Money

Start A Business? In The United States? Are You Kidding Me?

Many of you have decided that you are going to attempt to start a business in the United States today.  Many of you are still convinced that this is “the land of opportunity” and that starting a business is fairly easy.  Are you sure about that?  Are you certain that you have considered all of the headaches involved?  Are you sure that you are ready to handle the thousands of regulations that apply to your business and the mountains of paperwork mandated by various levels of government?  Are you prepared to deal with entrenched unions, predatory lawyers and rabid environmentalists?  The truth is that the business environment has never been this toxic in all of U.S. history.  So even if you are able to start a viable business that can compete with the monolithic global corporations that dominate our economy, you still might not be able to make it.  In the end, thousands upon thousands of businesses across America have been doomed to failure by ridiculous regulations, mountains of paperwork, health insurance costs, predatory lawsuits or corrupt government officials.  So do you really think that you can beat the odds?

Historically, small businesses have been the driving force behind America’s economic growth.  But today, we have made the business environment so complicated that small business owners are being completely smothered by red tape.

The following are 10 areas that anyone wishing to start a small business had better think about before moving forward.  When you really stop and think about it, the fact that anyone out there is still attempting to start small businesses in America today is absolutely amazing.

#1 Regulations

If you plan to start a business in America today, you better get a hold of a good lawyer.  In fact, if you want to be safe, you better get a small army of lawyers.  You are going to need an expert on the federal regulations that apply to your business, you are going to need an expert on the state regulations that apply to your business and you are going to need an expert on the local regulations that apply to your business.

There are going to literally be thousands of regulations that apply to any business started inside the United States today.  There is no way that you will ever be able to learn them all.  Not only that, but the truth is that your lawyers will only be aware of a small fraction of them.

Do you know what the Federal Register is?  The Federal Register is the primary source of regulations for U.S. government agencies.  In 1936, the number of pages in the Federal Register was about 2,600.  Today, the Federal Register is over 80,000 pages long.  That is just one example of how bad things have gotten.

So what do you do?  Well, just do your best to try to learn about the major regulations that apply to your business and pray that you don’t end up violating some important regulation that you are not even aware of.

#2 Paperwork

Do you know what paperwork the federal government expects you to fill out?  Do you know what paperwork the state government expects you to fill out?  Do you know what paperwork the city or the county expect you to fill out?  Do you know what paperwork you will be required to fill out when hiring a new employee?

The truth is that the paperwork burden on small businesses has multiplied in recent years.  Many small business owners are so swamped with paperwork that they barely have time to conduct their actual businesses.

For example, the U.S. Food and Drug Administration is projecting that the food service industry will have to spend an additional 14 million hours every single year just to comply with a new federal regulation that mandates that all vending machine operators and chain restaurants must label all products that they sell with a calorie count in a location visible to the consumer.

14 million hours just to comply with one ridiculous regulation?  Yes, that is how bizarre things have gotten in America in 2010.

#3 Fees And Fines

Many small business creators in America are absolutely horrified to learn of the fees and fines that they must pay before they can ever even open their doors.  Much of the time it is revenue-starved local governments that are the biggest culprits.

For example, a reader of this column named Gene recently shared his regulatory horror story with us….

Started a new business this year in AZ. Paid over $10,000 in fees for permitting, $10,000 in fee for elec hookup, $10,000 in fees for gas hook up and an extra $200 fee per month just for the “privilige” of having gas. Adding up all the fees to start our business, I don’t think we would do it again. We are now just getting to the point that we are making our bills each month, and so we are not taking a paycheck, and don’t anticipate one for at least another year. Our family has been in business for ourselves for decades,and we know what we are doing, but the rising fees caught us off guard. Cities, municipalities, counties and states are raising all fees at astronomical rates to help offset the slump in their real estate income (since banks apparently don’t have to pay real estate taxes)…I’m telling you every business person I know is on their last leg.

#4 Taxes

The United States has one of the most (if not the most) repressive business taxation scheme in the world.  As a small business owner, do you know what taxes you will be expected to pay?  It is not just federal income taxes and state income taxes that you will be paying.  In a previous article, I detailed the various forms of taxes that Americans pay each year and most of them apply to small businesses as well….

Accounts Receivable Taxes

Building Permit Taxes

Capital Gains Taxes

CDL license Taxes

Cigarette Taxes

Corporate Income Taxes

Court Fines (indirect taxes)

Dog License Taxes

Federal Income Taxes

Federal Unemployment Taxes (FUTA)

Fishing License Taxes

Food License Taxes

Fuel permit taxes

Gasoline Taxes

Gift Taxes

Hunting License Taxes

Inheritance Taxes

Inventory tax IRS Interest Charges (tax on top of tax)

IRS Penalties (tax on top of tax)

Liquor Taxes

Local Income Taxes

Luxury Taxes

Marriage License Taxes

Medicare Taxes

Payroll Taxes

Property Taxes

Real Estate Taxes

Recreational Vehicle Taxes

Road Toll Booth Taxes

Road Usage Taxes (Truckers)

Sales Taxes

Self-Employment Taxes

School Taxes

Septic Permit Taxes

Service Charge Taxes

Social Security Taxes

State Income Taxes

State Unemployment Taxes (SUTA)

Telephone federal excise taxes

Telephone federal universal service fee taxes

Telephone federal, state and local surcharge taxes

Telephone minimum usage surcharge taxes

Telephone recurring and non-recurring charges taxes

Telephone state and local taxes

Telephone usage charge taxes

Toll Bridge Taxes

Toll Tunnel Taxes

Traffic Fines (indirect taxation)

Trailer registration taxes

Utility Taxes

Vehicle License Registration Taxes

Vehicle Sales Taxes

Watercraft registration Taxes

Well Permit Taxes

Workers Compensation Taxes

#5 Health Insurance

Do you know if you will be required to provide health insurance for your new employees?  Have you familiarized yourself with the new 2,409 page health care law enough to be able to set up a health insurance program?

As a result of the new health care law, health insurance premiums for employees are shooting through the roof.  Are you going to be able to afford them?  Would it be better to have fewer employees and work each of them harder so that you won’t have to provide health coverage for as many people?

Will you be able to compete with the companies in your industry that have received waivers from having to comply with the new health care law?

In the United States, our system places the burden of providing health care on to the backs of employers.  So are you ready to handle that burden?

#6 Pensions

Will the employees of your new business need pensions?  Do you know how to set up a 401K program?  Do you know what defined benefit plans are?

You can literally sit through an entire law school course on pension law and still understand virtually nothing about the subject.  The truth is that if you plan to provide your employees with some kind of pension program you had better hire someone who can at least pretend that they know what they are talking about to set it up for you.

#7 Foreign Competition

Especially if you are creating a small business that does manufacturing, you are going to have to deal with foreign competition.

