14 Reasons Why The Economic Collapse Of Japan Has Begun

The economic collapse of Japan has begun.  The extent of the devastation is now becoming clear and many are now projecting that this will be the most expensive natural disaster in modern human history.  The tsunami that struck Japan on March 11th swept up to 6 miles inland, destroying virtually everything in the way.  Countless thousands were killed and entire communities were totally wiped out.  So how does a nation that is already drowning in debt replace dozens of cities and towns that have suddenly been destroyed?  Many in the mainstream media are claiming that the economy of Japan will bounce right back from this, but they are wrong.  The tsunami decimated thousands of square miles.  The loss of homes, cars, businesses and personal wealth is almost unimaginable.  It is going to take many years to rebuild the roads, bridges, rail systems, ports, power lines and water systems that were lost.  There are going to be a significant number of Japanese insurance companies and financial institutions that are going to be totally wiped out as a result of this great tragedy.  Of course in the days ahead the Japanese people will band together and work hard to rebuild the nation, but the truth is that it is impossible to “bounce right back” from such a massive loss of wealth, assets and infrastructure.

Just think about what happened after Hurricane Katrina.  Did the economy of New Orleans bounce right back?  No, there are some areas of New Orleans today that still look like war zones.

Well, this disaster is much worse.

The truth is that this is going to be one of the defining moments in the history of Japan.  Hundreds of miles along the coast of Japan have been absolutely devastated.  Authorities are finding it difficult to even get food and water into some areas at this point.

Even before this great tragedy Japan was one of the nations that was on the verge of a national economic collapse.  Their economy had been in the doldrums for over a decade and their national debt was well over 200 percent of GDP.  Now the Japanese economy has experienced a shock from which it may never truly recover.

The Bank of Japan is already flooding the Japanese economy with new yen, and so we may indeed see some impressive “economic growth” statistics at the end of the year.  But just because lots more yen are being passed around does not mean that the Japanese economy is in better shape.

The truth is that a tsunami of yen is not going to undo the damage that the tsunami of water did.  A massive amount of Japanese wealth was wiped out by this disaster.  An economy that was already teetering on the brink is now very likely going to plunge into oblivion.

It is fine to be optimistic, but the cold, hard reality of the situation is that this is a knockout blow for the Japanese economy.  The extent of the devastation is just too great.  This truly is a complete and total nightmare.

The following are 14 reasons why the economic collapse of Japan has now begun….

#1 The Bank of Japan has announced that they have decided to flood the Japanese economy with 15 trillion yen.  That is the equivalent of roughly $183 billion dollars.  This is going to provide needed liquidity in the short-term, but it is also going to set Japan on a highly inflationary course.

#2 Japan’s Nikkei 225 stock average declined by more than 6 percent on Monday.  As the full extent of the damage becomes apparent more declines are likely.

#3 Oil refineries all over Japan have been severely damaged or destroyed.  For example, six refineries that combine to process 31 percent of the oil for Japan have been totally shut down at least for now.

#4 The damage to roads, bridges, ports and rail systems is estimated to be in the billions of dollars.  The damage done to power lines and water systems is almost unimaginable.  It is going to take many years to rebuild the infrastructure of Japan.

#5 Right now the flow of goods and services in many areas of northern Japan has been reduced to a crawl, and this is likely to remain the case for quite some time.

#6 Many cities and towns along the east coast of Japan have essentially been completely destroyed.

#7 Japan’s nuclear industry is essentially dead in the water at this point.  Even if there is not a full-blown nuclear meltdown, the events that have transpired already have frightened people enough to cause a massive public outcry against nuclear power in Japan.

#8 Japan is going to need even more oil and natural gas in the long run to replace lost nuclear energy production.  Prior to this crisis, Japan derived 29 percent of its electricity from nuclear power.

#9 Japan is the second largest foreign holder of U.S. government debt, but that is about to change.  Japan currently has about $882 billion in U.S. Treasury bonds and they are going to have to liquidate much of that in order to fund the rebuilding of their nation.

#10 Many factories in Japan are closing down at least temporarily.  For example, Nissan has shut down four factories and Sony has shut down six factories.

#11 Toyota has shut down all production at its factories in Japan until at least March 16th.

#12 A substantial number of Japanese financial institutions and insurance companies are absolutely going to be devastated by this nightmare.

#13 Japan’s budget deficit was already 9 percent of GDP even before this tragedy.  Now they are going to have to borrow lots more money to fund the rebuilding effort.

#14 Japan’s national debt was already well over 200 percent of GDP even before this tragedy.  How much farther into the danger zone can they possibly go?

Sadly, as the economy of Japan goes down it is going to have a huge affect on the rest of the world as well.  For example, Japan is no longer going to be able to buy up huge amounts of U.S. Treasuries.  So who is going to pick up the slack?  Will our government officials beg China to lend us even more money?  Will the Federal Reserve just “buy” even more of our government debt?

Right now there are more questions than there are answers, but what is clear is that the Japanese economy has just been dealt an incapacitating blow.  Hopefully this tragedy will bring out the best in the Japanese people, but no matter how resilient they are, the truth is that this is something that no nation would be able to bounce back from quickly.

