3 million for an aging hotel across a nearby bridge with a view of the minor league ballpark.

Toledo is being promoted to Chinese investors as a “5-star logistics region“.  From Toledo it is very easy to get to Chicago, Detroit, Cleveland, Pittsburgh, Columbus and Indianapolis…

With a population of 287,000, Toledo is only the fourth largest city in Ohio, but it lies at the junction of two important highways — I-75 and I-80/90. “My vision is to make Toledo a true international city,” Toledo’s Mayor Mike Bell told the Toledo Blade.

But some of these deals appear to be about far more than just making “investments”.  According to the Idaho Statesman, a Chinese company known as Sinomach (which is actually controlled by the Chinese government) was actually interested in developing a 50 square mile self-sustaining “technology zone” south of the Boise airport…

A Chinese national company is interested in developing a 10,000- to 30,000-acre technology zone for industry, retail centers and homes south of the Boise Airport.

Sinomach is not looking only at Idaho.

The company sent delegations to Ohio, Michigan and Pennsylvania this year to talk about setting up research and development bases and industrial parks. It has an interest in electric transmission projects and alternative energy as well.

The technology zone proposal follows a model of science, technology and industrial parks in China — often fully contained cities with all services included.

Thankfully the deal in Idaho appears to be stalled for now, but could we soon see China establish special economic zones in other communities all around America?

The Chinese certainly do seem to be laying the groundwork for something.  They have been voraciously gobbling up important infrastructure all over the country.  The following comes from a recent American Free Press article…

In addition to already owning vital ports in Long Beach, Calif. and Boston, Mass., the China Ocean Shipping Company is eyeing major ports on the East Coast and Gulf of Mexico. China also owns access to ports at the entry and exit points of the Panama Canal.

And due to fiscal woes plaguing many American cities and states, U.S. legislators have been actively seeking out Chinese investors. In one of the worst cases, Baton Rouge, La., Mayor Kip Holden offered the Chinese government ownership and operating rights to a new toll way system if the Chinese would provide the funding to build it.

Does it make sense for the Chinese to own some of our most important ports?

Isn’t there a national security risk?

Sadly, there isn’t much of anything that our politicians won’t sell these days as long as someone is willing to flash a lot of cash.

The Chinese have also been busy buying up important real estate on the east coast as a recent Forbes article explained….

According to a recent report in the New York Times, investors from China are “snapping up luxury apartments” and are planning to spend hundreds of millions of dollars on commercial and residential projects like Atlantic Yards in Brooklyn. Chinese companies also have signed major leases at the Empire State Building and at 1 World Trade Center, the report said.

But it is not only just land and infrastructure that the Chinese have been buying up.

They have also been purchasing rights to vital oil and natural gas deposits all over the United States.

There have been two Chinese companies that have been primarily involved in this effort.

The first is the China National Offshore Oil Corporation (CNOOC).  According to Wikipedia, CNOOC is 100 percent owned by the Chinese government…

CNOOC Group is a state-owned oil company, fully owned by the Government of the People’s Republic of China, and the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) performs the rights and obligations of shareholder on behalf of the government.

The second is Sinopec Corporation.  Sinopec Group is the largest shareholder (approx. 75% ownership) in Sinopec Corporation.  And as the Sinopec website tells us, Sinopec Group is fully owned by the Chinese government…

Sinopec Group, the largest shareholder of Sinopec Corp., is a super-large petroleum and petrochemical group incorporated by the State in 1998 based on the former China Petrochemical Corporation. Funded by the State, it is a State authorized investment arm and State-owned controlling company.

So whenever you see CNOOC or Sinopec, you can replace those names with the Chinese government.  The Chinese government essentially runs both of those companies.

And as you can see from the following list compiled by the Wall Street Journal, those two companies have been extremely aggressive in buying up rights to oil and natural gas all over the nation…

Colorado: Cnooc gained a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming in a $1.27 billion pact with Chesapeake Energy Corp.

Louisiana: Sinopec has a one-third interest in 265,000 acres in the Tuscaloosa Marine Shale after a broader $2.5-billion deal with Devon Energy.

Michigan: Sinopec gained a one-third interest in 350,000 acres in a larger $2.5 billion deal with Devon Energy.

