The Future

Obama Has Stolen $5.3 Trillion From Our Children In Order To Make Himself Look Good

Barack Obama has destroyed the future of America in order to improve his chances of winning the next election.  Under Obama, 5.3 trillion dollars has been ruthlessly stolen from our children and our grandchildren.  That money has been used to pump up the debt-fueled false prosperity that we have been experiencing.  When the U.S. government borrows money that it does not have from someone else (such as China) and spends that money into the economy it is going to make our economic numbers look better.  Even if the government spends that money on incredibly stupid things, it still gets into the hands of average Americans who in turn spend that money on food, gas, clothes, etc.  If we were to go back and take that extra 5.3 trillion dollars out of the U.S. economy, I guarantee you that we would be in a rip-roaring depression right now.  We would look a lot like Greece at this point.  For several years Greece has been raising taxes and cutting government spending in an attempt to balance the budget and these austerity measures have resulted in an unemployment rate of over 23 percent and an economy that has contracted by close to 25 percent.  Most Americans don’t want to go through pain like that so they are okay with continuing to financially rape our children and our grandchildren.  Just imagine how you would feel if your parents died tomorrow and you found out that they had left you with a million dollar debt that you were legally obligated to pay off.  How would you feel, knowing that you had just been sold into debt slavery for the rest of your life?  Well, that is how our children and our grandchildren are going to feel.  We are destroying the greatest economic machine the world has ever seen, we are accumulating the biggest mountain of debt in the history of the planet, and the coming economic collapse that we have caused is going to wipe out the promising future that our children and our grandchildren were supposed to have.  If they get the chance, future generations of Americans will curse us bitterly and will spit on our graves.  What we are doing to our children and our grandchildren is the kind of stuff that horror movies are made of.  You should be ashamed of yourself America.

The federal budget deficit for 2012 will be larger than the entire U.S. national debt was 30 years ago.  In 1982 Ronald Reagan was in the White House and the U.S. national debt was considered to be a tremendous national crisis.  But somehow we have allowed our national debt to grow from about a trillion dollars back then to approximately $16,000,000,000,000 today.

By the end of Obama’s first term, the U.S. national debt will have grown more than it did from the time that George Washington became president to the time that George W. Bush became president.

That is hard to believe.

Obama is going to outdo all the presidents from George Washington through Bill Clinton in just one term.

Amazing.

At this point, the U.S. national debt is more than 22 times larger than it was when Jimmy Carter became president.

This has allowed us to enjoy a standard of living far beyond what we deserved to.  We have stolen from the future to make the present more pleasant.

But hardly anybody wants the party to end.  Especially not our Congress critters – they are living like kings and queens at our expense.  Our “representatives” in Washington D.C. love to give speeches about being “financially responsible”, but most of them never take any serious action about the debt because the way things are working now has been incredibly good to them.

And the truth is that both political parties have been responsible.  In 2010, Republicans took control of the House of Representatives with a clear mandate to get government spending under control.  Not a single penny of government money can be spent without their permission.  But since they took control, the U.S. national debt has increased by another 1.8 trillion dollars.

At this point, this current Congress (controlled by both Republicans and Democrats) has added more to the national debt than the first 97 Congresses combined.

We expect this kind of nonsense from the Democrats, but the Republicans are supposed to know better.

Of course our entire financial system is designed to permanently entrap our federal government in an endless spiral of debt, but neither political party ever talks about that.

Sadly, the U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.

But we never hear about the link between the Federal Reserve and our national debt from either political party or on the mainstream news.

So most Americans do not even realize that our system is designed to create government debt.

It is absolutely disgusting.

We say that we care about our kids, and yet we are passing down a $16,000,000,000,000 debt to them.

Talk about child abuse.

Most people have a really hard time grasping how much money 16 trillion dollars actually is.

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.

And it would take you more than half a million years to spend 16 trillion dollars.

This is a debt that is impossible to pay back.  Just look at how it has exploded over the past 40 years….

In a previous article I discussed the distressing rate at which our debt is growing….

It took more than 200 years for the U.S. national debt to reach 1 trillion dollars.  In 1986, the U.S. national debt reached 2 trillion dollars.  In 1992, the U.S. national debt reached 4 trillion dollars.  In 2005, the U.S. national debt doubled again and reached 8 trillion dollars.  Now the U.S. national debt is about to cross the 16 trillion dollar mark.  How long can this kind of exponential growth go on?

If we can’t even slow down the growth of our debt, how do we ever expect to repay a single penny?

The sad truth is that we aren’t ever going to start paying down our debt.  We have gotten to the point where if we take our foot off the debt accelerator we plunge directly into a depression and the entire system collapses.  It is like a really sick version of the movie “Speed”.

Where is Keanu Reeves when you need him?

Since Barack Obama entered the White House, he has approved a whole host of measures that have been good for the economy in the short-term.  TARP, the stimulus packages, the auto industry bailout and the payroll tax cut are just a few examples.

