Financial Oblivion

We Might As Well Face It – America Is Addicted To Debt

June 12, 2015June 15, 2015 by Michael

Corporations, individuals and the federal government continue to rack up debt at a rate that is far faster than the overall rate of economic growth. We are literally drowning in red ink from sea to shining sea, and yet we just can’t help ourselves. Consumer credit has doubled since the year 2000. Student loan debt has doubled over the course of the past decade. Business debt has doubled since 2006. And of course the debt of the federal government has doubled since 2007. Anyone that believes that this is “sustainable” in any way, shape or form is crazy. We have accumulated the greatest mountain of debt that the world has ever seen, and yet despite all of the warnings we just continue to race forward into financial oblivion. There is no possible way that this is going to end well.

Just the other day, a financial story that USA Today posted really got my attention. It contained charts and graphs that showed that business debt in the U.S. had doubled since 2006. I knew that things were bad, but I didn’t know that they were this bad. Back in 2006, just prior to the last major economic downturn, U.S. nonfinancial companies had a total of about 2.6 trillion dollars of debt. Now, that total has skyrocketed to 5.8 trillion…

Companies are sitting on a record $1.82 trillion in cash. That might sound impressive until you hear companies owe three times more – $5.8 trillion, according to a new report from Standard & Poor’s Ratings Services.

Debt levels are soaring at U.S. non-financial companies so quickly – total debt outstanding rose $650 billion in 2014, which is six times faster than the $100 billion in added cash.

So are we in better condition to handle an economic crisis than we were the last time, or are we in worse shape?

Let’s look at another category of debt. According to new data that just came out, the total amount of student loan debt in the U.S. is up to a staggering 1.2 trillion dollars. That total has more than doubled over the past decade…

New data released by The Associated Press shows student loan debt is over $1.2 trillion, which is more than double the amount of a decade ago.

Students are facing an average of $35,000 in debt, that’s the highest of any graduating class in U.S. history. A senior at University of Colorado, Colorado Springs, Jon Cheek, knows the struggle first hand.

“It’s been a pretty big concern, I work while I go to school. I applied for a bunch of scholarships and done everything I can to try and keep it low,” said Cheek.

And of course it isn’t just student loan debt. American consumers have had a love affair with debt that stretches back for decades. As the chart below demonstrates, overall consumer credit has more than doubled since the year 2000…

If our paychecks were increasing at this same pace, that would be one thing. But they aren’t. In fact, real median household income is actually lower today than it was just prior to the last economic crisis.

So American households should actually be cutting back on debt. But instead, they are just piling on more debt, and the financial predators are becoming even more creative. In a previous article, I discussed how many auto loans are now being stretched out for seven years. At this point, the number of auto loans that exceed 72 months is at an all-time high…

The average new car loan has reached a record 67 months, reports Experian, the Ireland-based information-services company. The percentage of loans with terms of 73 to 84 months also reached a new high of 29.5% in the first quarter of 2015, up from 24.9% a year earlier.

Long-term used-vehicle loans also broke records with loan terms of 73 to 84 months reaching 16% in the first quarter 2015, up from 12.94% — also the highest on record.

When will we learn?

The crash of 2008 should have been a wake up call.

We should have acknowledged our mistakes and we should have started doing things very differently.

But instead, we just kept on making the exact same mistakes. In fact, our long-term financial problems have continued to accelerate since the last recession. Just look at what has happened to our national debt. Just prior to the last recession, the U.S. national debt was sitting at approximately 9 trillion dollars. Today, it is over 18 trillion dollars…

Our debt has grown so large that we will never be able to get out from under it. This is something that I covered in my recent article entitled “It Is Mathematically Impossible To Pay Off All Of Our Debt“. Because of our recklessness, our children, our grandchildren and all future generations of Americans are consigned to a lifetime of debt slavery. What we have done to them is beyond criminal. If we lived in a just society, a whole bunch of people would be going to prison for the rest of their lives over this.