Let us hope that the economic damage from this tragedy will be contained and will not spread to the rest of the world.  The global economy is already in enough trouble, and hopefully this tragedy will not cause a cascade of economic failures to sweep the globe.

Should We Be Alarmed That The Biggest Bond Fund In The World Has Dumped All Of Their U.S. Treasury Bonds?

Bill Gross, the manager of the biggest bond fund in the world, has forgotten more about bonds than most of us will ever learn. That is why the big move that PIMCO has just made is so unsettling.  At one time PIMCO held more U.S. government debt than any other bond fund on the globe, but now news has come out that they have gotten rid of all their U.S. government-related securities.  So should we be alarmed?  For months Gross has been warning that the bull market in bonds is coming to an end, and now it looks like he is putting his words into action.s  Gross has often publicly decried the rampant government spending that has been going on over the last several years, and apparently he has seen enough.  He is taking his ball and he is going home.  This really is a stunning move by PIMCO.  Gross must really believe that something fundamental has shifted.    Gross didn’t get to where he is today by being stupid.  But so far world financial markets are taking this news in stride.  Nobody seems all that alarmed that the largest bond fund in the world has dumped all of their U.S. Treasuries.  But with world financial markets in such a state of chaos right now, shouldn’t we all take note when one of the biggest players in the game makes such a bold move?

Gross believes that interest rates on U.S. Treasuries are way too low right now and that they will start going up when the Federal Reserve ends the current round of quantitative easing in June.  Gross has indicated that if interest rates on U.S. Treasuries go up high enough, PIMCO might get back in.

But if interest rates do start going up that is going to make servicing the monolithic U.S. national debt much more expensive, and that would not be good news for U.S. government finances.

But would the Federal Reserve really allow interest rates on U.S. Treasuries to go up substantially?  Wouldn’t they just step in at some point and start buying U.S. government debt again?

Probably.

But the truth is that the Ponzi Scheme of the U.S. Treasury issuing bonds and the Federal Reserve buying them up cannot last forever as Gross noted in his March newsletter….

“Basically, the recent game plan is as simple as the Ohio State Buckeyes’ “three yards and a cloud of dust” in the 1960s. When applied to the Treasury market it translates to this: The Treasury issues bonds and the Fed buys them. What could be simpler, and who’s to worry? This Sammy Scheme as I’ve described it in recent Outlooks is as foolproof as Ponzi and Madoff until… until… well, until it isn’t.”

Gross also noted in his newsletter that the Federal Reserve is currently buying up about 70 percent of all new U.S. government debt.

So what is going to happen when that stops?

Nobody knows for certain, but it sure is going to be interesting to watch.

The market for U.S. Treasuries has not been working “normally” for quite some time now, and there is some legitimate doubt as to whether it will ever fully get back to “normal” again.

Meanwhile, the sovereign debt crisis in Europe continues to get even worse.

The yield on 10-year Portuguese bonds is now above 7 percent, the yield on 10-year Irish bonds is now above 9 percent and the yield on 10-year Greek bonds is now above 12 percent.

Most people expect European leaders to soon come to an agreement to add billions more to existing bailout funds, but there is no guarantee that is actually going to happen.

In fact, the Germans are making waves by insisting that the financially troubled nations in the EU must be willing to agree to limits on their future budget deficits.  A recent article on CNBC described the situation this way….

Before the Germans will agree to pump in extra cash from their taxpayers, backed by the French, they want each leader to agree to legislation at home that will limit the size of their future national deficits. The Greeks are already refusing point blank. Things may boil to the surface at an extraordinary summit on Friday.

So what if an agreement can’t be reached?

Could the dominoes in Europe start to fall?

Very few people actually want to see a wave of sovereign defaults in Europe, but the current situation cannot go on forever.  At some point the Germans are going to get sick and tired of bailing out other members of the EU.

The global addiction to debt is about to start having some very serious consequences.

For decades, most of the governments of the industrialized world have been running up debt as if it would never come back to haunt them.  Now the world is absolutely covered in red ink and everyone is looking for a way to solve the problem.

But there is not going to be a debt jubilee to come along and save everyone.  This debt bubble is either going to keep expanding or it is going to burst.

At one point, at least some of the debt-ridden nations will try to inflate their way out of debt by recklessly printing money.  To a certain extent that has already been going on.  But it will not work.  It will only cause a whole lot of inflation.

This is just more evidence that any economic system based on debt is destined to fall.  When we allowed a private central bank to start issuing debt-based currency in this country back in 1913 we set ourselves up to fail.  As I have written about previously, the Federal Reserve should never have been allowed to come into existence, and it should have been shut down by Congress long before now.

But now the United States is caught in the same debt trap that most of the other nations around the world are caught in.  The global addiction to debt is going to have some very, very serious consequences.  Instead of moving into a great time of peace and prosperity, everything is about to come falling apart.

Things could have been different.  Things did not have to turn out this way.  But here we are on the edge of one of the biggest financial disasters in human history and most Americans still don’t understand what is happening.