Barack Obama has wanted to do everything he possibly can to stimulate the economy in the short-term so that he can win again in 2012.

But what about the future?

Barack Obama could not care less about the future.  He is just like so many of our other politicians.  He is blinded by selfish ambition.

Since Barack Obama became president, the U.S. national debt has increased by an average of more than $64,000 per taxpayer.

Are you willing to write a check for your share?

No?

Oh, let’s just pass this horrific debt on to our children, right?

The path that we are on as a nation cannot go on too much longer.  The truth is that we are headed for financial oblivion.

A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.

Of course we will never get to the point.  Our financial system will collapse long before then.

Sadly, the United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.

So why are we not like Greece or Spain yet?

Well, it is because we are still able to borrow huge piles of money very, very cheaply.

But at some point that will come to an end, and when it does the consequences are going to be nightmarish.

Historically, the interest rate on 10 year U.S. Treasuries has averaged 6.68 percent.  If the average rate of interest on U.S. debt rose to that level today, we would be paying more than a trillion dollars a year just in interest on the national debt.

And when you consider our future unfunded liabilities things get even more frightening.

According to Boston University economist Laurence Kotlikoff, the “fiscal gap” is “the present value difference between projected future spending and revenue”.  His calculations have led him to the conclusion that the United States is facing a fiscal gap of 222 trillion dollars.

And this gap is rising at a breathtaking pace.

The following is an excerpt from a recent article co-authored by Kotlikoff….

In 2007, the first year the CBO produced the Alternative Fiscal Scenario, the gap, by our reckoning, stood at $175 trillion. By 2009, when the CBO began reporting the AFS annually, the gap was $184 trillion. In 2010, it was $202 trillion, followed by $211 trillion in 2011 and $222 trillion in 2012.

But if we interrupt this debt cycle we immediately go into a depression.

We are a debt addict that will die without more debt.

Meanwhile, our national ability to produce wealth is going down the toilet.

All over the country businesses are shutting down, factories are being closed and millions of jobs are being sent overseas.

As I wrote about the other day, American families are steadily getting poorer.  The middle class is shrinking and the tax base is shriveling up.

Many Americans end up flat broke at the end of their lives these days.  In fact, one study found that nearly half of all retirees end up with $10,000 or less when they die.

So where is all of the money for servicing this gigantic national debt going to come from?

Even if Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.

So what is the solution?

If we keep spending money like this we are doomed, but if we stop spending money like this we are doomed.

And debt is not just a problem that the federal government is facing.

Posted below is a chart that shows the growth of all forms of debt in the United States over the past several decades.  40 years ago, there was less than 2 trillion dollars of total debt owed in the United States.  Now there is nearly 55 trillion dollars of debt owed.  This generation has destroyed the future and has set the stage for an unprecedented economic collapse.  Shame on you America….

Is Wal-Mart Destroying America? Facts About Wal-Mart That Will Absolutely Shock You

America absolutely loves Wal-Mart.  100 million customers visit Wal-Mart every single week in this country.  But is Wal-Mart good for America?  That is a question that most people never stop and ask.  Most of us love shopping in big, clean stores that are packed with super cheap merchandise, but the truth is that Wal-Mart is destroying America in a lot of ways.  As you will see below, Wal-Mart has destroyed tens of thousands of small businesses and countless manufacturing jobs over the past couple of decades.  Wal-Mart has become a gigantic retail behemoth that sells five times more stuff than any other retailer in the United States.  Unfortunately, a large percentage of all the stuff sold at Wal-Mart is made overseas.  What that is costing the U.S. economy in terms of lost jobs and lost revenue is incalculable.  But Wal-Mart is a perfect example of where our economic system is headed.  Our economy is becoming completely and totally dominated by highly centralized monolithic predator corporations that ruthlessly crush all competition and that will stoop to just about anything in order to cut costs.  In the future, will we all be working for gigantic communal entities that funnel all of the wealth and economic rewards to a very tiny elite?  That sounds very much like how communist China works, and red-blooded Americans should want no part of that.  America is supposed to be about free enterprise and competition and working together to build up this country, and Wal-Mart is destroying all of that.

The following are 20 facts about Wal-Mart that will absolutely shock you….

#1 The average U.S. family now spends more than $4000 a year at Wal-Mart.

#2 In 2010, Wal-Mart had revenues of 421 billion dollars.  That amount was greater than the GDP of 170 different countries including Norway, Venezuela and the United Arab Emirates.

#3 If Wal-Mart was a nation, it would have the 23rd largest GDP in the world.

#4 Wal-Mart now sells more groceries than anyone else in America does.  In the United States today, one out of every four grocery dollars is spent at Wal-Mart.

#5 Amazingly, 100 million customers shop at Wal-Mart every single week.

#6 Wal-Mart has opened more than 1,100 “supercenters” since 2005 alone.

#7 Today, Wal-Mart has more than 2 million employees.

#8 If Wal-Mart was an army, it would be the second largest military on the planet behind China.