So are you going to be able to compete with the companies in your industry that pay their workers on the other side of the world less than a tenth of what you are paying to your American workers?

On the other side of the world, companies often don’t have to worry about unions, worker’s comp, health benefits, retirement benefits, nightmarish environmental regulations, crushing taxes or miles of paperwork and red tape.

Are you certain that you can compete against that?

#8 Lawsuits

The more successful you become, the more inviting of a target you are going to be for predatory lawsuits.  The truth is that the courtrooms of America are packed with thousands of them, and the lawyers that bring them are hardly ever held accountable.

All of your hard work can go down the drain in a single moment.  There are hordes of lawyers out there that make their living by filing lawsuits against small to mid-size businesses.

The truth is that if you are running a small business, you are probably doing something wrong.

Just hope and pray that a predatory lawyer does not find out.

#9 Environmentalists

Protecting the environment is a good thing.  Unfortunately, there are many radical “environmentalist” groups that consider it to be a bad thing that humans even breathe because it produces carbon dioxide.

When Audi ran their now famous “Green Police” commercial during the Super Bowl last year, most Americans laughed it off and thought that nothing like that could ever happen in America.  Well, it turns out that it is happening in America.

Not only are government environmental regulations totally nightmarish at this point, but there are a growing number of radical environmentalist groups that are running around the country filing lawsuits against whoever they feel like.

#10 The Federal Government

Are you prepared for a federal government that can literally change all the rules at any time?

Many businesses across America are frozen in their tracks at this point because they don’t know what Obama and the U.S. Congress are going to do next.

The truth is that things are getting really bizarre in this country.  For example, federal agents recently raided an Amish farm at 5 A.M. in the morning because they were selling “unauthorized” raw milk.

If federal agents will raid an Amish farmer at 5 AM in the morning over some raw milk, do you think that they are going to have any mercy on your small business when the time comes?

The America that once embraced “free enterprise” and the entrepreneurial spirit is dead and gone.

Now we are a country filled with bureaucrats and red tape from sea to shining sea.

Is it any wonder why we can’t compete with the rest of the world?

Is it any wonder why so many millions of Americans are unemployed and can’t find jobs?

In an attempt to “solve” our problems we just keep passing more “reform” which means even more rules and regulations for our businesses to follow.

Just as they are doing on an individual level, the government is attempting to watch, track and control everything that our businesses are doing.

Everywhere you look in American society today, the government is gradually tightening the steel-fisted grip that is has around everyone and everything.  Pretty soon you won’t even be able to sneeze without the government telling you how to do it correctly.

Is that really the kind of society that we all want to live in?

What a nightmare.

Do you have a horror story from starting a business in America that you would like to share?  If so, please feel free to post it in the comments section below….

11 Reasons Why North Korea Is The Most Bizarre Nation On Earth

Is the United States about to go to war with the most bizarre nation on earth?  A lot of Americans would actually welcome “the Korean War Part 2”, but before people get too excited it is important to keep in mind that we have never been at war with a nation that actually possesses nuclear weapons.  At this point it is unclear exactly how powerful North Korea’s nuclear weapons are, but nearly everyone does agree that they are crazy enough to use them.  North Korea reportedly has thousands of missile batteries that are capable to hitting the 10 million people that live in Seoul.  The death and devastation that an all-out strike on Seoul could potentially cause is almost unimaginable.  In fact, the 24.5 million people living either in or around Seoul make it the second largest metropolitan area in the world.  The next conflict on the Korean peninsula will be extremely bloody.  Nobody should be wishing for that.

Unfortunately, the next Korean war seems closer than ever.  Tensions on the peninsula are at a record high.  Today, North Korea has one of the largest armies in the world.  Some reports claim that they have over 1 million soldiers on active duty.  But South Korea is highly militarized as well, and there are 28,000 U.S. troops stationed in South Korea that the North Koreans would have to contend with.

Right now the rest of the world is getting quite nervous, because a war between nuclear powers could get out of hand very quickly.  If North Korea hits South Korea with nuclear weapons, it seems almost certain that the U.S. would hit North Korea with nukes.  The death and destruction that would result would be unprecedented.

So what does China think about all of this?  Well, North Korea would not be acting so belligerent right now if they did not have permission from China.  Perhaps China is trying to send a message to the West.

On the other hand, there are others that believe that it could go a lot deeper than that.  The regime in North Korea is on the verge of collapsing in on itself.  Even the Chinese are getting tired of propping up their government and dealing with their nonsense.  The truth is that a new Korean war could benefit the Chinese in several ways.

First of all, South Korea (the biggest U.S. ally in the region) would be absolutely devastated even if they “won” the war.  That would cripple an incredibly important geopolitical chess piece.

Secondly, the U.S. would be embroiled in yet another costly conflict and would undoubtedly suffer some costly losses as well.  The opinion of the rest of the world toward the United States would darken even more – especially if nuclear weapons were used.

Thirdly, China could gain a ton of “leverage” by stabbing North Korea in the back after the conflict had started.  In return for supporting the U.S./South Korean coalition, China could ask for all kinds of things that they wouldn’t even dream of getting right now.  In fact, it is not unthinkable to imagine China walking away with a significant chunk of North Korea in the aftermath of the war.  The Chinese government is regularly involved in “border disputes” (just Google it), and China would never pass up a chance to pick up a big slice of new territory.

In the end, the “winner” of any new war on the Korean peninsula would probably be China.  The U.S. would get rid of the “North Korean problem”, but it would come at a great cost.  It is hard to imagine any scenario that would end up greatly benefiting the United States.

Let us hope that a new all-out Korean war does not erupt.  North Korea is ruled by delusional leaders who are insane enough to actually use nuclear weapons.  If you doubt this, just consider the following 11 facts….

#1 The first “Great Leader” of North Korea, Kim Il-Sung, is deeply revered in North Korea.  In fact, there are over 500 statues of Kim Il-sung scattered throughout the country.  Many Koreans apparently believe that Kim Il-Sung actually created the world.

#2 It is said that hanging up pictures of Kim Il-Sung is compulsory for every household in North Korea.

#3 Millions of North Korean citizens have literally starved to death over the past 10 years.

#4 The North Korean constitution actually guarantees freedom of speech and freedom of the press.

#5 It has been reported that during times of extreme hunger in North Korea, cannibalism is quite common.  Several years ago the Washington Post shared what one 29-year-old female defector told them about what is going on inside the country….

“When one is very hungry, one can go crazy. One woman in my town killed her 7-month-old baby, and ate the baby with another woman.”

The sad thing is that the 29-year-old female defector didn’t even consider what she had seen to be wrong….

“I can’t condemn cannibalism. Not that I wanted to eat human meat, but we were so hungry. It was common that people went to a fresh grave and dug up a body to eat meat. I witnessed a woman being questioned for cannibalism. She said it tasted good.”