Ohio: Sinopec acquired a one-third stake in Devon Energy’s 235,000 Utica Shale acres in a larger $2.5 billion deal.

Oklahoma: Sinopec has a one-third interest in 215,000 acres in a broader $2.5 billion deal with Devon Energy.

Texas: Cnooc acquired a one-third interest in Chesapeake Energy’s 600,000 acres in the Eagle Ford Shale in a $2.16-billion deal.

Wyoming: Cnooc has a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming after a $1.27 billion pact with Chesapeake Energy. Sinopec gained a one-third interest in Devon Energy’s 320,000 acres as part of a larger $2.5 billion deal.

Gulf of Mexico: Cnooc Ltd. separately acquired minority stakes in some of Statoil ASA’s leases as well as six of Nexen Inc.’s deep-water wells.

So why is the U.S. government allowing this?

That is a very good question.

For a nation that purports to be pursuing “energy independence”, we sure do have a funny way of going about things.

Unfortunately, the sad truth is that China is absolutely mopping the floor with the United States on the global economic stage.  China is rising and America is in an advanced state of decline.  Global economic power has shifted dramatically and most Americans still don’t understand what has happened.

The following are 44 more signs of how dominant the economy of China has become…

1. A Chinese firm recently made a $2.6 billion offer to buy movie theater chain AMC.

2. A different Chinese firm made a $1.8 billion offer to buy aircraft maker Hawker Beechcraft.

3. In December it was announced that a Chinese group would be purchasing AIG’s plane leasing unit for $4.23 billion.

4. It was recently announced that the Federal Reserve will now allow Chinese banks to buy up American banks.

5. A $190 million bridge project up in Alaska was awarded to a Chinese firm.

6. A $400 million contract to renovate the Alexander Hamilton bridge in New York was awarded to a Chinese firm.

7. A $7.2 billion contract to construct a new bridge between San Francisco and Oakland was awarded to a Chinese firm.

8. The uniforms for the U.S. Olympic team were made in China.

9. 85 percent of all artificial Christmas trees are made in China.

10. The new World Trade Center tower is going to include glass that has been imported from China.

11. The new Martin Luther King memorial on the National Mall was made in China.

12. In 2001, American consumers spent 102 billion dollars on products made in China.  In 2011, American consumers spent 399 billion dollars on products made in China.

13. The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

14. According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.

15. The Chinese economy has grown 7 times faster than the U.S. economy has over the past decade.

16. The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

17. The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

18. Overall, the United States has lost a total of more than 56,000 manufacturing facilities since 2001.

19. According to the Economic Policy Institute, America is losing half a million jobs to China every single year.

20. Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

21. In 2010, China produced more than twice as many automobiles as the United States did.

22. Since the auto industry bailout, approximately 70 percent of all GM vehicles have been built outside the United States.

23. After being bailed out by U.S. taxpayers, General Motors is currently involved in 11 joint ventures with companies owned by the Chinese government.  The price for entering into many of these “joint ventures” was a transfer of “state of the art technology” from General Motors to the communist Chinese.

24. 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.

25. The United States has lost more than a quarter of all of its high-tech manufacturing jobs over the past ten years.

26. China’s number one export to the U.S. is computer equipment.

27. The number one U.S. export to China is “scrap and trash”.

28. The U.S. trade deficit with China is now more than 28 times larger than it was back in 1990.

29. Back in 1985, the U.S. trade deficit with China was just 6 million dollars for the entire year.  For the month of November 2012 alone, the U.S. trade deficit with China was 28.9 billion dollars.

30. China now consumes more energy than the United States does.

31. China is now the leading manufacturer of goods in the entire world.

32. China uses more cement than the rest of the world combined.

33. China is now the number one producer of wind and solar power on the entire globe.

34. Today, China produces nearly twice as much beer as the United States does.

35. Right now, China is producing more than three times as much coal as the United States does.

36. China now produces 11 times as much steel as the United States does.

37. China produces more than 90 percent of the global supply of rare earth elements.

38. China is now the number one supplier of components that are critical to the operation of U.S. defense systems.

39. A recent investigation by the U.S. Senate Committee on Armed Services found more than one million counterfeit Chinese parts in the Department of Defense supply chain.