#9 Wal-Mart is the largest employer in 25 different U.S. states.

#10 According to the Economic Policy Institute, trade between Wal-Mart and China resulted in the loss of 133,000 manufacturing jobs in the United States between 2001 and 2006.

#11 The CEO of Wal-Mart makes more in a single hour than a full-time Wal-Mart associate makes in an entire year.

#12 Tens of thousands of Wal-Mart employees and their children are enrolled in Medicaid and are dependent on the government for healthcare.

#13 Between 2001 and 2007, the value of products that Wal-Mart imported from China grew from $9 billion to $27 billion.

#14 Amazingly, 96 percent of all Americans now live within 20 miles of a Wal-Mart.

#15 The number of “independent retailers” in the United States declined by 60,000 between 1992 and 2007.

#16 According to the Center for Responsive Politics, Wal-Mart spent 7.8 million dollars on political lobbying during 2011.  That number does not even include campaign contributions.

#17 Today, Wal-Mart has five times the sales of the second largest U.S. retailer (Costco).

#18 The combined net worth of six members of the Walton family is roughly equal to the combined net worth of the poorest 30 percent of all Americans.

All over the country, independent retailers are going out of business because they cannot compete with Wal-Mart and their super cheap Chinese products.  Often communities will give Wal-Mart huge tax breaks just to move in to their areas.  But what many communities don’t take into account is that the introduction of a Wal-Mart is often absolutely devastating to small businesses….

A study of small and rural towns in Iowa showed lost sales for local businesses ranging from -17.2% in small towns to -61.4% in rural areas, amounting to a total dollar loss of $2.46 BILLION over a 13-year period.

When we buy stuff made by people working for slave labor wages in China, we destroy good paying American jobs and we make America poorer.  This is a point that I have tried to make over and over.

Wal-Mart often tells one thing to the public and then does another thing in private.  Sadly, the truth is that Wal-Mart does not care about U.S. manufacturing jobs.  Wal-Mart just wants to get products as cheaply as they possibly can, and most of the time that means getting them from China.

Just check out this first-hand testimony from an 81-year-old retired apparel manufacturer….

I was president of the Southwestern Apparel Manufacturers Association. There was a meeting sometime between 1985 and 1990. Walmart had contacted our organization and asked if they could meet with us at our beautiful Apparel Mart we had here in Dallas, which has now been razed, because all the independent merchants don’t exist that used to come to it. Two people from Walmart came down and they said they were going to be sourcing goods from overseas and we would have to meet those prices for consumer products and to get ready for it—we are going to be sourcing the world. Walmart was the only company that came out and said this.

It was sort of shocking: I was selling them some merchandise at the time. On the back of their trucks it was saying “Bring it Back to America!” They had the big “keep it in America” program going at that time on the big signs in the stores. Meanwhile when I reminded the buyer of that, she told me, “that is just for domestic consumption, we’re going to buy at the cheapest we can anywhere on earth.”

As I have written about previously, the United States has lost more than 56,000 manufacturing facilities since 2001.

We are losing millions of good jobs that cannot be replaced.  If you can believe it, the United States has actually lost an average of about 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001.

Last year, the U.S. trade deficit with China was the biggest trade deficit that one nation has had with another nation in the history of the world, and Wal-Mart played a huge role in that.

In fact, Wal-Mart has actually been forcing some U.S. manufacturers to pack up and move overseas.  The following is from a recent article by Amy Traub….

Walmart’s market power is so immense that the even the largest suppliers must comply with its demands for lower and lower prices because they cannot afford to have their goods taken off its shelves. Companies that used to manufacture products in the United States, from Levi’s jeans to lock maker Master Lock, were pressured to shut their U.S. factories and moved manufacturing abroad to meet Walmart’s demand for low prices.

Unfortunately, the vast wealth that Wal-Mart is sucking out of our communities is not put back into our communities.  The profits are funneled out to Wal-Mart executives and shareholders.  We may enjoy the low prices, but very little of the money that we give to Wal-Mart gets recycled in our local areas.

In the old days, you could actually support a family selling electronics or running a general store.  But you can’t support a family working at Wal-Mart.  The vast majority of the jobs that Wal-Mart creates are very low paying.  Large numbers of Wal-Mart employees are actually on welfare, and this is part of the reason why we have seen such an explosion in the number of the working poor in America.

At this point, more than 40 percent of all jobs in America are low wage jobs and the middle class is rapidly disappearing.

If we do not support American jobs and American manufacturers they will continue to go away and the welfare rolls in this country will continue to explode.

There is not going to be any prosperity in this country without jobs.  Unfortunately, most Americans simply do not understand how good jobs are being systematically destroyed in America every single day.

The path that America is headed on today is only going to end in complete and total disaster.  We are being transformed from a wealthy nation into a poor nation.  In the end, we will be dominated by a very tiny elite and everyone else will either be among the working poor or will be totally dependent on the government.