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

People Of Earth: Prepare For Economic Disaster

It is not just the United States that is headed for an economic collapse.  The truth is that the entire world is heading for a massive economic meltdown and the people of earth need to be warned about the coming economic disaster that is going to sweep the globe.  The current world financial system is based on debt, and there are alarming signs that the gigantic global debt bubble is getting ready to burst.  In addition, global prices for the key resources that the major economies of the planet depend on are rising very rapidly.  Despite all of our advanced technology, the truth is that human civilization simply cannot function without oil and food.  But now the price of oil and the price of food are both increasing dramatically.  So how is the current global economy supposed to keep functioning properly if it soon costs much more to ship products between continents?  How are the billions of people that are just barely surviving today supposed to feed themselves if the price of food goes up another 30 or 40 percent?  For decades, most of the major economies around the globe have been able to take for granted that massive amounts of cheap oil and massive amounts of cheap food will always be there.  So what happens when that paradigm changes?

At last check, the price of U.S. crude was over 104 dollars a barrel and the price of Brent crude was over 115 dollars a barrel.  Many analysts fear that if the crisis in Libya escalates or if the chaos in the Middle East spreads that we could see the all-time record of 147 dollars a barrel broken by the end of the year.  That would be absolutely disastrous for the global economy.

But it isn’t just the chaos in the Middle East that is driving oil prices.  The truth is that oil prices have been moving upwards for months.  The recent revolutions in the Middle East have only accelerated the trend.

Let’s just hope that the “day of rage” being called for in Saudi Arabia later this month does not turn into a full-blown revolution like we have seen in other Middle Eastern countries.  The Saudis keep a pretty tight grip on their people, but at this point anything is possible.  A true revolution in Saudi Arabia would send oil prices into unprecedented territory very quickly.

But even without all of the trouble in the Middle East the world was already heading for an oil crunch.  The global demand for oil is rising at a very vigorous pace.  For example, last year Chinese demand for oil increased by almost 1 million barrels per day.  That is absolutely staggering.  The Chinese are now buying more new cars every year than Americans are, and so Chinese demand for oil is only going to continue to increase.

Much could be done to increase the global supply of oil, but so far our politicians and the major oil company executives are sitting on their hands.  They seem to like the increasing oil prices.

So for now it looks like oil prices will continue to rise and this is going to result in much higher prices at the gas pump.

Already, ABC News is reporting that regular unleaded gasoline is going for $5.29 a gallon at one gas station in Orlando, Florida.

The U.S. economy in particular is vulnerable to rising oil prices because our entire economic system is designed around cheap gasoline.  If the price of gas goes up to 5 or 6 dollars a gallon and it stays there it is going to have a catastrophic effect on the U.S. economy.

Just remember what happened back in 2008.  The price of oil hit an all-time high of $147 a barrel and then a few months later the entire financial system had a major meltdown.

Well, as the price of oil rises it is going to create a whole lot of imbalances in the global financial system once again.

This is definitely a situation that we should all be watching.

But it is not just the price of oil that could cause a global economic disaster.

The global price of food could potentially be even more concerning.  As you read this, there are about 3 billion people around the globe that live on the equivalent of 2 dollars a day or less.  Those people cannot afford for food prices to go up much.

But global food prices are rising.  According to the United Nations, the global price of food has risen for 8 consecutive months.  Last month, the global price of food set a brand new all-time record high.  Many are starting to fear that we could actually be in the early stages of a major global food crisis.

The price of just about every major agricultural commodity has been absolutely soaring during the past year….

*The price of corn has doubled over the last six months.

*The price of wheat has more than doubled over the past year.

*The price of soybeans is up about 50% since last June.

*The price of cotton has more than doubled over the past year.

*The commodity price of orange juice has doubled since 2009.

*The price of sugar is the highest it has been in 30 years.

Unfortunately, the production of food in most countries around the world is very highly dependent on oil, so as oil goes up in price this is going to make the food crisis even worse.

Hold on to your hats folks.

Also, as I have written about previously, the world is facing some very serious problems when it comes to water.  Due to the greed of the global elite, there is not nearly enough fresh water to go around.  The following are some very disturbing facts about the global water situation….

*Worldwide demand for fresh water tripled during the last century, and is now doubling every 21 years.

*According to USAID, one-third of all humans will face severe or chronic water shortages by the year 2025.

*Of the 60 million people added to the world’s cities every year, the vast majority of them live in impoverished slums and shanty-towns with no sanitation facilities whatsoever.

*It is estimated that 75 percent of India’s surface water is now contaminated by human and agricultural waste.

*Not only that, but according to a UN study on sanitation, far more people in India have access to a mobile phone than to a toilet.

*In northern China, the water table is dropping one meter per year due to overpumping.

These days, one of the trendy things to do is to call water “the oil of the 21st century”, but unfortunately that is not a completely inaccurate statement.  Fresh, clean water is something that we all need, but right now world supplies are getting tight.

Our politicians and the global elite could be doing something about this if they really wanted to, but right now they seem perfectly fine with what is happening.

On top of everything else, the sovereign debt crisis is worse than it has ever been before.

All of the major global central banks have been feverishly printing money in an attempt to “paper over” this crisis, but it is not going to work.

Most Americans don’t realize it, but right now the continent of Europe is a financial basket case.  Greece and Ireland would have imploded already if they had not been bailed out, and now Portugal is on the verge of collapse.  The interest rate on Portugal’s 10-year notes has now been above 7% for about 3 weeks, and most analysts believe that it is only a matter of time before they are forced to accept a bailout.