40. 15 years ago, China was 14th in the world in published scientific research articles.  But now, China is expected to pass the United States and become number one very shortly.

41. China now awards more doctoral degrees in engineering each year than the United States does.

42. According to one study, the Chinese economy already has roughly the same amount of purchasing power as the U.S. economy does.

43. According to the IMF, China will pass the United States and will become the largest economy in the world in 2016.

44. 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.

Without the “globalization” of the world economy, none of this would have ever happened.  But instead of admitting our mistakes and fixing them, our politicians continue to press for even more “free trade” and even more integration with communist nations such as China.

In fact, according to Dr. Jerome Corsi, the U.S. government has already set up 257 “foreign trade zones” all over America.  These “foreign trade zones” are apparently given “special U.S. customs treatment” and are used to promote “free trade”…

Corsi noted that the U.S. government has created 257 foreign trade zones, or FTZs, throughout the United States, designed to extend special U.S. customs treatment to U.S. plants engaged in international-trade-related activities.

The FTZs tend to be located near airports, with easy access into the continental NAFTA and WTO multi-modal transportation systems being created to move free-trade goods cheaply, quickly and efficiently throughout the continent of North America.

“There is nothing in the U.S. government’s description of FTZs that would prevent a foreign government, like China, from operating a shell U.S. company that is in reality owned and financed by the Chinese government and operated through a Chinese government-owned corporation,” Corsi wrote.

Sadly, we are probably going to see a whole lot more of this in the years ahead.

According to Corsi, a professor of economics at Tsighua University in Beijing named Yu Qiao has suggested the following plan as a way to transform the debt that the United States owes China into something more “tangible”…

1. China would negotiate with the U.S. government to create a “crisis relief facility,” or CRF. The CRF “would be used alongside U.S. federal efforts to stabilize the banking system and to invest in capital-intensive infrastructure projects such as high-speed railroad from Boston to Washington, D.C.
2. China would pool a portion of its holdings of Treasury bonds under the CFR umbrella to convert sovereign debt into equity. Any CFR funds that were designated for investment in U.S. corporations would still be owned and managed by U.S. equity holders, with the Asians holding minority equity shares “that would, like preferred stock, be convertible.”
3. The U.S. government would act as a guarantor, “providing a sovereign guarantee scheme to assure the investment principal of the CRF against possible default of targeted companies or projects”.
4. The Federal Reserve would set up a special account to supply the liquidity the CRF would require to swap sovereign debt into industrial investment in the United States.

Apparently the Bank of China really likes this plan and would like to see something like this implemented.

In the years ahead, perhaps many of you will end up working in a “special economic zone” for a Chinese company on a project that is being financially guaranteed by the U.S. government.

If that sounds like a form of slavery to you, the truth is that you are probably not too far off the mark.

The borrower is the servant of the lender, and we should have never allowed ourselves to get into so much debt.

Now we will pay the price.

To get an idea of how much the world has changed in recent years, just check out this incredible photo which contrasts the decline of Detroit over the years with the amazing rise of Shanghai, China.

Things did not have to turn out this way.  Unfortunately, we made decades of incredibly foolish decisions and we wrecked the greatest economic machine that the world has ever seen.

Now the future for America looks really bleak.

Or could it be that I am being too pessimistic?  Please feel free to post a comment with your thoughts below…

The post Does China Plan To Establish “China Cities” And “Special Economic Zones” All Over America? appeared first on The Economic Collapse.

But at this point the Federal Reserve has already “jumped the shark”.  If you don’t know what “jumping the shark” means, you can find a definition on Wikipedia right here.  Whatever shreds of credibility the Fed had left are being washed away by a flood of newly printed money.

Those running the Fed have essentially used up all of their bullets and the next great financial crisis has not even fully erupted yet.

So what is the Fed going to do if the stock market crashes and the credit market freezes up like we saw back in 2008?

How much more extreme can the Fed go?

One can just picture “Helicopter Ben” strapping on a pair of water skis and making the following promise….

“We are going to print so much money that we’ll make Zimbabwe and the Weimar Republic look like wimps!”