#6 In 1987, North Korea began construction on the Ryugyong Hotel, which would have been the tallest hotel in the world if it had been finished on schedule in 1989.  Instead, construction of the bizarre 105-story skyscraper that somewhat resembles a pyramid was suspended in 1992, and the unfinished structure was just a massive concrete shell towering over Pyongyang completely empty for the next 16 years.  Work began once again on the project in 2008, and it is anticipated that it will finally be completed in 2012.

#7 One of North Korea’s greatest “tourist attractions” is the Pueblo – a U.S. naval vessel that the North Koreans captured from “the imperialist Americans” back in 1968.

#8 According to North Korean media, Kim Jong-il is a phenom at just about everything.  It is claimed that he shot 38 under par (including 11 holes-in-one) the first time he ever played golf.

#9 Christians are slaughtered in some of the most brutal ways imaginable in North Korea.  The following is just one example…..

“While Interviewee 17 was in the North Korean Army, his unit was dispatched to widen the highway between Pyongyang and the nearby port city of Nampo. They were demolishing a vacated house in Yongkang county, Yongkang district town, when in a basement between two bricks they found a Bible and a small notebook that contained 25 names, one identified as pastor, two as chon-do-sa (assistant pastors), two as elders, and 20 other names, apparently parishioners, identified by their occupations. The soldiers turned the Bible and notebook over to the local branch of Department 15 of the Korean Workers Party (KWP), but the Party officials said it was up to the military police unit, Bowisaryungbu gigwanwon, to investigate. Tracked down at their place of work through the listing of occupation in the notebook, the 25 persons were picked up without formal arrest by the military bowibu. The interviewee was not aware of any judicial procedures for those seized. In November 1996, the 25 were brought to the road construction site. Four concentric rectangular rows of spectators were assembled to watch the execution. Interviewee 17 was in the first row. The five leaders to be executed – the pastor, two assistant pastors, and two elders – were bound hand and foot and made to lie down in front of a steamroller. This steamroller was a large construction vehicle imported from Japan with a heavy, huge, and wide steel roller mounted on the front to crush and level the roadway prior to pouring concrete. The other twenty persons were held just to the side. The condemned were accused of being Kiddokyo (Protestant Christian) spies and conspiring to engage in subversive activities. Nevertheless, they were told, “If you abandon religion and serve only Kim Il Sung and Kim Jong Il, you will not be killed.” None of the five said a word. Some of the fellow parishioners assembled to watch the execution cried, screamed out, or fainted when the skulls made a popping sound as they were crushed beneath the steamroller. Interviewee 17 thought, at the time, that these church people were crazy. He thought then that religion was an “opiate,” and it was stupid for them to give up their lives for religion. He heard from the soldiers who took away the other twenty prisoners that they were being sent to a prison camp.”

#10 A few years ago when China was sending humanitarian aid into North Korea the North Koreans decided that they would just start keeping the trains as well.  The Chinese crews were sent back over the border on foot.

#11 A song entitled “No Motherland Without You” was written specifically for Kim Jong-il and is one of the most popular songs in North Korea.  It is regularly sung by the North Korean military.

Are you convinced yet?  The truth is that North Korea is very, very dangerous and they should not be underestimated.  Let us hope that the United States never has to fight another war with them.

Black Friday: A Festival Of Greed In The Midst Of A Sea Of Pain And Suffering

Black Friday – the day after Thanksgiving when millions of Americans line up before the crack of dawn at retail stores across the nation hoping to find great deals on cheap plastic stuff made outside the United States.  The Friday after Thanksgiving has become an “unofficial holiday” in recent years, and in fact in many ways it is starting to become as big as Thanksgiving itself.  A recent search on Google News found over 31,000 stories about “Thanksgiving” and over 24,000 stories about “Black Friday”.  Almost every major news organization has been running stories about Black Friday for weeks now.  Some of the biggest retailers, including Wal-Mart, Sears, Old Navy and Toys R Us, have had such success with Black Friday sales that they have decided to stay open for Thanksgiving now.  You would think that we could all have one day off to spend with family and friends to give thanks for all that we have been blessed with, but apparently that is not going to be possible.  Just like so many of our other holidays, the true purpose behind having a holiday called “Thanksgiving” is being totally obliterated by a tsunami of greed.  Meanwhile, more Americans than ever are living in poverty this year and very few people even seem to notice.

Not that there is anything wrong with enjoying all the things you and your family have been blessed with.  However, perhaps we should all take time this week to remember the tens of millions of Americans that are going to be deeply suffering this winter.  They keep telling us that “the recession is over” and yet poverty continues to spread like an out of control plague.  But for most Americans life is still relatively “normal”, and so the horrible suffering going on out there doesn’t really affect them.

The truth is that the U.S. economy is dying.  Americans have been living beyond their means for decades, and now we are starting to pay the price for the gigantic mountains of debt that we have accumulated.  But instead of preparing for harder times and looking for ways to help those who are hurting, most Americans are preparing for another orgy of shopping this holiday season….

*According to a new study by America’s Research Group and UBS, more Americans than ever before will be out shopping this Black Friday.

Meanwhile, nearly 15% of all American households experienced a food shortage at some point during 2009, and experts anticipate that the final number for 2010 will be even worse.

*Approximately 48.9 percent of all Americans plan to shop on Black Friday this year.

Meanwhile, many other Americans only have a very, very cold winter to look forward to.  According to the National Energy Assistance Directors’ Association, more than 10 million U.S. households will not be able to afford to heat their homes this winter without assistance, which would be a new all-time record.

*The National Retail Federation estimates that holiday retail sales will hit $447.1 billion for 2010.

Meanwhile, more Americans are on food stamps than ever before.  Today, more than 43 million Americans are enrolled in the food stamp program.  The number of Americans on food stamps has increased almost 60 percent since 2007.  If our economy is getting better, then why is hunger spreading like an out of control virus?….

*Millions of American families will be streaming into Wal-Mart and Target to buy foreign-made electronic gadgets this upcoming Friday.

Meanwhile, millions of other American families would gladly give up their Thanksgiving meals in exchange for a decent job for a family member.  According to one recent survey, 28% of all U.S. households have at least one person that is looking for a full-time job.  Unfortunately, there are not even close to enough jobs to go around in post-industrial America.

*Consumer Reports has posted a Black Friday shopping guide that encourages people to be prepared to wait in line out in the cold for several hours if they want to get the “best deals”….

It’s not always worth breaking down the ‘door.’ … But consumers shouldn’t bother to show up unless they are willing to wait in line, sometimes for hours before the store opens, and should be prepared for possible disappointment. There are no guarantees.

Meanwhile, there are millions of American children that barely have enough to eat.  According to one recent study, approximately 21 percent of all children in the United States are living below the poverty line in 2010.