Sadly, if the entire global economy experiences a slowdown because of rising oil prices, we could see half a dozen European nations default on their debts if they are not bailed out.

For now the Germans seem fine with bailing out the weak sisters that are all around them, but that isn’t going to last forever.

A day or reckoning is coming for Europe, and when it arrives the reverberations are going to be felt all across the face of the earth.  The euro is on very shaky ground already, and whether or not it can survive the coming crisis is an open question.

Of course there are some very serious concerns about Asia as well.  The national debt of Japan is now well over 200% of GDP and nobody seems to have a solution for their problems.  Up to this point, Japan has been able to borrow massive amounts of money at extremely low interest rates from their own people, but that isn’t going to last forever either.

As I have written about so many times before, the biggest debt problem of all is the United States.  Barack Obama is projecting that the federal budget deficit for this fiscal year will be a new all-time record 1.65 trillion dollars.  It is expected that the total U.S. national debt will surpass the 15 trillion dollar mark by the end of the fiscal year.

Shouldn’t we have some sort of celebration when that happens?

15 trillion dollars is quite an achievement.

Most Americans cannot even conceive of a debt that large.  If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

But the United States is not alone.  The truth is that wherever you look, there is a sea of red ink covering the planet.

The current global financial system is entirely based on debt.  If the total amount of debt does not continually expand, the system will crash.  If somehow a way was found to keep this system going perpetually (which is impossible), the size of global debt would keep on increasing infinitely.

Now the World Economic Forum says that we need to grow the total amount of debt by another 100 trillion dollars over the next ten years to “support” the anticipated amount of “economic growth” around the world that they expect to see.

The entire global financial system is a gigantic Ponzi scheme.  It is designed to keep everyone enslaved to perpetual debt.  If at some point the debt spiral gets interrupted in some significant way, we are going to witness an economic disaster that is going to make what happened in 2008 look like a Sunday picnic.

The more research that one does on the current global economic situation, the more clear it becomes that we are absolutely doomed.

So people of earth you had better get ready.

An economic disaster is coming.

Wars, Rumors Of Wars, Skyrocketing Oil Prices And Global Economic Chaos – Why Is All Of This Happening?

Did anyone out there anticipate that 2011 would be such a wild year?  The year is barely over two months old and we have already seen multiple civil wars erupt, rumors of more wars all over the mainstream media (potentially even including the United States), riots and revolutions breaking out all over the globe, oil prices soaring into the stratosphere and chaos on global financial markets.  So why is all of this happening?  Is all of this one big coincidence or is there a reason why we are witnessing such global chaos right now?  Is it just coincidence that revolutions have broken out in over a dozen countries in the Middle East all at the same time?  Is it just a coincidence that global prices for oil, food and precious metals are all skyrocketing?  Is it just a coincidence that world financial markets suddenly seem more vulnerable than at any time since 2008?  Looking at what is going on in the world right now, it is very tempting to use the phrase “a perfect storm” to describe it.  Unfortunately, this “perfect storm” is very likely to plunge the global economy into yet another financial collapse if it continues to get even worse.

After decades of relative stability, the Middle East has erupted in chaos in 2011.  In the post-World War 2 era, we have never seen a time when there have been so many major internal revolutions all at once.  All of these simultaneous revolutions are driving the price of oil rapidly upwards.

The price of West Texas crude is now over $102 a barrel and the price of Brent crude is now over $116 a barrel and if the chaos in the Middle East continues those numbers are likely to go a lot higher.

Meanwhile, gold has set a new all-time record this week and the price of silver is absolutely exploding.

In fact, just about every kind of “hard asset” that you can possibly name is going up in price.  Investors don’t like all of this instability and they are looking for safe places to put their money.

Unfortunately, the global situation looks like it may become even more heated.

The calls for military action against Libya are rapidly reaching a crescendo.

The U.S. Senate has unanimously passed a resolution calling for the UN Security Council to impose a no-fly zone over Libya, and many members of Congress are openly declaring that the U.S. and NATO should take unilateral action no matter what the UN ultimately decides.

But implementing a no-fly zone is not a simple thing.  It is not just a matter of telling Libya not to fly their planes.  Rather, imposing a no-fly zone over Libya would constitute a major military operation.

U.S. Secretary of Defense Robert Gates is even admitting that enforcing a no-fly zone over Libya would begin with a huge military strike…..

“Let’s just call a spade a spade. A no-fly zone begins with an attack on Libya to destroy the air defenses … and then you can fly planes around the country and not worry about our guys being shot down.”

U.S. commander General James Mattis made a similar comment on Tuesday….

You would have to remove the air defense capability in order to establish the no-fly zone so it – no illusions here, it would be a military operation.

Essentially, imposing a no-fly zone over Libya would be an act of war.

Most of our representatives in Washington D.C. seem to be quite ready to go to war in Libya, but it is another story entirely when it comes to the American people.  A recent Rasmussen poll found that a whopping 67 percent of Americans do not want the U.S. to get more involved in the unrest going on in Arab countries and only 17 percent of Americans do want the U.S. to get more directly involved.