Sadly, the truth is that money printing is not a “quick fix” and it never has been.  Just look at Japan.  The Bank of Japan is on round 8 of their quantitative easing strategy, and yet things in Japan continue to get even worse.

But that is not going to stop the folks on Wall Street from calling for even more quantitative easing.

For example, the top U.S. equity strategist for Morgan Stanley, Adam Parker, made headlines all over the world this week by writing the following….

“QE3 will likely be insufficient to significantly boost equity markets and we wouldn’t be at all surprised to see the Fed dramatically augment this program (i.e., QE4) before year-end, particularly if economic and corporate news continue to deteriorate as they have over the past few weeks.”

Did you get what he is saying there?

He says that QE3 is not going to be enough to boost equity markets (the stock market) so more money printing will be necessary.

But wasn’t QE3 supposed to be about creating jobs and helping the middle class?

I can almost hear many of you laughing out loud already.

As I have written about before, QE3 is unlikely to change the employment picture in any significant way, but what it will do is create more inflation which will squeeze the poor, the middle class and the elderly.

The truth is that quantitative easing has always been about bailing out the banks, and the hope is that this will trickle down to the folks on Main Street as well, but that never seems to happen.

Wall Street is not calling for even more quantitative easing because it would be good for you and I.  Rather, Wall Street is calling for even more quantitative easing because it would be good for them.

A CNBC article entitled “Fed May Need to Boost QE ‘Dramatically’ This Year: Pros” discussed Wall Street’s desire for even more money printing….

The Federal Reserve’s latest easing move has been nicknamed everything from “QE3” to “QE Infinity” to “QEternal,” but some on Wall Street question whether the unprecedented move will be QEnough.

And of course everyone pretty much understands that QE3 is definitely not going to fix our economic problems.  Even most of those on Wall Street will admit as much.  In the CNBC article mentioned above, a couple of economists named Paul Ashworth and Paul Dales at Capital Economics were quoted as saying the following….

“The Fed can commit to deliver whatever economic outcome it likes, but the problem is that  the crisis in the euro-zone and/or a stand-off in negotiations to avert the fiscal cliff in the U.S. may well reveal it to be like the proverbial Emperor with no clothes”

An emperor with no clothes?

I think the analogy fits.

The Federal Reserve is going to keep printing and printing and printing and things are not going to get any better.

At this point, economists at Goldman Sachs are already projecting that QE3 will likely stretch into 2015….

The Federal Reserve’s QE3 bond buying program announced earlier this month could last until the middle of 2015 and eventually reach $2 trillion, according to an estimate from economists at Goldman Sachs.

The Goldman economists also wrote in a report that they believe the Fed will not raise the federal funds rate until 2016. This rate, which is used as a benchmark for a wide variety of consumer and business loans, has been near 0% since December 2008. The Fed said in its last statement that it expected rates would remain low until mid-2015.

So why is Wall Street whining and complaining so loudly right now?

Well, even with all of the bailouts and even with all of the help from the first two rounds of quantitative easing, things are still tough for them.

For example, Bank of America recently announced that they will be laying off 16,000 workers.

In addition, there are rumors that 100 highly paid partners at Goldman Sachs are going to be getting the axe.  It is said that Goldman will save 2 billion dollars with such a move.

We haven’t even reached the next great financial crisis and the pink slips are already flying on Wall Street.  Meredith Whitney says that she has never seen anything quite like this….

“The industry is as bad as I’ve seen it. So it’s certainly not a great time to be on Wall Street.”

But of course Wall Street is not going to get much sympathy from the rest of America.  The truth is that things have been far rougher for most of the rest of us than things have been for them.

When the last crisis hit, they got trillions of dollars in bailout money and we got nothing.

So most people are not really in a mood to shed any tears for Wall Street.

But of course the Federal Reserve is definitely hoping to help their friends on Wall Street out by printing lots of money.

You never know, by the time this is all over we may see QE4, QE5, QE Reloaded, QE With A Vengeance and QE The Return Of The Bernanke.

Meanwhile, Europe is gearing up to print money like crazy too.

A couple months ago, European Central Bank President  Mario Draghi made the following pledge….

“Within our mandate, the European Central Bank is ready to do whatever it takes to preserve the euro, and believe me, it will be enough.”