The age of consumerism is coming to a close so enjoy it while it lasts.

Sadly, many proponents of “free trade” (which is actually not “free” or “fair” at all) point to the “great deals” available on Black Friday as evidence that globalism works.

Yes, you might get 20 extra bucks off on that 32-inch television, but in the end American workers are going to be supported somehow.

Either we provide jobs for American workers that enable them to feed their families or we provide for them by giving them food stamps and unemployment checks.

The United States has lost over 42,000 factories since 2001.  Are you willing to have your taxes raised to provide food and shelter for all of those displaced workers?

The following is how Wikipedia defines deindustrialization….

Deindustrialization (also spelled deindustrialisation) is a process of social and economic change caused by the removal or reduction of industrial capacity or activity in a country or region, especially heavy industry or manufacturing industry. It is an opposite of industrialization.

In case you haven’t noticed, that is what is happening to America.

The United States is rapidly becoming a post-industrial nation.

As of the end of 2009, less than 12 million Americans worked in manufacturing.  The last time less than 12 million Americans were employed in manufacturing was in 1941.

Not that all trade is a bad thing.  Trading with other nations such as Canada and Germany that have similar standards of living and that pay their workers similar wages could potentially be beneficial to both sides.

However, merging our economy with nations such as communist China was a colossal mistake.  In China, most workers earn less than a tenth of what most American workers make.  Today, our factories, our jobs and our wealth are being transferred to China at a pace that is almost unbelievable.

In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year.  In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.

In case you are wondering, that is not a good trend.

Every single month, tens of billions of dollars more goes out of the United States than comes into it.

In other words, we are being drained.

But that isn’t going to stop tens of millions of Americans from running out on Black Friday and buying huge piles of stuff that nobody really needs with money that they can’t really afford to spend.

America is in the midst of a long-term economic decline, but nearly everyone in the media keeps expecting the economy to “snap out of it” and for the good times to start rolling once again.

Unfortunately, things aren’t going to get better.  This is about as good as things are going to get.

The federal government has piled up the biggest mountain of debt in the history of the world.  Our state and local governments are drowning in a sea of red ink.  Average Americans are seeing their incomes decline and their standards of living go down.  The greatest economic machine in world history is being dismantled and most Americans have become so dumbed-down that they don’t even understand what is going on.

But as they say, ignorance is bliss.

So enjoy this “Black Friday” while you still can.  Perhaps the memories of these good times will keep us warm during the truly dark days that are ahead.

The Prepper's Blueprint

Full Spectrum Dominance: 8 Examples Of How The Government Is Attempting To Take Total Control Of Our Food, Our Health, Our Money And Even Our Dignity

Over the past several decades, no matter which political party has been in power the government has continued to become a larger part of our lives. These days many people are speaking of the “nanny state” that we have created, but the reality is far worse than that. The truth is that the government has become a gluttonous, out of control behemoth that is gobbling up everything in sight and that is attempting to exert full spectrum dominance over our lives.  Today, the government seems to have an insatiable hunger to watch us, track us and control us.  Now they even want to feel our private parts before we get on an airplane.  No matter what politicians we send to Washington D.C., it just seems to get worse and worse.  Anyone who still believes that we live in “the land of the free” is completely and totally delusional.

It isn’t just in one particular area that all of this government intrusion into our lives is so offensive.  What we are witnessing is the government slowly digging its fingers even deeper into our lives in a thousand different ways.  Sadly, most Americans see the government as the one who is supposed to take care of them from the cradle to the grave, as the one who is supposed to fix all of the problems in society and as the one who is their ultimate authority.

This is in direct contradiction to the concept of a “limited government” that our Founding Fathers tried so desperately to enshrine in our founding documents.  The American people need a big-time wake up call.  The following are 8 examples of how the U.S. government is attempting to take even more control over our lives….

#1 Taking Total Control Of Our Food – S. 510 “The Food Safety Modernization Act”

S. 510, “The Food Safety Modernization Act”, is another huge power grab by the FDA and the federal government over our food supply.  The bill is written so broadly and so vaguely that nobody really knows what it means.  The potential for abuse of these vague new powers would be staggering.  So will the government abuse these powers?  Those who are in favor of the bill say that of course the government will be reasonable, but those who are opposed to the bill point to all of the other abuses that are currently taking place as evidence that we simply cannot trust the feds with vague, undefined powers.

Fortunately, the Tester Amendment has been attached to S. 510 at least for now, but big agriculture is not happy about this, and they will be doing everything they can to get it kicked out of the final version of the law.  In any event, if this food safety law does get passed, tens of millions of Americans will be left wondering what they are allowed to grow in their back yards, what seeds they are allowed to save and what can and cannot be sold at farmer’s markets.

In case you think this is paranoid, just consider what is already happening.  It has been documented that the feds recently raided an Amish farmer at 5 AM in the morning because they claimed that he was was engaged in the interstate sale of raw milk in violation of federal law.  If the feds are willing to stoop so low as to raid Amish farmers, do you think they will have any hesitation when the time comes to raid your home?

#2 Taking Total Control Of Air Travel – The Dehumanizing Full Body Scanners And “Enhanced Pat-Downs”

Totalitarian governments throughout history have always sought to dehumanize their subjects.  Sadly, that is exactly what is happening in America today.  If you want to get on an airplane in the United States, you will now be forced to either let TSA agents gawk at your naked body or let TSA agents grope your entire body including your genitals.

What these TSA agents are being instructed to do to ordinary Americans is so bizarre that it is hard to believe.  It is being reported that in many instances TSA agents are actually reaching down the pants of male travelers and up the skirts of female travelers.  One retired special education teacher was left humiliated, crying and covered with his own urine after an “enhanced pat-down” by TSA agents.  Quite a number of women that have been through these “enhanced pat-downs” have used the phrase “sexual assault” to describe the experience.

So is this what America has become?  A place that is so “dangerous” that we all must be treated like prison inmates?  Large numbers of Americans are swearing that they will simply not fly anymore, but what happens when these “enhanced pat-downs” start showing up at our schools, our shopping centers and our sporting events someday?

#3 Taking Total Control Of Our Health Care – The Loss Of Our Health Freedom

Once upon a time, Americans had control over their own health care decisions.  That is no longer true today.  Thanks to major changes in our health care laws, the health care landscape in America has been dramatically changed.  Americans are now forced to participate in the officially-sanctioned health care system by purchasing health insurance.  But Americans cannot just get any kind of health insurance policy that they want.  Our health insurance choices are now tightly constrained by thousands of regulations.

Not only that, but doctors in America no longer have the freedom to treat patients however they see fit.  Only “approved” treatments are permissible, and now the federal government is going to be telling doctors which of those “approved” treatments are “cost-effective” enough.  As the new health care laws are fully implemented over the next decade, the American people are going to become truly horrified not only about how much their health insurance premiums are going up, but also about how much health freedom they have actually lost.