But the American people don’t get to decide whether we go to war or not.  Our leaders in Washington D.C. do.  The USS Enterprise and other major warships are on their way to Libya, and U.S. forces throughout the Mediterranean are on high alert.

So could the U.S. really get involved in another war in the Middle East?

Well, if the U.S. and NATO choose to get involved they will do it without the approval of the rest of the world.

On Wednesday, the Arab League issued a statement which specifically rejected “any foreign interference within Libya on behalf of the opposition”.

Not only that, but any military action by the UN will most likely be blocked by both China and Russia.

Russia’s ambassador to NATO, Dmitry Rogozin, says that any military action against Libya without UN approval would be a violation of international law….

“If someone in Washington is seeking a blitzkrieg in Libya, it is a serious mistake because any use of military force outside the NATO responsibility zone will be considered a violation of international law.”

But Libya is far from the only crisis point in the Middle East.

In fact, a much larger problem may be brewing in Saudi Arabia.

On Facebook, a “Day of Rage” is being hyped for March 11th.  Other dates being promoted for “revolution” in Saudi Arabia include March 20th and March 21st.

But if Saudi Arabia sees the same kind of chaos that we have seen in other countries in the Middle East there is no telling how high the price of oil could go.

Could we see $125 oil?

Could we see $150 oil?

Could we see $200 oil?

Saudi Arabia exports more oil than anyone else in the world, so if their oil production gets interrupted it is going to have a dramatic impact on the global economy.

For example, are you ready to pay 5 dollars for a gallon of gasoline in the United States?

For decades, the entire globe has been blessed with very cheap oil and this has resulted in a massive economic boom.

But times are changing.

The economic situation over in Europe is already deteriorating and any additional bad news could plunge that entire continent into a major crisis.  A recently released report from Ernst & Young is warning that if oil goes up to 150 dollars a barrel and it stays there, “at least” one eurozone country will default and the entire eurozone will be plunged back into recession.

A much higher price for oil would obviously not be good for the U.S. economy either.  Do you remember what happened back in 2008?  The price of oil hit a record high in June and then the entire financial system came unglued just a few months later.

But if we see a repeat of 2008 it may be a lot worse this time because the global financial system is now more unstable than ever.

The truth is that the entire world is still trying to recover from the last financial crisis.  The Federal Reserve is pumping massive quantities of dollars into the U.S. economy in an attempt to stimulate it back to life, but so far it is not working too well.

The rest of the world does not appreciate all of this “money printing” and the inflation that this is causing is beginning to create massive imbalances on global financial markets.

The world is starting to lose faith in the U.S. dollar.  Right now, approximately 85% of all foreign-exchange transactions in the world involve the U.S. dollar.  Not only that, 60% of all the currency reserves in the world are in U.S. dollars.  With the U.S. dollar rapidly becoming less stable, many are now wondering if it should continue to be used as the reserve currency of the world.

The truth is that if the U.S. dollar falls, it is going to create a tremendous amount of financial chaos in almost every nation on the globe.

Unfortunately, as I have written about so many times previously, the U.S. economy is dying.  The U.S. government is absolutely drowning in debt, and leaders all over the planet are calling for the establishment of a new global reserve currency.

The days of the United States being the “economic engine of the planet” are rapidly coming to an end.

The U.S. economy is not ever going to fully “recover”.  In fact, the U.S. economy is basically “running on empty” at this point as Gerald Celente recently noted during an interview on RT television….

The entire U.S. economy was designed to operate on massive amounts of very cheap oil.  Americans do more driving than anyone else in the world.  Many of us are so lazy that we won’t even walk to a store if it is on the other side of the parking lot.

If oil hits record levels in 2011, it is going to be a massive shock to the U.S. economic system.  Any hopes for an “economic recovery” will be completely dashed.

In fact, if one wanted to “take down” the U.S. economy, driving up the price of oil would be a perfect way to do it.

And if one wanted to drive up the price of oil, a perfect way to do that would be to create all kinds of chaos in the Middle East.

So is all of this craziness that we are seeing in 2011 just a big coincidence or is there a reason why all of this is happening?

Please feel free to leave a comment with your opinion on the matter below….

Inflation Is Here – Just Open Up Your Eyes And Look At These 5 Financial Charts!

Despite what Federal Reserve Chairman Ben Bernanke says, rampant inflation is officially here.  The federal government is constantly monkeying with the numbers to keep the “official” rate of inflation below 2 percent, but it is becoming very difficult to deny that the cost of almost everything is really going up these days.  The American people are not stupid.  They notice the difference when they go to the grocery store or stop at the gas station.  The dollar is losing value rapidly now.  The price of gold set another new all-time record today and is currently hovering just above $1430 an ounce.  The price of West Texas crude has moved above 100 dollars several times recently and the price of Brent crude is currently above 116 dollars.  These higher oil prices are really starting to be felt in the United States.  The average price for a gallon of gasoline in the United States has now reached $3.38.  There are some gas stations in the U.S. where the price of a gallon of gas is already over 4 dollars.  But it is not just the American people that are feeling the pain.  The global price of food recently hit a new record high and almost every major agricultural commodity has absolutely skyrocketed in price over the past 12 months.  Meanwhile, Ben Bernanke just told the Senate Banking Committee that he really isn’t concerned about inflation at all.