And of course the Bank of Japan has joined the money printing party too.  The following is from a recent article by David Kotok….

The recently announced additional program by the BOJ includes a fifty-percent allocation to the purchase of ten-year Japanese government bonds. The other fifty percent will buy shorter-term government securities. Thus, the BOJ is applying half of its additional QE stimulus to extracting long duration from the government bond market, denominated in Japanese yen.

All of the central banks seem to be getting on the QE bandwagon.

But will this fix anything?

Unfortunately it will not, at least according to Paul Volcker….

“Another round of QE is understandable – but it will fail to fix the problem. There is so much liquidity in the market that adding more is not going to change the economy.”

Sadly, most Americans have a ton of faith in the people running our system, but the truth is that they really do not know what they are doing.  Just check out what Dallas Fed President Richard Fisher said the other day….

“The truth, however, is that nobody on the committee, nor on our staffs at the Board of Governors and the 12 Banks, really knows what is holding back the economy. Nobody really knows what will work to get the economy back on course. And nobody – in fact, no central bank anywhere on the planet – has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank – not, at least, the Federal Reserve – has ever been on this cruise before.”

Can you imagine the head coach of a football team coming in at halftime and telling his players the following….

“Nobody on the coaching stuff really has any idea what will work.”

That sure would not inspire a lot of confidence, would it?

Perhaps the Fed should be open to some input from the rest of us.

Actually, back on September 14th the Federal Reserve Bank of San Francisco posted a poll on Facebook that asked the following question….

What effect do you think QE3 will have on the U.S. economy?

The following are the 5 answers that got the most votes….

-“Long term, disastrous”

-“Negative”

-“Thanks for $5 gas”

-“I can’t believe you think this will work!”

-“Fire Bernanke”

So what do you think about the quantitative easing that the Federal Reserve is doing?

Please feel free to post a comment with your thoughts below….

The post QE4? The Big Wall Street Banks Are Already Complaining That QE3 Is Not Enough appeared first on The Economic Collapse.

Household Wealth

We live during a time when U.S. households are becoming poorer.  This week the Federal Reserve announced that the total net worth of U.S. households declined by 4.1 percent in the 3rd quarter of 2011 alone.

That is a staggering decline.  The total net worth of U.S. households plummeted by $2.2 trillion during those three months.  When you break that down, it comes to approximately $7,800 for every single U.S. citizen.

But this is not the first time we have seen a huge decline in U.S. household wealth in recent years.

A recent article posted on CNN detailed the stunning drop in U.S. household wealth that we saw from 2007 to 2009….

Household wealth plunged $16.3 trillion in the two years from early 2007 to the first quarter of 2009, and has slowly been climbing since then. But with the drop in the third quarter of this year, households find their net worth still $9.4 trillion, or 14%, below the high they hit in early 2007, before the bursting of the housing bubble.

So right now the total net worth of U.S. households is $9.4 trillion below what it was back in 2007.

That certainly is not good news.

But not only is the total net worth of U.S. households going down, our incomes are going down as well.

Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

Not that incomes were rising very quickly prior to that time either.

Between 1979 and 2007, income growth for the bottom 90 percent of all U.S. income earners was only about 5 percent for that entire time period.

Meanwhile, household debt was absolutely skyrocketing.  Take a look at the following chart which shows what total U.S. household debt has done over the last three decades….

So income growth has been pretty much flat over the past three decades but household debt has been rising at an exponential pace for most of that time.

Yes, there has been a little bit of deleveraging during this economic downturn, but there are now signs that the deleveraging is rapidly coming to an end.

According to a recent CNN article, credit card use in the United States is experiencing a major upswing once again….

Purchases made with credit cards rose 8.2% in the first quarter of 2011, 9% in the second quarter and 10.6% in the third quarter, according to First Data.

That is not good news.

The truth is that U.S. households owe way, way too much money already.  According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

We are up to our eyeballs in debt, and our incomes are not keeping up.

In addition, we have seen massive amounts of home equity wiped out in recent years.

An unusual thing has happened during this economic downturn.  For the first time in U.S. history, the banks have more equity in our homes than we do.  If you do not believe this, just check out this chart.

The truth is that the American people are not becoming wealthier.  They are becoming poorer.