Our system is supposed to be about open, honest competition.  But that is not what Wal-Mart is about.  Wal-Mart is about crushing small businesses and manufacturers here in America and getting us all to buy their super cheap Chinese-made goods.

So what do all of you think about Wal-Mart?  Please feel free to post a comment with your thoughts below….

Eurobonds: The Issue That Could Shatter Europe

Would you pool your debt with a bunch of debt addicts that have no intention of reducing their wild spending habits?  Of course you wouldn’t.  But that is exactly what Germany is being asked to do.  Increasingly, “eurobonds” are being touted as the best long-term solution to the financial crisis in Europe.  These eurobonds would represent jointly issued debt by all 17 members of the eurozone.  This debt would also be guaranteed by all 17 members of the eurozone.  This would allow all countries in the eurozone to enjoy the same credit rating that Germany does, and borrowing costs for nations such as Greece, Portugal, Italy and Spain would plummet.  But borrowing costs for Germany would rise substantially.  In fact, it is being estimated that Germany could be facing an extra 50 billion euros a year in interest expenses.  So over ten years that would come to about 500 billion euros.  Needless to say, Germany is not thrilled about this idea.  But new French President Francois Hollande is pushing eurobonds very hard, and he has the support of the OECD, the IMF and many top Italian politicians.  In the end, this could be the key to the future of the eurozone.  If the Germans give in and decide that they are willing to deeply subsidize their profligate neighbors indefinitely, then the euro could potentially be saved.  If not, then this issue could end up shattering Europe.

It is easy to try to portray the Germans as the “bad guys” in all this, but try to step into their shoes for a minute.

If you had some relatives that were spending wildly and that had already run up $100,000 in credit card debt, would you be a co-signer on their next credit card application?

Of course not.

The recent elections in France and Greece made it abundantly clear that the populations of those two countries are rejecting austerity.

Instead, they want a return to the debt-fueled prosperity that they have always enjoyed in the past.

Unfortunately, they need German help to be able to do that.

That is why new French President Francois Hollande is pushing so hard for eurobonds.  He wants the rest of the eurozone to be able to “piggyback” on Germany’s sterling credit rating so that everyone can return to the days of wild borrowing and spending.

But Germans greatly fear what a co-mingling of eurozone debt could eventually mean.  Not only would Germany’s borrowing costs rise dramatically, but there is also a concern that the rest of the eurozone could eventually pull Germany down with them.

Austria, Finland and the Netherlands are also against eurobonds, but the key is Germany.

For now, Germany is not budging on the issue of eurobonds at all.  The following is a statement that German Chancellor Angela Merkel made during a recent speech in Berlin….

“It’s just about not spending more than you collect. It’s astonishing that this simple fact leads to such debates”

And she is right.

Why is it so controversial to insist that people not spend more than they bring in?

But this is the problem that is created when you create a false lifestyle fueled by debt that goes on for decades.  People become accustomed to that false standard of living and they throw hissy fits when that false standard of living begins to disappear.

The Germans don’t want to make great sacrifices just so the Greeks, the French and the Italians can go back to borrowing and spending wildly.

Why would the Germans want to do that?

And as a recent CNN article noted, German politicians believe that eurobonds are explicitly banned under existing EU treaties anyway….

“There is no way of introducing them under the current [EU] treaties. Indeed, there is an explicit ban on them,” one senior German official said, adding Berlin would not drop its opposition in the foreseeable future. “That’s a firm conviction which will not change in June.”

But politicians such as Hollande are complaining that austerity could seriously damage living standards throughout Europe.

And Hollande is right about that.

When you inflate your standard of living with borrowed money for many years, eventually there comes a time when you must pay a great price.

Anyone that has ever been in trouble with credit card debt knows how painful that can be.

It is shameful for the rest of Europe to be pleading and begging Germany to help them.

They should take care of themselves.

As I wrote about the other day, Greece would be much better off in the long run if it left the euro and created a new financial system based on sound financial principles.

But in the financial press all over the world there are calls for someone to come up with a “plan” to “rescue” Europe.  For example, the following is from a recent Wall Street Journal article….

There have been two main responses to the crisis: austerity, and kicking cans down roads. Austerity, in case you haven’t noticed, is so last year. It’s out. Which means that unless something else is found, some other comprehensive plan, the other main response, can kicking, is going to run out of road.

Just about everybody backed the idea of eurobonds, except for the Germans, and since they’re the ones with all the money, they’re kind of the only ones whose vote counts anyway. So, it’s time to go to plan B. Only there’s no Plan B, and there’s no time, either.

If Germany does not agree to subsidize the rest of the eurozone, will that ultimately mean that the eurozone will be forced to break up?

Probably.

And that would cause a huge amount of pain in the short-term.

But the euro never was a good idea in the first place.  It was foolish to expect a monetary union to work smoothly in the absence of fiscal and political union.

And to be honest, the entire world would be a better place with less European integration.  The EU has become a horrifying bureaucratic nightmare and it would be wonderful if the entire thing broke up.