When it comes to inflation, the key is not to look at the official U.S. government numbers (they are highly manipulated) or how the U.S. dollar is performing against other major currencies (because they are all being devalued as well).  Instead, you can get a truer sense of what is really happening to inflation by looking at what the U.S. dollar is doing against precious metals, commodities and other hard assets.

So are we experiencing rampant inflation right now?  Well, just open up your eyes and look at these 5 charts….

1 – The price of oil is racing back up to record levels.  The chart below from the Federal Reserve is a couple weeks out of date.  As noted above, the current price of West Texas crude is about $100 a barrel….

2 – The price of a gallon of gasoline in the United States seems destined to hit a brand new all-time record at some point this year.  Was it really just a few short years ago when the average price of gas in this country was about a dollar a gallon?….

3 – The value of most precious metals is very consistent over time.  So when you see precious metals go up dramatically in price, it means that the dollar is being devalued.  The price of gold just set another new all-time high and it seems destined to keep going even higher….

4 – The chart below from the Federal Reserve is a measure of the price of all commodities.  These price increases are inevitably going to be passed along to consumers in the United States….

5 – After a couple of years of stable food price, the price of food is starting to take off yet again….

In fact, many analysts are warning that we could experience a major food crisis over the next couple of years.  The global demand for food continues to grow at a very brisk pace, but all of the crazy weather we have been having around the world has caused some very bad harvests.

Unfortunately, the global price of food has gone up substantially in recent months and it is likely to keep going up very rapidly.  Just consider the following five facts….

#1 The United Nations says that the global price of food hit another new all-time high during the month of January.

#2 The price of corn has doubled in the past six months.

#3 The price of wheat has roughly doubled since the middle of 2010.

#4 According to Forbes, the price of soybeans is up about 50% since last June.

#5 The United Nations is projecting that the global price of food will increase by another 30 percent by the end of 2011.

Ouch.

But isn’t there some good economic news?

Yes, there is, but before we cover it, it is important to keep in mind that in an inflationary environment almost all economic numbers go up.

For example, during the recent hyperinflation in Zimbabwe stocks went up like crazy and “economic growth” statistics were very impressive.

Why?

Because those numbers were measured in currency units that were being devalued at a blinding pace.

So please keep that in mind when you hear “good economic statistics” on the evening news.

The truth is that in an inflationary environment such as we have now entered into almost all economic numbers should be going up.

So what is the good news?

Well, last month all three major U.S. car companies reported strong sales gains.  Sales of GM vehicles were up 49%, sales of Chrysler vehicles were up 13%, and sales of Ford vehicles were up 10%.

But just because a few pieces of good economic news come floating our way does not mean that we should forget all of the horrific long-term economic trends that are tearing this country apart.

The truth is that we are still a nation that is absolutely drowning in debt.

For example, it was just announced that China now owns 1.16 trillion dollars of U.S. government debt.

The borrower is the servant of the lender.  We should never forget that.

Also, the U.S. economy is slowly but surely becoming of less importance on the global stage.

In 1985, America’s share of global GDP was 33%.  Today, it is just 24%.

Our nation is rapidly being deindustrialized and we are becoming deeply dependent on industrial production from other nations.

Did you know that the new World Trade Center that is being constructed on the site of the September 11, 2001 attacks is going to be made from German steel and Chinese glass?

That says a lot about where we are at as a country.

We have allowed so much of our industrial infrastructure to be exported to China where workers slave away in almost unbelievable conditions.

A reader named Rish recently described what things are like over there….

As a product developer I went to china and saw the way the factory workers lived and worked in person. 50$ a month is about right, but if you are a skilled quality control expert you might make as much as 150$. at least this was true about 2 years ago the last time I went. The barracks were pretty meager, bunk beds with just plywood, no mattresses, if you wanted you could go to a store just outside the factory gate and buy a thick comforter that they sell as a “mattress” .

It will be interesting to see how the next few years changes the face of the USA. Who knows? if the unemployment rate and lack of jobs keeps going and enough people become homeless, we might become the next Bangladesh, and people will be lining up of the 30 cents an hour corporate factory jobs, and living in barracks just like those…

The only way the U.S. has been able to “thrive” during this deindustrialization is by borrowing gigantic amounts of money.  But all of this borrowing is slowly but surely destroying the U.S. dollar, and we are getting closer to the point of absolute catastrophe.

Peter Schiff recently shook folks up when he talked about these issues during a recent interview on CNBC….

But it is not just the United States that is printing tons and tons of money.  All of the major industrialized nations have been firing out gobs of currency.  That is a huge reason why so many investors have been racing to get into hard assets recently.

Now Ben Bernanke and other top Federal Reserve officials have been dropping hints that more quantitative easing may be necessary.

Unfortunately, just like with any other addiction, once you give in a few times it becomes easier and easier to engage in destructive behavior.  Now that the Fed has gotten a taste for quantitative easing it is going to be really hard to stop.

Nor can the Fed stop at this point.  If they did it would be disastrous for the U.S. economy.  But if the Fed continues on this reckless course it will make the eventual collapse of our economy even worse.

Under our current debt-based system there is no way out.  The Federal Reserve can attempt to put off the inevitable for a while by pumping up the debt bubble even more, but at some point it is going to burst.