And a shocking number of Americans are falling into poverty.  In 2010, 2.6 million more Americans fell into poverty, which set a new all-time record for a single year.

But this is not a new thing.  This is a trend that we have seen building for many years.  Back in the year 2000, 11.3% of all Americans were living in poverty.  Today, 15.1% of all Americans are living in poverty.

So obviously U.S. households are not doing well.

But what about the government?

Government Debt

The U.S. national debt is completely and totally out of control.  Right now it is sitting at $15,046,397,725,405.16.  That means that it is nearly 15 times higher than it was just 30 years ago.  Just check out this almost unbelievable chart….

So is our ability to pay these debts 15 times greater than it was back then?

Of course not.

Our liabilities are exploding at an out of control rate but our assets are not.

Whether you are a running a family or running a government, that is a recipe for financial disaster.

The U.S. government has been running budget deficits of over a trillion dollars for several years now, and there is no sign that these trillion dollar deficits are going to stop any time soon.

So how much money is a trillion dollars?

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

Yet somehow the U.S. government has accumulated a debt that is well over 15 trillion dollars.

The Bush administration was a nightmare when it came to running up debt, but they have definitely been outclassed by the Obama administration….

*During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

*The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

*Since Barack Obama was sworn in, the share of the national debt per household has increased by $35,835.

And most U.S. government spending does not do a thing to build real wealth for this country.  For example, the total compensation that the federal government workforce brought in during 2010 is estimated to be about 447 billion dollars.

So did federal workers create 447 billion dollars of real wealth last year?

Of course not.

The truth is that our bloated federal government is a massive drain on our society.

But the federal government is not the only one with a debt problem.

State and local governments all over America are also drowning in debt.  In fact, state and local government debt in America is now sitting at an all-time high of 22 percent of U.S. GDP.

Total Debt

The following chart from the Federal Reserve combines government debt, business debt and consumer debt.  As you can see, America is swimming in an ocean of more than 50 trillion dollars of debt….

To get an idea of how bad that is, just look at where total debt was at back in 1970 or 1980.

Over the last three decades we have seen an orgy of debt that has been absolutely unprecedented.

Meanwhile, we are bleeding national wealth at a staggering rate.

Every single month, tens of billions of dollars more goes out of this country than comes into it.

In fact, it is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.

This represents a transfer of wealth that is so vast that it is almost impossible to believe.

Our dependence on foreign oil is greatly contributing to this.  It is being projected that for the first time ever, the OPEC nations are going to bring in over a trillion dollars from exporting oil this year.  Their biggest customer is the United States.

When we send hundreds of billions of dollars overseas, that is hundreds of billions of dollars that does not go into the pockets of American business owners or American workers.

The United States has had a negative trade balance every single year since 1976, and since that time the United States has run a total trade deficit of more than 7.5 trillion dollars with the rest of the world.

For a moment, imagine a giant map of the world.  Then imagine a pile of 7.5 trillion dollars sitting on the United States of America.

That looks pretty good, eh?

Well, then start taking big chunks of that money and start exchanging it for oil and for cheap plastic products until the entire pile is gone.

Are you starting to understand?

We burn up the foreign oil in our cars and most of the cheap plastic products end up being discarded fairly quickly.

But our loss of national wealth is permanent.

Meanwhile, we are facing national financial obligations in the years ahead that are absolutely nightmarish.

According to Boston University Professor Laurence J. Kotlikoff, the U.S. government is facing a “fiscal gap” of $211 trillion in the decades ahead.  The following comes from an article that Kotlikoff wrote for CNN earlier this year….

The government’s total indebtedness — its fiscal gap — now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations — including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt — and all projected future taxes.

If you went out and liquidated all of the assets owned by all American citizens, all U.S. businesses and all levels of government in America, it would only cover about a third of that bill.

Are you starting to get the picture?

America is no longer a wealthy nation.

We are like that family down the street that is always throwing around tons of money but that is always on the verge of bankruptcy.

So when they tell you that the economy “grew” by 1 or 2 percent, please don’t think that means that America is becoming wealthier.

The truth is that our debts are growing at a far, far faster rate than our assets are.

That means that we are getting poorer.

Is there anyone out there that disagrees with that?

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