During fiscal year 2014, the debt of the federal government increased by more than a trillion dollars. But in addition to that, the federal government has more than seven trillion dollars of debt that must be “rolled over” every year. In other words, the government must issue more than seven trillion dollars of new debt just to pay off old debts that are coming due.

As long as the rest of the world continues to lend us enormous mountains of money at ridiculously low interest rates, we can continue to keep our heads above the water. But this can change at any time. And once it does, interest rates will rise. If the average rate of interest on U.S. government debt was to return to the long-term average, we would very quickly find ourselves spending more than a trillion dollars a year just on interest on the national debt.

The debt-fueled prosperity that we are enjoying now is not real. It is a false prosperity that has been purchased by selling future generations into debt slavery. We have mortgaged the future to make our own lives better.

We are addicts. We are addicted to debt, and no matter how many warnings we receive, we just can’t help ourselves.

Shame on you America.

All Of This Whining And Crying About The Sequester Shows Why America Is Doomed

February 27, 2013February 27, 2013 by Michael

If we can’t even cut federal spending by 2.4 percent without much of the country throwing an absolute hissy fit, then what hope does America have? All of this whining and crying about the sequester is absolutely disgraceful. The truth is that even if the sequester goes into effect, the U.S. government will still take in more money than ever before in 2013 and it will still spend more money than ever before in 2013. So it is a bit disingenuous to call what is about to happen “a spending cut”, but for the sake of argument let’s concede that point. Even if the budget really was being “cut” by 85 billion dollars, that only would only amount to a “cut” of 2.4 percent to federal spending. It would barely make a dent in the federal budget deficit for 2013. The U.S. government would still accumulate about as much new debt in fiscal year 2013 as it did in all the years from the inauguration of George Washington to the inauguration of Ronald Reagan combined. Our debt to GDP ratio would continue to soar. The sequester cuts would essentially only be a minor bump on the road to financial oblivion. But if you listen to Barack Obama and his allies, they would have you believe that we are facing a great national crisis because of these impending cuts. They would have you believe that hundreds of thousands of people will lose their jobs and that many government agencies will no longer be able to operate effectively. They would have you believe that “granny won’t get her lunch” and “roofs blown off by Hurricane Sandy won’t get repaired”. Well, if all of that is true, then what in the world would our country look like if we actually cut a trillion dollars from the federal budget this year and started living within our means?

Have you ever known people that are already hundreds of thousands of dollars in debt and yet go out and regularly blow thousands more dollars on wild shopping sprees?

Such debt addicts may be very proud of their new homes, their new cars, their new clothes and all of their fancy electronic gadgets, but it was all purchased with debt. When a “day of reckoning” finally arrives, many debt addicts lose absolutely everything and end up in the street.

That is what America is like today.

Our politicians like to show off all of the stuff that our government is spending money on, but the truth is that we are spending gigantic mountains of money that we simply do not have. We are literally stealing from our kids and our grandkids so that we can continue to enjoy a massively inflated standard of living that we have not earned.

But we can’t stop ourselves. Americans are absolutely addicted to big government. They want a gigantic government that sends out free money to more than 100 million Americans every month, but they absolutely do not want to pay for it. They would rather steal money from their children and their grandchildren to pay for it.

This has got to stop, because we are literally destroying the future of this country.

If Americans really want a massively bloated government that takes care of everyone from the cradle to the grave then they should pay for it.

If Americans don’t want to pay for it, then they should reduce the size of the government to a level where they are willing to pay for it.

But stealing money from future generations of Americans to pay our bills is absolutely disgraceful.

As I talked about in a previous article, we are stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day.

Is there anyone out there that is willing to stand up and defend that kind of theft?

But the vast majority of Americans don’t want to do anything to stop it, because they don’t want to harm “the economy” (i.e. our ridiculously bloated standard of living).

Will the sequester cuts hurt the economy a bit?

Of course.

Government spending cuts always hurt the economy.

If we raised taxes to help pay the bills that the federal government has been racking up, would that hurt the economy?