But for now, the only thing that is in danger is the euro.

Increasingly, it is looking like Greece may be the first country to exit the euro.

This week, former Greek Prime Minister Lucas Papademos admitted that the Greek government is considering making preparations for Greece to leave the euro.

Not only that, Reuters is reporting that top officials in the eurozone are now working on “contingency plans” for a Greek exit from the euro….

Each euro zone country will have to prepare a contingency plan for the eventuality of Greece leaving the single currency, euro zone sources said on Wednesday.

Officials reached the consensus on Monday afternoon during an hour-long teleconference of the Eurogroup Working Group (EWG).

As well as confirmation from three euro zone officials, Reuters has seen a memo drawn up by one member state detailing some of the elements that euro zone countries should consider.

So obviously a Greek exit from the euro has become a very real possibility.

A recent Bloomberg article detailed how a Greek exit from the euro could play out during the 46 hours that global financial markets are closed over the weekend….

Greece may have only a 46-hour window of opportunity should it need to plot a route out of the euro.

That’s how much time the country’s leaders would probably have to enact any departure from the single currency while global markets are largely closed, from the end of trading in New York on a Friday to Monday’s market opening in Wellington, New Zealand, based on a synthesis of euro-exit scenarios from 21 economists, analysts and academics.

Over the two days, leaders would have to calm civil unrest while managing a potential sovereign default, planning a new currency, recapitalizing the banks, stemming the outflow of capital and seeking a way to pay bills once the bailout lifeline is cut. The risk is that the task would overwhelm any new government in a country that has had to be rescued twice since 2010 because it couldn’t manage its public finances.

Right now, nobody is quite sure what is going to happen next and panic is spreading throughout the European financial system.

At this point, everyone is afraid of what is going to happen if Greece is forced to start issuing drachmas again.  As CNBC is reporting, some big European corporations are already beginning to implement their own “contingency plans”….

Big tourism operators like TUI of Germany and Kuoni of Britain are demanding the addition of so-called drachma clauses to contracts with Greek hoteliers should the euro no longer be in use here. British newspapers are filled with advice columns for travelers worried about the wisdom of planning a vacation in Greece, or even Portugal and Spain, should the euro crisis worsen. Large multinational companies like Vodafone Group, Reckitt Benckiser and Diageo have taken to sweeping cash every day from euro accounts back to Britain to limit their exposure.

Sadly, this is probably only a small taste of the financial anarchy that is coming.

France is likely to keep pushing hard for the creation of eurobonds.

Germany is likely to keep fiercely resisting this.

At some point, a moment of crisis will arrive and a call will have to be made.

Will Germany give in or will political turmoil end up shattering Europe?

It will be interesting to see how all of this plays out.

The 15 Trillion Dollar Party

If you knew that you could live in luxury for the rest of your life but that by doing so it would absolutely destroy the future for your children, your grandchildren and your great-grandchildren would you do it?  Well, that is exactly what we are doing as a nation.  Over the past several decades, we have stolen 15 trillion dollars from future generations so that we could enjoy a dramatically inflated level of prosperity.  Our 15 trillion dollar party has been a lot of fun, but what we have done to our children and our grandchildren has been beyond criminal.  We ran up the greatest mountain of debt in the history of the planet and we are sticking them with the bill.  Sadly, both political parties have been responsible for the big spending that has been going on.  Both Democrats and Republicans have run up huge budget deficits when in power.  But instead of learning the hard lessons of the past, both political parties continue to vote for even more debt.  They would rather continue to steal trillions of dollars from future generations than have the party end and have to face the consequences.

And the consequences will be dramatic when the party ends.  During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars.  That means that the U.S. government spent about 1.3 trillion dollars that it did not have.  It is important to understand that even if the U.S. government spent that 1.3 trillion dollars on really stupid things, that money still got into the pockets of ordinary Americans who then spent it on things like food, gas, housing, etc.  In turn, most of those that received money from providing those goods and services would spend it on other things.

So extra government spending can definitely stimulate the economy.  The problem is that we have been doing it permanently.  Since 1975, we have added more than 15 trillion dollars to the national debt.  This has fueled a false prosperity that was way beyond what we could afford.

If the U.S. government tried to go to a balanced budget now, our standard of living would crash and there would be riots in the streets.  The American people have been enjoying false prosperity for so long that they have lost any notion of what “normal” actually is.

Think of it this way.  If your family makes $40,000 this year and you spend an extra $20,000 on your credit cards, your family would be enjoying a false sense of prosperity.

You could do that year after year as long as the credit card companies keep loaning you more money.

But debt always catches up with you in the end.

It is the same thing with the United States.

We have been running up our national credit card balance and the interest payments have become quite painful.

The U.S. government spent over 454 billion dollars just on interest on the national debt during fiscal 2011.

That is 454 billion dollars that the people of the United States do not receive anything in return for.

So in order to keep up with interest on the national debt and to enjoy a standard of living that is beyond our means we now have to run deficits that are in excess of a trillion dollars every single year.