When that happens we are going to be facing a financial crisis which will blow what happened in 2008 completely out of the water.

So enjoy these good economic times while you still can.  This is about as good as things are going to get from here on out.

Become A Teacher? 10 Examples That Show Why Becoming A Teacher Is A Dead End In This Economy

Today budget cutters are on the rampage from coast to coast and often one of their first targets is public school teachers. What we have witnessed recently in Wisconsin is just one example of this. The truth is that you do not want to become a teacher if you want to have financial security in America today. Teacher salaries are being slashed from sea to shining sea. But to a certain extent the teachers that are having their wages cut are the fortunate ones. There are thousands upon thousands of teachers that have already been laid off, and there are tens of thousands more that are about to be laid off. It is absolutely brutal out there right now. So if you are thinking about becoming a teacher you might want to think twice. Not that there are a whole lot of other jobs that are more secure right now. The truth is that there is no such thing as a “safe job” in America today.

It is very unfortunate that what is going on right now is going to scare so many young people away from becoming a teacher because the next generation could definitely use some quality teachers.

But the truth is that it is getting really hard to honestly recommend that anyone become a teacher at this point. Just consider some of the following news stories that we have seen around the nation recently….

#1 In Providence, Rhode Island the school district plans to send out dismissal notices to every single one of its 1,926 teachers.

#2 Michigan has just approved a plan to shut down nearly half of the public schools in Detroit.  Under the plan, 70 schools will be closed and 72 will continue operating.

#3 In New Jersey, Governor Chris Christie has laid off thousands of teachers and he cut a billion dollars from the state education budget.

#4 Bills in Wisconsin, Ohio, Tennessee, Indiana and Idaho would either significantly alter or completely take away the collective bargaining rights of public school teachers.

#5 The eyes of the whole country are on Wisconsin right now.  Teachers there are very alarmed about the $900 million in cuts to school funding over the next two years that are being proposed.

#6 Clay Robison, a spokesman for the Texas State Teachers Association, recently said that his organization is projecting that 100,000 school employees in the state of Texas could lose their jobs.

#7 The current plan is for more than 4,500 New York City school teachers to be laid off after this current school years ends.  This will be the most significant teacher layoffs in New York since the 1970s.

#8 In Los Angeles, more than 5,000 teachers will be receiving preliminary layoff notices due to budget cuts.

#9 Nevada Governor Brian Sandoval is being deeply criticized for the teacher pay cuts that he is proposing.

#10 StudentsFirst.org is projecting that 161,000 teachers across the United States are in danger of losing their jobs this year alone.

So in light of the facts above, should we advise any of our young people to try to become a teacher?

The worst thing about all this for young teachers is that in many areas of the country there is a rule that says the last teachers hired are the first ones that get laid off.

That is another huge incentive for young people not to choose teaching as a profession.

So why are so many teacher layoffs happening?

Well, the truth is that most of our state and local governments are very deep in debt and have run out of money.

State and local government debt has reached at an all-time high of 22 percent of U.S. GDP, and hordes of state and local governments are teetering on the brink of insolvency at this point.

When there is no more money, the cuts have to come from somewhere.  It is just really unfortunate that so many teachers are going to be put out onto the street.

People that have gone into the teaching profession have all spent a lot of time and money to get the education that they need to teach.  If they are told that they can’t do that anymore, what are they supposed to do?

Most of the time when teachers are forced out of the profession they end up having to take jobs that pay much less.  In this economy, many ex-teachers will not be able to find jobs at all.  Today, one out of every seven Americans is on food stamps, and sadly many teachers may soon be joining them.

So why don’t we just raise taxes so that all of these teachers can keep their jobs?  Well, the truth is that middle class Americans are already being taxed into oblivion.  When you add up the dozens and dozens of different taxes that Americans pay each year the overall tax burden is absolutely frightening.  There is only so much that you can squeeze out of the American people.

No, the truth is that the American people are taxed way too much already, and the big corporations and the ultra-wealthy have become experts at avoiding taxation.  Our current tax system needs to be completely scrapped and replaced with something entirely new.

If our state and local governments had not been so addicted to debt, and if our economy had been managed correctly and if about a hundred other things had been done differently we would not be having these problems.

But here we are.

Unfortunately, there does not seem to be any easy answers.

Or are there some solutions that most of us have been overlooking?  What do you all think?  What should be done about all of the teacher layoffs that are taking place all over the country?  Please feel free to leave a comment with your thoughts below….

What Is Wrong With The U.S. Economy? Here Are 10 Economic Charts That Will Blow Your Mind

The 10 economic charts that you are about to see are completely and totally shocking.  If you know anyone that still does not believe that the United States is in the midst of a long-term economic decline, just show them these charts.  Sometimes you can quote economic statistics to people until you are blue in the face and it won’t do any good, but when those same people see charts and pictures suddenly it all sinks in.  What is great about charts is that you can very easily demonstrate what has been happening to the economy over an extended period of time.  As you examine the economic charts below, pay special attention to what has been happening to the U.S. economy over the last 30 or 40 years.  The truth is that what is wrong with the U.S. economy is not a great mystery.  All of the economic problems that we are experiencing now have taken decades to develop.  Hopefully the charts in this article will help people realize just how nightmarish our economic problems have become, because until people start realizing how incredibly bad things have gotten they will never be willing to accept the dramatic solutions that are necessary to fix our financial system.