#4 Taking Control Of Our Money – Multiplying Taxes

Whenever one tax goes down, it seems like several other taxes either go up or get invented.  The truth is that Americans are being drained by the federal government, state governments and local governments in dozens upon dozens of different ways.  To our various levels of government, our primary function is to serve as a revenue source.  Each year it seems like they find more ways to stick it to us.  In fact, it looks like 2011 is going to be a banner year for tax increases.  If you doubt this, just see my previous article entitled “2011: The Year Of The Tax Increase“.

#5 Taking Control Of Our Businesses – Thousands Of Ridiculous Regulations

Why would anyone in America even attempt to be an entrepreneur today?  Most small businesses are literally being strangled by hordes of red tape.

Just consider how things have changed in America.  The Federal Register is the main source of regulations for U.S. government agencies.  In 1936, the number of pages in the Federal Register was about 2,600.  Today, the Federal Register is over 80,000 pages long.

The following is just one example of how bizarre things have gotten in this country.  The U.S. Food and Drug Administration is projecting that the food service industry will have to spend an additional 14 million hours every single year just to comply with new federal regulations that mandate that all vending machine operators and chain restaurants must label all products that they sell with a calorie count in a location visible to the consumer.

Do we really need to spend 14 million more hours telling Americans that if they keep eating hamburgers and fries that they are likely to get fat?

But it is not just the federal government that is the problem.  One reader recently described how difficult  it was to try to run a business in the state of California….

Had 10 employees, but one almost exclusively to deal with government regs, taxes, reporting etc, Received a $144 penalty for a .33 (yes, cents)error on my quarterly payroll taxes from Cal Franchise Tax Board. I called to ask if that was not a bit repressive, why level penalize someone for what was obvisouly a didminimus error? I was told “we would have penalized you if it was .03!” I said, I did not volunteer to be the income tax collector for the State and Fed government, you should be paying me to do all this work and insane paper pushing. Reply: “That is part of the PRIVILIGE of being a business owner!!!”

#6 Taking Control Of Our Environment – The Green Police

The government is using the “green movement” as an excuse to take an unprecedented amount of control over our lives.  From coast to coast, communities have been given government grants to track our trash with RFID microchips. The following are just some of the communities that will now be using microchips to track what we throw away….

*Cleveland, Ohio

*Charlotte, North Carolina

*Alexandria, Virginia

*Boise, Idaho

*Dayton, Ohio

*Flint, Michigan

Not only that, but some cities are now starting to fine citizens for not recycling properly.

In Cleveland, Ohio if an RFID tracking chip signals that a recycle bin has not been brought out to the curb within a certain period of time, a “trash supervisor” will actually sort through the trash produced by that home for recyclables.

According to Cleveland Waste Collection Commissioner Ronnie Owens, trash bins that contain over 10 percent recyclable material will be subject to a $100 fine.

Does that sound like America to you?

Now we don’t even have the freedom to throw out trash the way we want to.

#7 Taking Away Our Independence – The Exploding Welfare State

You don’t have much freedom if you can’t take care of yourself.  But in America today, tens of millions of Americans have literally become completely dependent on the government for survival.  Over 42 million Americans are now on food stamps.  Approximately one out of every six Americans is enrolled in a federal anti-poverty program.

The number of Americans living in poverty has increased for three consecutive years, and the 43.6 million poor Americans in 2009 was the highest number that the U.S. Census Bureau has ever recorded in 51 years of record-keeping.

The more Americans that are destitute and totally dependent on the government the easier it will be for the government to control them.  Today a rapidly growing percentage of Americans fully expect the government to take care of them.  But this is not what our founders intended.

#8 Taking Away Our Patriotism – We Are Even Losing The Freedom To Be Proud Of America

Do you ever think things will get so repressive in America that a group of high school students will be forbidden from singing the national anthem at the Lincoln Memorial?  Well, that has already happened.  Do you think that areas of our nation will ever become so anti-American that they will forbid students from riding to school with an American flag on their bikes?  Well, that has already happened.

Fortunately, there was such an uproar over what happened to 13-year-old Cody Alicea that it made national headlines and he ended up being escorted to school by hundreds of other motorcycles and bicycles – most of them displaying American flags as well.  The school reversed its policy and now Cody can ride his bike to school every day proudly displaying the American flag.

But what if nobody had decided to stand up?

That school would have gotten away with banning the flag if the American people had allowed them to.

Our liberties and our freedoms are under attack from a thousand different directions and they are being stripped away from us at a blinding pace.

It has gotten to the point where most of us just sit in our homes and enjoy the “freedom” of digesting the “programming” that is constantly being hurled at us through our televisions.  Of course the vast majority of that programming is produced by just 6 monolithic corporations that control almost everything that we watch, hear and read.

Power and money have become more highly concentrated in America today than ever before, and yet most Americans don’t even realize it.

Most Americans are so busy just trying to survive from month to month that they don’t even have time to think about the deeper issues.  At the end of the night most of them are so exhausted from serving the system that all they can do is collapse on the sofa and turn on some programming.

But the American people desperately need to wake up.  Without liberty and freedom our country cannot work.  But our freedoms and liberties are being stripped away a little bit more each and every day.

The America that so many of us grew up adoring is dying right in front of our eyes.  If you plan on saying something about it, you better do so before it is too late.

111 Obamacare Waivers And Counting – Can The Rest Of Us Get Waivers From Having To Comply With Obamacare Please?

In a stunning admission of just how job-killing and business-crushing the new health care law really is, the Obama administration has issued a staggering total of 111 Obamacare waivers (and counting) so far. The list of the dozens of companies and organizations that have been approved for a waiver is very, very deeply buried on the website of the Department of Health & Human Services.  In fact, it takes six separate clicks to get to the list.  Some of the companies that have been granted waivers include McDonald’s, Darden Restaurants (owners of the Olive Garden and Red Lobster restaurant chains), Aetna, the United Federation of Teachers Welfare Fund in New York, and Dish Network.  These Obamacare waivers cover a total of 1.2 million Americans.  However, as news of these waivers spreads, it is inevitable that thousands more companies will want to apply.  In the end, tens of millions of Americans may be covered by health plans that have been exempted from Obamacare.  So can the rest of us get in on this action or is the Obama administration going to play favorites with these waivers?

So far, the Obamacare waivers have primarily been granted to companies that offer very limited health plans.  The Obama administration has apparently been afraid of the public relations nightmare that would result if dozens of companies suddenly started dropping health coverage for their employees.  The following is how the New York Times recently described what is going on with these waivers….

Last month, federal officials granted dozens of one-year waivers that were aimed at sparing certain employers, including McDonald’s, insurers and unions who offer plans that sharply limit the coverage they provide. These limited-benefit plans, also known as “minimeds,” fail to comply with new rules phasing out limits on how much policies will provide in medical care each year.