Of course.

Tax increases always hurt the economy.

But if we continue on the path that we are today, America is doomed.

The U.S. national debt is the biggest single debt in the history of the world. It is now more than 16.6 trillion dollars, and it has gotten more than 23 times larger since Jimmy Carter first entered the White House.

If our politicians suddenly decided to go to a balanced budget today, our debt-fueled “bubble economy” would disappear and we would immediately plunge into a deep economic depression.

Do the American people have the character to be able to handle that kind of an “adjustment” to our standard of living?

Of course not.

That is why so many of our politicians are scared to death of doing anything about the debt.

And even these small sequester “cuts” are freaking everyone out. Many of our politicians and many in the mainstream media are openly declaring that “the sky is falling”. Just check out the following short excerpt from a recent New York Times article…

The owner of a Missouri smokehouse that makes beef jerky is worried about a slowdown in food safety inspections. A Montana school district is drawing up a list of teachers who could face layoffs. Officials at an Arizona border station fear that lines to cross the border could lengthen. And if Olympic National Park in Washington cannot hire enough workers to plow backcountry trails, they may stay closed until the snow melts in July.

But that is nothing compared to what others are saying. CNN is declaring that if the sequester cuts happen, “granny won’t get her lunch” and “roofs blown off by Hurricane Sandy won’t get repaired”.

And check out these ominous warnings from Barack Obama about what will happen if the sequester cuts go into effect…

“Emergency responders like the ones who are here today — their ability to help communities respond to and recover from disasters will be degraded. Border Patrol agents will see their hours reduced. FBI agents will be furloughed. Federal prosecutors will have to close cases and let criminals go. Air traffic controllers and airport security will see cutbacks, which means more delays at airports across the country. Thousands of teachers and educators will be laid off. Tens of thousands of parents will have to scramble to find childcare for their kids. Hundreds of thousands of Americans will lose access to primary care and preventive care like flu vaccinations and cancer screenings.”

The Obama administration has even decided to release hundreds of illegal immigrants in anticipation of the cuts…

Immigration and Customs Enforcement officials have released “several hundred” immigrants from deportation centers across the country, saying the move is an effort to cut costs ahead of budget cuts due to hit later this week.

Announcing the news Tuesday, ICE officials said that the immigrants were released under supervision and continue to face deportation. After reviewing hundreds of cases, those released were considered low-risk and “noncriminal,” officials said.

The claims about the sequester cuts just seem to get more ridiculous with each passing day. Homeland Security Secretary Janet Napolitano is warning that the cuts will make the U.S. more vulnerable to terrorist attacks, and Obama recently decided not to send an aircraft carrier to the Persian Gulf because of “budget concerns“.

Apparently he sees no problem with using the U.S. military to score political points.

And Federal Reserve Chairman Ben Bernanke says that the budget cuts will result in “less actual deficit reduction in the short run”.

Really?

How stupid do they think we all are?

Yes, the sequester cuts will have an impact on the economy, but they won’t cause the sky to fall.

The following is what the CBO says the economic impact of the cuts is likely to be…

The Congressional Budget Office estimates the cuts will cost 750,000 jobs and hit growth by 0.6 percentage points, assuming the cuts remain in effect for the remainder of the fiscal year. Some economists expect a slightly bigger impact.

Remember, these are actually very small cuts.

In fact, according to U.S. Representative Lynn Jenkins, the U.S. government will actually be spending more money in 2013 than it did in 2012 even if the sequester cuts go into effect…

“There’s a fact that says we are going to take in more money this fiscal year than we have ever taken in before,” Jenkins said. “The budget this year, we will spend more money this year than we spent last year even if the sequester goes into effect. We will spend more money even if the sequester goes into effect.”

So why is everyone whining and crying over such a very small amount of money?

If you want to get upset about something, why not get upset about things that are increasing our debt by trillions of dollars?

For example, according to a Government Accountability Office report that was just released, Obamacare is going to cause the federal debt to rise by $6.2 trillion.