The sad fact of the matter is that we have been living in the biggest debt bubble in the history of the world over the last 40 years.  All of this debt has purchased a wonderful standard of living for the vast majority of us, but all of this debt has also destroyed the economic future of our children and our grandchildren.  Someday future generations will look back on what we have done in absolute horror.

The 10 economic charts posted below are meant to shock you.  Most Americans today need to be shocked before they will be motivated to take action.  Please share these charts with as many people as you can.  Hopefully we can wake enough people up that something will be done about all of these problems while there is still time.

1 – Government spending is expanding at an exponential rate.  As you can see from the chart below, federal spending is almost 18 times higher than it was back in 1970.  Now Barack Obama has proposed a budget that would increase U.S. government spending to 5.6 trillion dollars in 2021.  Just imagine what the following chart would look like if that happens….

2 – U.S. government debt is absolutely exploding.  The U.S. national debt is currently $14,081,561,324,681.83.  It is more than 14 times larger than it was back in 1980.  Unfortunately, the national debt continues to grow at breathtaking speed.  In fact, the Obama administration is projecting that the federal budget deficit for this year will be an all-time record 1.6 trillion dollars.  Can we afford to continue to accumulate debt at this rate?….

3 – Unless something changes right now, the outlook for U.S. government finances in future years is downright apocalyptic.  The chart posted below is from an official U.S. government report to Congress.  As you can see, it is projected that interest on our exploding national debt is absolutely going to spiral out of control if we continue on the path that we are currently on….

4 – Household debt has soared to almost unbelievable levels over the last 30 years.  The sad truth is that it is not just the U.S. government that has a massive debt problem.  U.S. households have also been accumulating debt at a staggering rate.  Total U.S. household debt did not pass the 2 trillion dollar mark until the mid-1980s, but now total U.S. household debt is well over 13 trillion dollars….

5 – The total of all debt (government, business and consumer) in the United States is now well over 50 trillion dollars.  For the past couple of years this figure has been hovering around a level that is equivalent to approximately 360 percent of GDP.  This is a debt bubble that is absolutely unprecedented in U.S. history….

6 – As tens of thousands of U.S. factories get shut down and as millions of our jobs get shipped overseas, the number of unemployed Americans continues to go up and up and up.  As you can see from the chart below, there has been a long-term trend of increasing unemployment in the United States.  In fact, there are about 3 and a half times as many unemployed workers in the United States today as there were when 1970 began.  These jobs losses are going to continue as long as we allow our corporations to pay slave labor wages to workers on the other side of the globe.  All of the major trends in global trade are very bad for the U.S. middle class.  For example, the U.S. trade deficit with China for 2010 was 27 times larger than it was back in 1990.  How long will our politicians stand by as our nation bleeds jobs?….

7 – The median duration of unemployment in the United States is in unprecedented territory.  For most of the post-World War 2 era, when the median duration of unemployment in America reached 10 weeks that was considered a national crisis.  Well, today competition for jobs is so intense that the median duration of unemployment is now well over 20 weeks….

8 – Since the Federal Reserve was created in 1913, the value of the U.S. dollar has declined by over 95 percent.  One of the reasons given for the existence of the Federal Reserve is that the Fed helps control inflation.  But that is a huge lie.  The truth is that the United States never had consistently rampant inflation until the Federal Reserve took control.  In particular, once the U.S. totally went off the gold standard in the 1970s inflation really started escalating out of control….

9 – Now the Federal Reserve says that the solution to our current economic problems is to print even more money out of thin air.  The games that the Federal Reserve is playing with our money supply are simply inexcusable.  Just look at what the Federal Reserve has done to the monetary base since the beginning of the recession….

10 – All of this new money is creating tremendous inflation.  In particular, the price of oil is now ridiculously high.  A high price for oil is very, very bad for the U.S. economy.  Our entire economic system is based on being able to use massive quantities of very cheap oil.  Unfortunately, that paradigm is starting to break down and the consequences will be very bitter.  Back in mid-2008, the price of oil hit an all-time record of $147 a barrel and subsequently the world financial system imploded a few months later.  Well, the price of oil is on the march again and that is very bad news for the U.S. economy….

Needless to say, if the economic trends documented by the charts above continue the U.S. economy will be totally wiped out.  The U.S. economy as it currently exists is unsustainable by definition.  It is only a matter of time before we slam into an economic brick wall.

We have developed an economy that cannot function without debt, and at this point it seems like almost everyone is drowning in red ink.  The federal government is massively overextended, most of our state and local governments are massively overextended, most of our major corporations are massively overextended and the majority of U.S. consumers are massively overextended.

The only way that the game can continue is for the Federal Reserve to print increasingly larger amounts of paper money out of thin air and for everyone in the economic food chain to go into increasingly larger amounts of debt.

But no debt spiral can go on forever.  At some point this entire house of cards is going to collapse.

When that happens, there is going to be economic pain that is greater than anything that this country has ever seen before.

Someday we will all desperately wish that we could go back to the “good times” of 2011.  A great economic collapse is coming, and all of us had better get ready.

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