So do you want to get an Obamacare waiver for your own company?  Well, just over a week ago the Department of Health & Human Services published a set of new guidelines for those seeking to apply for a waiver.  As news of these waivers starts to spread they will likely get absolutely swamped with applications, so you better get yours in early.  In fact, it is being reported that the number of approved applications has tripled in just the last month alone.

But these waivers raise some very important questions.

-If Obamacare is such a great law, shouldn’t it apply equally to everybody?

-If Obamacare is going to cause firms to drop their “mini-med” health plans, shouldn’t all firms with “mini-med” plans be given a blanket exemption?

-Are all firms that apply for an Obamacare exemption going to be given one or will the Obama administration be playing favorites?

-Won’t firms that are granted these Obamacare waivers be given a very substantial competitive advantage over other firms in the same industry that do not have an exemption?

-What does it say about an administration when they grant dozens upon dozens of exemptions from a law that they spent months upon months selling to the American people as the ultimate solution to our health care problems?

The following is a recent video news report about these Obamacare exemptions…..

The truth is that the U.S. health care system was deeply broken before Obamacare, and after the new health care law the U.S. health care system is still deeply broken.

Before Obamacare, the U.S. health care system was all about making as much money as possible for health insurance companies and the pharmaceutical industry.  After Obamacare, the U.S. health care system is still about making as much money as possible for health insurance companies and the pharmaceutical industry, only now we all have to deal with more suffocating layers of government bureaucracy and much higher health insurance premiums.

The entire health care system in the United States should be dismantled and built again from scratch.  It was a complete and total nightmare before Obamacare and it is still a complete and total nightmare.

But perhaps you disagree.  Freedom of speech is a wonderful thing, and if you have a different perspective feel free to express it below….

Suffocated By Red Tape – 12 Ridiculous Regulations That Are Almost Too Bizarre To Believe

Even with all of the massive economic problems that the United States is facing, if the government would just get off our backs most of us would do okay.  In America today, it is rapidly getting to the point where it is nearly impossible to start or to operate a small business.  The federal government, the state governments and local governments are cramming thousands upon thousands of new ridiculous regulations down our throats each year.  It would take a full team of lawyers just to even try to stay informed about all of these new regulations.  Small business in the United States is literally being suffocated by red tape.  We like to think that we live in “the land of the free”, but the truth is that our lives and our businesses are actually tightly constrained by millions of rules and regulations.  Today there is a “license” for just about every business activity.  In fact, in some areas of the country today you need a “degree” and multiple “licenses” before you can even submit an application for permission to start certain businesses.  And if you want to actually hire some people for your business, the paperwork nightmare gets far worse.  It is a wonder that anyone in America is still willing to start a business from scratch and hire employees.  The truth is that the business environment in the United States is now so incredibly toxic that millions of Americans have simply given up and don’t even try to work within the system anymore.

Today, the U.S. government has an “alphabet agency” for just about everything.  The nanny state feels like it has to watch, track and tightly control virtually everything that we do.  The Federal Register is the main source of regulations for U.S. government agencies.  In 1936, the number of pages in the Federal Register was about 2,600.  Today, the Federal Register is over 80,000 pages long.  That is just one example of how bad things have gotten.

But it is not just the federal government that is ramming thousands of ridiculous regulations down our throats.  The truth is that in many cases state and local governments are far worse.  We have become a nation that is run and dominated by bureaucrats.  Yes, there always must be rules in a society, but we have gotten to the point where there are so many millions of rules that the game has become unplayable.

The following are 12 examples of ridiculous regulations that are almost too bizarre to believe….

#1 The state of Louisiana says that monks must be fully licensed as funeral directors and actually convert their monasteries into licensed funeral homes before they will be allowed to sell their handmade wooden caskets.

#2 The city of Philadelphia now requires all bloggers to purchase a $300 business privilege license.  The city even went after one poor woman who had earned only $11 from her blog over the past two years.

#3 In the state of Massachusetts, all children in daycare centers are mandated by state law to brush their teeth after lunch.  In fact, the state even provides the fluoride toothpaste for the children.

#4 If you attempt to give a tour of our nation’s capital without a license, you could be put in prison for 90 days.

#5 A reader named Gene recently shared his regulatory horror story with us….

Started a new business this year in AZ. Paid over $10,000 in fees for permitting, $10,000 in fee for elec hookup, $10,000 in fees for gas hook up and an extra $200 fee per month just for the “privilige” of having gas. Adding up all the fees to start our business, I don’t think we would do it again. We are now just getting to the point that we are making our bills each month, and so we are not taking a paycheck, and don’t anticipate one for at least another year. Our family has been in business for ourselves for decades,and we know what we are doing, but the rising fees caught us off guard. Cities, municipalities, counties and states are raising all fees at astronomical rates to help offset the slump in their real estate income (since banks apparently don’t have to pay real estate taxes)…I’m telling you every business person I know is on their last leg. In a few more years, if things don’t turn out better for the BUSINESS PEOPLE THAT SUPPORT THE GOV, then the last ones standing will go down, and the GOV with it. Not counting the other bubbles that could blow, this one is just common sense. People talk about TAXES. This has nothing to do with taxes, or the blatent disregard for taking my money and giving it to someone else. This is just about the issue of actually getting a business started and keeping a business going. The fees are feeing us all out of business.

#6 Federal agents recently raided an Amish farm at 5 A.M. in the morning because they were selling “unauthorized” raw milk.

#7 In Lake Elmo, Minnesota farmers can be fined $1,000 and put in jail for 90 days for selling pumpkins or Christmas trees that are grown outside city limits.

#8 A U.S. District Court judge slapped a 5oo dollar fine on Massachusetts fisherman Robert J. Eldridge for untangling a giant whale from his nets and setting it free.  So what was his crime?  Well, according to the court, Eldridge was supposed to call state authorities and wait for them do it.

#9 In the state of Texas, it doesn’t matter how much formal interior design education you have – only individuals with government licenses may refer to themselves as “interior designers” or use the term “interior design” to describe their work.

#10 Deeply hidden in the 2,409-page health reform bill passed by Congress was a new regulation that will require U.S. businesses to file millions more 1099s each year.  In fact, it is estimated that the average small business will now have to file 200 additional 1099s every single year.  Talk about a nightmare of red tape!  But don’t try to avoid this rule – it is being reported that the IRS has hired approximately 2,000 new auditors to audit as many of these 1099s as possible.

#11 The city of Milwaukee, Wisconsin makes it incredibly difficult to go out of business.  In order to close down a business, Milwaukee requires you to purchase an expensive license, you must submit a huge pile of paperwork to the city regarding the inventory you wish to sell off, and you must pay a fee based on the length of your “going out of business sale” plus a two dollar charge for every $1,000 worth of inventory that you are attempting to sell off.