Why aren’t more people getting upset over that?

Sadly, it is because America is a debt addict. Most Americans don’t really care much when federal spending skyrockets out of control, but if anyone tries to slow down the spending a little bit they throw hissy fits.

And please don’t tell me that “the big government Republicans” are much better than “the big government Democrats” on budget issues. The Republicans have caved in and have gone along with all of this wild spending every single time.

On March 27th, they will have another opportunity to do something. That is when the current continuing resolution expires.

At that time, the Republicans could refuse to pass anything but a balanced budget.

Or they could at least refuse to pass anything except a budget that would cut the federal budget deficit in half.

But they won’t do anything once again. They will cave in and go along with the status quo because they are cowards.

So we will continue to rip off future generations to fuel our current bloated standard of living.

Thomas Jefferson understood that government borrowing is theft from future generations. He once made the following statement….

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

Shame on you Democrats.

Shame on you Republicans.

Shame on you America.

You are destroying the future of America for your own selfish reasons.

If future generations get the chance, they will look back on what you did to them and they will curse you for it.

For much more on our exploding national debt, please see the following article: “55 Facts About The Debt And U.S. Government Finances That Every American Voter Should Know“.

Not that living within our means would be easy.

Like I said, it would mean a deep economic depression, and it would also likely mean a tremendous amount of societal chaos.

Even now, while we are still living in the boom times, things are really starting to get crazy out there. Just check out what is going on in Oakland…

Oakland’s crime problems have gotten so bad that some people aren’t even bothering to call the cops anymore; instead, they’re trying to solve and prevent crimes themselves.

KPIX 5 cameras caught up with a half dozen neighbors in East Oakland’s Arcadia Park neighborhood Monday as they walked the streets on the lookout for crime. The vigilance has never seemed more necessary than now; 25 homes in the neighborhood have been burglarized over the last two months alone.

In a neighborhood that has started to feel like the wild west, people have even started posting “wanted” signs.

“You have to walk around in your house with a gun to feel safe here,” said Alaska Tarvins of the Arcadia Park Board of Directors.

If this is how bad things are now, how bad will they be when a day of reckoning for our economy arrives?

And a day of reckoning is coming.

Our politicians can try to keep kicking the can down the road for as long as they can, but eventually time will run out. Just take a look at what is happening in Greece and Spain. Meanwhile, all of this can kicking is just making the eventual crisis even worse.

We can borrow our way to prosperity for a while, but in the end there is always a very bitter price to pay for doing so.

I would love to tell you that there is a chance that all of this will be turned around, but the truth is that all of this whining and crying about the sequester shows that America is doomed.

I hope that you are getting ready.

The Federal Government Hands Out Money To 128 Million Americans Every Month

January 10, 2013January 10, 2013 by Michael

The number of Americans receiving money directly from the federal government has grown from 94 million in the year 2000 to over 128 million today. A shocking new research paper by Patrick Tyrrell and William W. Beach contains that statistic and a whole bunch of other very revealing numbers. According to their research, the federal government hands out money to 41.3 percent of the entire population of the United States each month. Overall, more than 70 percent of all federal spending goes to what they call “dependence-creating programs”. It is the most massive wealth redistribution scheme in the history of the world, and it continues to grow at a very rapid pace with each passing month. But can we really afford this? Of course we never want to see a single person go without food to eat or a roof to sleep under, but can the federal government really afford to support 128 million Americans every month? If millions more Americans keep jumping on to the “safety net” each year, how long will it be before it breaks and it is not there for anyone? The federal government is already drowning in debt. This year the U.S. national debt will easily blow past the 17 trillion dollar mark and we are rapidly heading toward financial oblivion. We are stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day with no end in sight. If we don’t get our finances in order as a nation, what will the end result be?