And a trillion dollars is a staggering amount of money.

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.

Since Barack Obama was elected, the U.S. government has added about 5 trillion more dollars to the national debt.

That kind of debt is a recipe for national financial suicide.

How are we supposed to explain to our children that we are passing a debt of $15,579,852,946,457.64 down to them?

At this point, the United States government is responsible for more than a third of all the government debt in the entire world.

The 15 trillion dollar party that we have been enjoying has been amazing, but all of that debt is soon going to bring us a tremendous amount of pain.

And there is really no way out under our current financial system.  As our population ages, government budget deficits are projected to spiral wildly out of control in future years.

Already, entitlement programs are starting to cause massive problems.  For example, mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011.  That was not supposed to happen until 50 years from now.

If the federal government used GAAP (Generally Accepted Accounting Principles) like all publicly-traded corporations are required to do, the situation would be much worse.

The truth is that the U.S. government never had a “balanced budget” during the end of the Clinton administration.  The federal government was borrowing gigantic amounts of money from the Social Security trust fund to finance regular government operations.  It was a big fraud.  Under GAAP, there would have been huge budget deficits during those years.

And even under the non-GAAP numbers used by the U.S. Treasury Department, the U.S. national debt still increased every single year during the Clinton administration.

So let’s get real.

Our national financial situation has always been much worse than we have been told.

It has been estimated that our current budget deficits would be in the neighborhood of 4 to 5 trillion dollars under GAAP.

And looking down the road a bit, we are facing a tsunami of unfunded liabilities that is absolutely nightmarish.

In other words, we have committed ourselves to tens of trillions of dollars of expenses that we don’t have any money for.

According to Professor Laurence J. Kotlikoff, the U.S. is facing a “fiscal gap” of over 200 trillion dollars in the coming years.  The following is a brief excerpt from a recent article that he did for CNN….

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.

And it just keeps getting worse.  Recently it was revealed that Obamacare will add 17 trillion dollars more to our long-term unfunded obligations.

Basically what we have done is we have committed future generations to a life of endless debt slavery to pay for our debts and for the financial promises that we have made.

How could we be so stupid?

Of course this entire fraudulent system is going to completely collapse before we get too much farther down the road anyway.  Right now the whole thing is essentially being held together by chicken wire and duct tape.

Most Americans do not realize this, but the Federal Reserve bought approximately 61 percent of all government debt issued by the U.S. Treasury Department in 2011.

Normally, the Federal Reserve is not supposed to be doing this.

But right now there are not nearly enough buyers of U.S. government debt at the super low interest rates that the U.S. government wants to pay.  A recent Money News article explained that foreigners have been increasingly shying away from U.S. debt….

“In 2009, such foreign purchases of U.S. debt amounted to 6 percent of GDP and has since falled by over eighty percent to a paltry 0.9 percent.”

Instead of interest rates on U.S. Treasuries rising to attract additional investors, the U.S. Federal Reserve has been intervening to make up the difference.

This is essentially “monetizing the debt” and it is something that Ben Bernanke promised that he would never do.

But he is doing it.

If the Federal Reserve was not buying up all this debt, interest rates on U.S. debt would soar and so would U.S. government interest payments.

Yes, this is a giant Ponzi scheme and it cannot last for long.

Of course all of this could have been avoided if our politicians had not been running up such massive amounts of debt all these years.

Some have suggested that our problems could be solved by simply increasing taxes on the wealthy.

Well, the truth is that the top 5 percent of all income earners already pay nearly 50 percent of all federal taxes and soaking them even more will not even come close to solving the federal budget crisis.

For example, if Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.

And as Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.

So taxing the wealthy will certainly not solve all of our problems.

In fact, when you tax the wealthy and the “somewhat wealthy” it slows economic growth in a number of different ways.

Number one, they have less money to spend into the economy.

Number two, they have less money to invest in business activities.

Number three, it gives wealthy individuals and corporations more of an incentive to move out of the United States.  As I have written about previously, the global elite are already hiding about 18 trillion dollars in offshore banks.  The U.S. government keeps trying to tap into all of that offshore wealth, but the elite always seem to be a few steps ahead of the game.

Yes, we should try to close loopholes in the tax system, but the truth is that the root cause of our problem is that the federal government is simply spending way, way too much money.

Right now, spending by the federal government accounts for about 24 percent of GDP.  Back in 2001, it accounted for just 18 percent.

But our politicians always want to put off spending cuts for another day because they know that immediate spending cuts would really hurt the economy.

For example, just check out this recent quote from White House Chief of Staff Jack Lew….

“The time for austerity is not today,” Lew told NBC News “Meet the Press.” “If we were to put in austerity measures right now, it would take the economy in the wrong way.”

Yes, the Obama administration definitely does not want to hurt the economy with an election coming up in a few months.

So when will it be time to seriously cut government spending?

The day never seems to arrive.