#12 The U.S. Food and Drug Administration is projecting that the food service industry will have to spend an additional 14 million hours every single year just to comply with new federal regulations that mandate that all vending machine operators and chain restaurants must label all products that they sell with a calorie count in a location visible to the consumer.

The following short video produced by the Institute for Justice examines some more examples of completely ridiculous regulations across the United States.  The video is very funny, but please keep in mind that all of this red tape is absolutely killing many very real businesses….

So is this what “free enterprise” is supposed to look like?

Over and over again I have written about the dangers of globalization, but no matter what changes are made a lot of companies will still not want to set up shop in the United States until something is done about all of these ridiculous regulations.

As mentioned earlier, the U.S. economy is facing a vast array of incredibly serious problems, but if government would just get off our backs at least we would have a fighting chance.

Instead, it gets worse every single year.  Each new wave of bureaucrats just seems to get worse than the wave before it.  They always seem to think that if they just write more regulations and impose more fees and require more licenses and raise more revenue that they will be able to “fix” things.

But the truth is that they always make things worse.  Our economy is literally being suffocated by red tape.  A “total control grid” is being erected all around us and most Americans are so numb that they don’t even realize that it is happening.

9 Reasons Why Quantitative Easing Is Bad For The U.S. Economy

Buckle up and hold on – a new round of quantitative easing is here and things could start getting very ugly in the financial world over the coming months.  The truth is that many economists fear that an out of control Federal Reserve is “crossing the Rubicon” by announcing another wave of quantitative easing.  Have we now reached a point where the Federal Reserve is simply going to fire up the printing presses and shower massive wads of cash into the financial system whenever the U.S. economy is not growing fast enough?  If so, what does the mean for inflation, the stability of the world financial system and the future of the U.S. dollar?  The Fed says that the plan is to purchase $600 billion of U.S. Treasury securities by the middle of 2011.  In addition, the Federal Reserve has announced that it will be “reinvesting” an additional $250 billion to $300 billion from the proceeds of its mortgage portfolio in U.S. Treasury securities over the same time period.  So that is a total injection of about $900 billion.  Perhaps the Fed thought that number would sound a little less ominous than $1 trillion.  In any event, the Federal Reserve seems convinced that quantitative easing is going to work this time.  So should we believe the Federal Reserve?

The truth is that the Federal Reserve has tried this before.  In November 2008, the Federal Reserve announced a $600 billion quantitative easing program.  Four months later the Fed felt that even more cash was necessary, so they upped the total to $1.8 trillion.

So did quantitative easing work then?

No, not really.  It may have helped stabilize the economy in the short-term, but unemployment is still staggeringly high.  Monthly U.S. home sales continue to come in at close to record low levels.  Businesses are borrowing less money.  Individuals are borrowing less money.  Stores are closing left and right.

The Fed is desperate to crank the debt spiral that our economic system is now based upon back up again.  The Fed thinks that somehow if it can just pump enough nearly free liquidity into the banking system, the banks will turn around and lend it out at a markup and that this will get the debt spiral cranking again.

The sad truth is that the Federal Reserve is not trying to build an economic recovery on solid financial principles.  Rather, what the Federal Reserve envisions is an “economic recovery” based on new debt creation.

So will $900 billion be enough to get the debt spiral cranked up again?

No.

If 1.8 trillion dollars didn’t work before, why does the Federal Reserve think that 900 billion dollars is going to work now?  This new round of quantitative easing will create more inflation and will cause speculative asset bubbles, but it is not going to fix what is wrong with the economy.  The damage is just too vast as Charles Hugh Smith recently explained….

Anyone who believes a meager one or two trillion dollars in pump-priming can overcome $15-$20 trillion in overpriced assets and $10 trillion in uncollectible debt may well be disappointed.

In fact, economists over at Goldman Sachs estimate that it would take a staggering $4 trillion in quantitative easing to get the economy rolling again.

Of course that may eventually be what happens.  The Fed may be starting at $900 billion just to get the door open.  With these kinds of bureaucrats, once you give them an inch they usually end up taking a mile.

So why should we be concerned about quantitative easing?  The following are 9 reasons why quantitative easing is bad for the U.S. economy….

#1 Quantitative Easing Will Damage The Value Of The U.S. Dollar

Each time you add a new dollar to the system, it decreases the value of each existing dollar by just a little bit.  Now the Federal Reserve is pumping 900 billion dollars into the system and that is going to have a significant impact.  Bill Gross, the manager of the largest mutual fund in the entire world, said on Monday that he believes that more quantitative easing could result in a decline of the U.S. dollar of up to 20 percent….

“I think a 20 percent decline in the dollar is possible.”

#2 Inflation Is Going To Hit Already Struggling U.S. Consumers Really Hard

Already, investors have been fleeing from the U.S. dollar and other paper currencies and have been flocking to commodities, precious metals and oil.  That means that the price of food is going to go up.  The price of gasoline is also going to go up.  American families are going to find their budgets stretched even more in the months ahead.

#3 Once An Inflationary Spiral Gets Going It Is Really Hard To Stop

The Federal Reserve is playing a very dangerous game by flirting with inflation.  Once an inflationary spiral gets going, it is really difficult to stop.  Just ask anyone who lived through the Weimar Republic or anyone who lives in Zimbabwe today.  If the Federal Reserve is now going to be dumping hundreds of billions of fresh dollars into the system whenever the economy gets into trouble it is inevitable that we will see rampant inflation at some point. 

#4 Inflation Is A Hidden Tax On Every American

Tens of millions of Americans have worked incredibly hard to save up a little bit of money.  These Americans are counting on that money to pay for a home, or to pay for retirement or to pay for the education of their children.  Well, inflation is like a hidden tax on all of those savings.  In fact, inflation is a hidden tax on every single dollar that all of us own.  We have been taxed more than enough – we certainly don’t need the Federal Reserve imposing another hidden tax on all of us.

#5 The Solution To The Housing Bubble Is Not Another Housing Bubble

Today, approximately a third of all U.S. real estate is estimated to have negative equity.  The Federal Reserve apparently believes that by flooding the system with gigantic sacks of cash banks will start making home loans like crazy again and home prices will rise substantially once again – thus wiping out most of that negative equity.

But the solution to the housing bubble is not another housing bubble.  The kinds of crazy home loans that were made back in the middle of the decade should never be made again.  Market forces should be allowed to bring the housing market to a new equilibrium where ordinary Americans can actually afford to purchase homes.  But that is not how our system works anymore.  Today, everything has to be manipulated.