According to Tyrrell and Beach, federal spending on entitlement programs has been rising more than 6 times as fast as population growth has in recent years…

Between 1988 and 2011, spending on dependence-creating federal government programs has increased 180 percent versus “only” a 62 percent increase in the number of people who are enrolled in federal government programs, and a 27 percent increase in the population. Not only are more people enrolled in government programs than ever before, but more US taxpayer dollars are being spent on each recipient every year.

But even though the numbers that Tyrrell and Beach present in their paper are incredibly shocking, the truth is that they have probably underestimated the true scope of government dependence in America today. Just consider the following numbers…

Food Stamps

Back in the year 2000, there were about 17 million Americans on food stamps. That number has exploded to more than 47 million today.

Medicaid

If you can believe it, today more than 70 million Americans are on Medicaid, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

Social Security

Right now, there are more than 53 million Americans on Social Security, and that number is projected to absolutely explode as huge waves of Baby Boomers retire in the coming years.

Medicare

As I wrote about in a previous article, the number of Americans on Medicare is expected to grow from 50.7 million in 2012 to 73.2 million in 2025.

And those are only four examples of government programs that have seen their numbers explode in recent years. There are so many more that could be mentioned. Overall, the federal government runs nearly 80 different “means-tested welfare programs“, and almost all of them are experiencing explosive growth.

So is the “128 million” figure that Tyrrell and Beach have come up with actually too low? I believe that it is. But in any event, nobody can deny that the “welfare state” in the U.S. has absolutely mushroomed in size since the turn of the century.

According to one recent poll, 55 percent of all Americans say that they have received money from a safety net program run by the federal government at some point in their lives. We are a nation that has become very comfortable leaning on Uncle Sam for help.

And poor people from all around the globe see how good things are here and they are eager to get a seat at the table. In a previous article, I talked about a federal government website (“WelcomeToUSA.gov“) that actually teaches new immigrants how to apply for welfare once they are able to get into the United States.

Will we all eventually becoming dependent on the government? If that happens will we still be free men and women?

Once someone is dependent on the government, they become forced to do what the government tells them to do in order to survive. If we all eventually become dependent on the federal government, how much power will that give them over us?

That is something to think about.

Another thing to ponder is how the U.S. middle class is rapidly disappearing.

There will always be poor people, and we should always take care of them, but what we should be truly alarmed about is how the middle class in America has been dramatically shrinking in recent years.

One of the biggest reasons why so many Americans are applying for government assistance these days is because there simply aren’t enough jobs for everyone. Politicians from both political parties have fully embraced the one world “free trade” economic agenda of the global elite, and as a result millions of our jobs are being shipped out of the country. Big corporations can either choose to pay U.S. workers a living wage with benefits, or they can choose to set up shop on the other side of the globe where it is legal to pay workers slave labor wages with no benefits. Plus there are much fewer taxes and regulations to deal with typically on the other side of the globe.

As long as this nation pursues this “one world economic agenda”, there will never be enough jobs in the United States ever again. Chronic unemployment will become the new normal. Our formerly great manufacturing cities will continue to degenerate into gang-infested war zones.

Apologists for the current system continue to insist that the answer is “more education”, but the truth is that government dependence is even exploding among those with advanced degrees. The following is a brief excerpt from a recent article on The Chronicle Of Higher Education…

People who don’t finish college are more likely to receive food stamps than are those who go to graduate school. The rolls of people on public assistance are dominated by people with less education. Nevertheless, the percentage of graduate-degree holders who receive food stamps or some other aid more than doubled between 2007 and 2010.

During that three-year period, the number of people with master’s degrees who received food stamps and other aid climbed from 101,682 to 293,029, and the number of people with Ph.D.’s who received assistance rose from 9,776 to 33,655, according to tabulations of microdata done by Austin Nichols, a senior researcher with the Urban Institute. He drew on figures from the 2008 and 2011 Current Population Surveys done by the U.S. Census Bureau and the U.S. Bureau of Labor.

After reading that, does anyone still believe that “more education” is the answer to our problems?

What we need is more jobs, and lots of them. Unfortunately, our politicians continue to pursue policies that absolutely kill American jobs.