But even though the federal government has been pumping more than a trillion extra dollars into the economy every year, the economy has not shown much improvement.  The percentage of working age Americans that have jobs has barely budged for over two years.

Yes, the policies of the Obama administration have stabilized the U.S. economy for the moment, but if he was actually going to tell the truth he would say something like this….

“By mortgaging the future of our children and our grand-children I have stabilized our economic statistics for the short-term.   Unfortunately, I am going to have to continue to financially abuse future generations to keep us from falling into another Great Depression.  Meanwhile, I am making our long-term financial problems far, far worse.  But the most important thing is that I win re-election so that I can continue to be president.  Thank you for being so selfish and so willing to destroy the future of your children.  Vote for me in 2012 and let the party continue!”

Unfortunately, the party is going to come crashing to an end at some point.

Right now, the global financial system is based on the U.S. dollar and on U.S. government debt.

There will come a time when the rest of the world is going to get sick and tired of watching this Ponzi scheme play out and they are going to completely lose faith in the U.S. dollar and in U.S. government debt.  In fact, there are already signs that this is starting to happen.

When faith in our currency and our debt is completely gone, it will be nearly impossible to get back and the game will be over.

The false prosperity that we are experiencing right now is about as good as things are going to get.

Enjoy it while you still can, because when it is gone that will be the end of it.

Both the Democrats and the Republicans have failed us.  They played fast and loose with our future and they never planned for the long-term.

Now we are facing a collapse of unprecedented magnitude that most Americans will never even see coming.

A horrifying economic collapse is coming.

You better get ready for it.

A Cashless Society May Be Closer Than Most People Would Ever Dare To Imagine

Most people think of a cashless society as something that is way off in the distant future.  Unfortunately, that is simply not the case.  The truth is that a cashless society is much closer than most people would ever dare to imagine.  To a large degree, the transition to a cashless society is being done voluntarily.  Today, only 7 percent of all transactions in the United States are done with cash, and most of those transactions involve very small amounts of money.  Just think about it for a moment.  Where do you still use cash these days?  If you buy a burger or if you purchase something at a flea market you will still use cash, but for any mid-size or large transaction the vast majority of people out there will use another form of payment.  Our financial system is dramatically changing, and cash is rapidly becoming a thing of the past.  We live in a digital world, and national governments and big banks are both encouraging the move away from paper currency and coins.  But what would a cashless society mean for our future?  Are there any dangers to such a system?

Those are very important questions, but most of the time both sides of the issue are not presented in a balanced way in the mainstream media.  Instead, most mainstream news articles tend to trash cash and talk about how wonderful digital currency is.

For example, a recent CBS News article declared that soon we may not need “that raggedy dollar bill” any longer and that the “greenback may soon be a goner”….

It’s what the wallet was invented for, to carry cash. After all, there was a time when we needed cash everywhere we went, from filling stations to pay phones. Even the tooth fairy dealt only in cash.

But money isn’t just physical anymore. It’s not only the pennies in your piggy bank, or that raggedy dollar bill.

Money is also digital – it’s zeros and ones stored in a computer, prompting some economists to predict the old-fashioned greenback may soon be a goner.

“There will be a time – I don’t know when, I can’t give you a date – when physical money is just going to cease to exist,” said economist Robert Reich.

So will we see a completely cashless society in the near future?

Of course not.  It would be wildly unpopular for the governments of the world to force such a system upon us all at once.

Instead, the big banks and the governments of the industrialized world are doing all they can to get us to voluntarily transition to such a system.  Once 98 or 99 percent of all transactions do not involve cash, eliminating the remaining 1 or 2 percent will only seem natural.

The big banks want a cashless society because it is much more profitable for them.

The big banks earn billions of dollars in fees from debit cards and they make absolutely enormous profits from credit cards.

But when people use cash the big banks do not earn anything.

So obviously the big banks and the big credit card companies are big cheerleaders for a cashless society.

Most governments around the world are eager to transition to a cashless society as well for the following reasons….

-Cash is expensive to print, inspect, move, store and guard.

-Counterfeiting is always going to be a problem as long as paper currency exists.

-Cash if favored by criminals because it does not leave a paper trail.  Eliminating cash would make it much more difficult for drug dealers, prostitutes and other criminals to do business.

-Most of all, a cashless society would give governments more control.  Governments would be able to track virtually all transactions and would also be able to monitor tax compliance much more closely.

When you understand the factors listed above, it becomes easier to understand why the use of cash is increasingly becoming demonized.  Governments around the world are increasingly viewing the use of cash in a negative light.  In fact, according to the U.S. government paying with cash in some circumstances is now considered to be “suspicious activity” that needs to be reported to the authorities.

This disdain of cash has also grown very strong in the financial community.  The following is from a recent Slate article….

David Birch, a director at Consult Hyperion, a firm specializing in electronic payments, says a shift to digital currency would cut out these hidden costs. In Birch’s ideal world, paying with cash would be viewed like drunk driving—something we do with decreasing frequency as more and more people understand the negative social consequences. “We’re trying to use industrial age money to support commerce in a post-industrial age. It just doesn’t work,” he says. “Sooner or later, the tectonic plates shift and then, very quickly, you’ll find yourself in this new environment where if you ask somebody to pay you in cash, you’ll just assume that they’re a prostitute or a Somali pirate.”

Do you see what is happening?

Simply using cash is enough to get you branded as a potential criminal these days.

Many people are going to be scared away from using cash simply because of the stigma that is becoming attached to it.

This is a trend that is not just happening in the United States.  In fact, many other countries are further down the road toward a cashless society than we are.

Up in Canada, they are looking for ways to even eliminate coins so that people can use alternate forms of payment for all of their transactions….

The Royal Canadian Mint is also looking to the future with the MintChip, a new product that could become a digital replacement for coins.

In Sweden, only about 3 percent of all transactions still involve cash.  The following comes from a recent Washington Post article….

In most Swedish cities, public buses don’t accept cash; tickets are prepaid or purchased with a cell phone text message. A small but growing number of businesses only take cards, and some bank offices — which make money on electronic transactions — have stopped handling cash altogether.

“There are towns where it isn’t at all possible anymore to enter a bank and use cash,” complains Curt Persson, chairman of Sweden’s National Pensioners’ Organization.

In Italy, all very large cash transactions have been banned.  Previously, the limit for using cash in a transaction had been reduced to the equivalent of just a few thousand dollars.  But back in December, Prime Minister Mario Monti proposed a new limit of approximately $1,300 for cash transactions.

And that is how many governments will transition to a cashless society.  They will set a ceiling and then they will keep lowering it and lowering it.

But is a cashless society really secure?

Of course not.

Bank accounts can be hacked into.  Credit cards and debit cards can be stolen.  Identity theft all over the world is absolutely soaring.

So companies all over the planet are working feverishly to make all of these cashless systems much more secure.

In the future, it is inevitable that national governments and big financial institutions will want to have all of us transition over to using biometric identity systems in order to combat crime in the financial system.

Many of these biometric identity systems are becoming quite advanced.

For example, just check out what IBM has been developing.  The following is from a recent IBM press release….

You will no longer need to create, track or remember multiple passwords for various log-ins. Imagine you will be able to walk up to an ATM machine to securely withdraw money by simply speaking your name or looking into a tiny sensor that can recognize the unique patterns in the retina of your eye. Or by doing the same, you can check your account balance on your mobile phone or tablet.

Each person has a unique biological identity and behind all that is data. Biometric data – facial definitions, retinal scans and voice files – will be composited through software to build your DNA unique online password.

Referred to as multi-factor biometrics, smarter systems will be able to use this information in real-time to make sure whenever someone is attempting to access your information, it matches your unique biometric profile and the attempt is authorized.

Are you ready for that?

It is coming.

In the future, if you do not surrender your biometric identity information, you may be locked out of the entire financial system.

Another method that can be used to make financial identification more secure is to use implantable RFID microchips.

Yes, there is a lot of resistance to this idea, but the fact is that the use of RFID chips in animals and in humans is rapidly spreading.

Some U.S. cities have already made it mandatory to implant microchips into all cats and all dogs so that they can be tracked.

All over the United States, employees are being required to carry badges that contain RFID chips, and in some instances employers are actually requiring employees to have RFID chips injected into their bodies.

Increasingly, RFID chips are being implanted in the upper arm of patients that have Alzheimer’s disease.  The idea is that this helps health care providers track Alzheimer’s patients that get lost.

In some countries, microchips are now actually being embedded into school uniforms to make sure that students don’t skip school.

Can you see where all of this is headed?

Some companies are even developing RFID technologies that do not require an injection.

One company called Somark has developed chipless RFID ink that is applied directly to the skin of an animal or a human.  These “RFID tattoos” are applied in about 10 seconds using micro-needles and a reusable applicator, and they can be read by an RFID reader from up to four feet away.

Would you get an “RFID tattoo” if the government or your bank asked you to?

Some people out there are actually quite excited about these new technologies.

For example, a columnist named Don Tennant wrote an article entitled “Chip Me – Please!” in which he expressed his unbridled enthusiasm for an implantable microchip which would contain all of his medical information….

“All I can say is I’d be the first person in line for an implant.”

But are there real dangers to going to a system that is entirely digital?

For example, what if a devastating EMP attack wiped out our electrical grid and most of our computers from coast to coast?

How would we continue to function?

Sadly, most people don’t think about things like that.

Our world is changing more rapidly than ever before, and we should be mindful of where these changes are taking us.

Just because our technology is advancing does not mean that our world is becoming a better place.

There are millions of Americans that want absolutely nothing to do with biometric identity systems or RFID implants.

But the mainstream media continues to declare that nothing can stop the changes that are coming.  A recent CBS News article made the following statement….

“Most agree a cashless society is not only inevitable, for most of us, it’s already here.”

Yes, a cashless society is coming.

Are you ready for it?

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