So the number of Americans that are forced to turn to the government for assistance will continue to grow, as will our national debt.

Sadly, most Americans still don’t realize what is happening. Most of them are still listening to those in the mainstream media that are insisting that everything is going to be just fine.

For example, the most famous economic journalist in the country, Paul Krugman of the New York Times, recently wrote that the deficit crisis has been “solved”…

True, there are projected problems further down the road, mainly because of the continuing effects of an aging population. But it still comes as something of a shock to realize that at this point reasonable projections do not, repeat do not, show anything resembling the runaway deficit crisis that is a staple of almost everything you hear, including supposedly objective news reporting.

So you heard it here first: while you weren’t looking, and the deficit scolds were doing their scolding, the deficit problem (such as it was) was being mostly solved.

Oh really?

I don’t know how in the world Paul Krugman can get paid to write such nonsense, but the truth is that our government debt problems are only just beginning.

In a previous article, I explained that the unfunded liabilities of the federal government are growing so rapidly that we could not cover them even if we raised the highest tax rate to 100%…

According to Chris Cox and Bill Archer, two men who served on Bill Clinton’s Bipartisan Commission on Entitlement and Tax Reform, there is no way in the world that we could raise taxes high enough to pay for all of the obligations that we are currently taking on. They say that even if we taxed all corporations and all individuals at a 100% tax rate on all income over $66,193, “it wouldn’t be nearly enough to fund the over $8 trillion per year in the growth of U.S. liabilities.“

Yes, Paul Krugman, we do have a spending problem. Even if Bill Gates gave every single penny of his fortune to the federal government, it would only cover the U.S. budget deficit for about 15 days. We simply cannot go on spending money like this.

If anyone out there believes Paul Krugman and is convinced that the federal government is no longer facing a massive debt problem, please read this article: “55 Facts About The Debt And U.S. Government Finances That Every American Voter Should Know“.

But if we can’t afford to do all of this spending, then why are we doing it?

Well, it is because there are a whole lot of people out there that are really hurting. Poverty in the U.S. is absolutely exploding, and the gap between the wealthy and the poor has grown to unprecedented heights.

According to a recent article posted on Economy In Crisis, the bottom 60 percent of all Americans only own 2.3 percent of all the financial wealth in the nation combined.

That is astounding.

If you live in a wealthy area of the country, you may look around and things may look really good to you. But in many other areas of the country things are worse than they have ever been in the post-World War II era. For the first time ever, more than a million public school students in the United States are homeless. That number has risen by 57 percent since the 2006-2007 school year.

Can you imagine that? We have over a million kids that are attending our public schools that do not have a home to go back to at night.

Our economy desperately needs more jobs, but we just continue to lose more of them. On Thursday, it was announced that American Express is eliminating 5,400 more jobs. More announcements like this come out just about every day now. 65 percent of all Americans expect 2013 to be a year of “economic difficulty”, and there aren’t a whole lot of reasons to be optimistic about things at this point.

When you lose your job, it can feel like your entire life is falling apart. The competition for jobs is absolutely fierce, and a lot of workers have fallen through the cracks. In this rough economic environment, there are millions of Americans that have never been able to put the pieces of their lives back together. A recent CNN article profiled a 42-year-old woman up in Oregon named Lynette who has had her life totally turned upside down by unemployment…

I’m a single mom with a son in high school.

Three years ago, I was laid off from a job working at a propane company. I had just gotten back on my feet after battling breast cancer, then cervical cancer, but the economy tanked, and I was the first to go.

I am now 42, and the cancer is gone. But it appears my employability is also gone.

She used to work in a position that helped others find government assistance, but now she is the one who has been forced to seek it…

Before I was diagnosed with cancer, I worked for the state of Oregon and was the number one service manager for the Department of Human Services. My job was to help low income families find work and get food stamps and insurance. Now, I cannot even get a job at McDonalds, and I’m the one living on social assistance.

Does anyone out there have a similar story to share? If so, please feel free to share it below…