#6 More Quantitative Easing Threatens To Destabilize The Global Financial System

We have already entered a time of increasing global financial instability, and the Federal Reserve is not going to help things by introducing hundreds of billions of new dollars into the game.  Over the past two decades, bubble after bubble has caused tremendous economic problems, and now all of this new money could give rise to new bubbles.  Already, we see financial institutions and investors pumping up carry trade bubbles, engaging in currency speculation and driving up commodity prices to ridiculous levels.

#7 Quantitative Easing Is An Aggressive Move In A World Already On The Verge Of A Currency War

Quantitative easing will likely help U.S. exporters by causing the value of the U.S. dollar to sink.  However, this gain by U.S. exporters will come at the expense of foreigners.  It is essentially a “zero sum” game.  So all of those exporting countries that are already upset with us will become even more furious as the U.S. dollar declines.  Could we witness the first all-out “global currency war” in 2011?   

#8 Quantitative Easing Threatens The Status Of The Dollar As The World Reserve Currency

As the Federal Reserve continues to play games with the U.S. dollar, quite a few nations around the globe will start evaluating whether or not they want to continue to trade with the U.S. dollar and use it as a reserve currency.

In fact, a recent article on The Market Oracle website explained how this is already happening….

In September, China supported a Russian proposal to start direct trading using the yuan and the ruble rather than pricing their trade or taking payment in U.S. dollars or other foreign currencies. China then negotiated a similar deal with Brazil. And on the eve of the IMF meetings in Washington on Friday, Premier Wen stopped off in Istanbul to reach agreement with Turkish Prime Minister Erdogan to use their own currencies in a planned tripling Turkish-Chinese trade to $50 billion over the next five years, effectively excluding the dollar.

#9 It Is Going To Become More Expensive For The U.S. Government To Borrow Money

Right now, the U.S. government has been able to borrow money at ridiculously low interest rates.  But as the Federal Reserve keeps buying up hundreds of billions in U.S. Treasuries, the rest of the world is going to start refusing to participate in the ongoing Ponzi scheme.

Peter Schiff, the CEO of Euro Pacific Capital, says that one of the big reasons for more quantitative easing is because the U.S. government is already starting to have difficulty finding enough people to borrow from….

At the end of the day, all this deflation talk is a red herring. The true purpose of QE 2 is to disguise the decreasing ability of the Treasury to finance its debts. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. By announcing QE 2, it can monetize government debt without the markets perceiving a funding problem.

But the truth is that foreigners are not stupid.  They can see the shell game that is being played.  As Bill Gross noted on Monday, U.S. government debt will soon become a lot less attractive to foreign investors….

QEII not only produces more dollars but it also lowers the yield that investors earn on them and makes foreigners, which is the key link to the currencies, it makes foreigners less willing to hold dollars in current form or at current prices.

As foreigners begin to balk at all of this nonsense, the U.S. government will either have to start paying higher interest rates on government debt in order to attract enough investors, or the Federal Reserve will just have to drop all pretense and permanently start buying up most of the debt.  Either way, once faith has been lost in U.S. Treasuries the financial world will never, ever be the same.

Most Americans have absolutely no idea how fragile the world financial system is right now.  Once the rest of the world loses faith in the U.S. dollar and in U.S. Treasuries this entire thing could completely unravel very quickly.   

The Federal Reserve is playing a very dangerous game.  They are openly threatening the delicate balance of the world financial system. 

Once the toothpaste is out of the tube, it is really hard to put it back in again.  Cross your fingers and hold on tight, because things are going to get really bumpy ahead.

The Calm Before The Storm

An eerie calm has descended upon world financial markets as they await perhaps the two most important financial events of the year this week.  On Tuesday, investors will be eagerly awaiting the results of one of the most anticipated midterm elections in U.S. history.  On Wednesday, the Federal Reserve is expected to end months of speculation by formally announcing the details of a new round of quantitative easing.  If either the election or the meeting of the Federal Reserve open market committee delivers a highly unexpected result, it could have a dramatic impact on world financial markets.  In fact, many are looking at this week as a potential turning point for the U.S. economy.  The decisions that are made or not made this week could set us down a road from which the U.S. economy may never recover.

At this point, it looks like the Republicans will take control of the U.S. House of Representatives and will pick up a number of U.S. Senate seats as well.

There are many in the financial world who already consider Barack Obama to be the most “anti-business” president in U.S. history, so a defeat for the Democrats on Tuesday would be greatly welcomed by many on Wall Street.  Barack Obama’s decline in popularity since he was elected has been absolutely stunning.  According to Gallup, Barack Obama had an average approval rating of just 44.7% during the seventh quarter of his presidency, which was a brand new low.  In fact, Obama’s average approval rating has fallen during every single quarter since he took office.  Things have gotten so bad for Obama that one new poll has found that 47% of Democrats now think that Barack Obama should be challenged for the 2012 Democratic presidential nomination. 

However, if the Democrats were able to do surprisingly well on Tuesday, it would not only shock the political pundits, but it would also likely put world financial markets in a very bad mood. 

If the Republicans do very well on Tuesday, it will likely mean that there will be no more extensions for those receiving long-term unemployment benefits.  Some state governments are already anticipating this and are making preparations.  For example, armed security guards are now being posted at all 36 full-service unemployment offices in the state of Indiana.  It is estimated that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season if  Congress does not authorize another emergency extension of benefits by the end of November.  If the Republicans do very well on Tuesday, it would make it much more likely that the extension will not happen.

But if millions of unemployed Americans suddenly find themselves without any unemployment checks, that is only going to cause the anger and frustration regarding this economy to grow.

Either way, the unfortunate truth is that this election is not going to change much.

Over the past five elections, incumbents have been re-elected to the U.S. House of Representatives at an average rate of 96 percent.

This time will be a little different of course, but not that much different.  The sad truth is that we are still likely to see about 80 percent of the exact same faces going back to the U.S. Congress for the next session.

However, even if the American people could somehow vote out every single member of Congress, it would still not do much to fundamentally change our economic situation because the U.S. Congress does not run the economy and neither does the President.

Of course both of those institutions can influence the U.S. economy, but it is actually the Federal Reserve that runs the economy.

The Federal Reserve controls the money supply.  The Federal Reserve controls our interest rates.  If the U.S. government wants more money it has to go get it from the Federal Reserve.  It is the Federal Reserve that is tasked with the mandate of keeping unemployment low while also keeping inflation at a “reasonable” level.

But these days, Federal Reserve officials don’t really seem to be that concerned about the dangers of inflation.  In fact, several top Federal Reserve officials have come out in recent weeks and have made public statements not only advocating more quantitative easing, but also suggesting that inflation is not a danger because it is actually “too low” right now.

In fact, there have been some rumblings that many officials at the Fed would actually welcome more inflation because they think that it would somehow stimulate the economy.  In fact, a Federal Reserve paper that was released in September actually floated the idea that a spike in oil prices would be quite good for the U.S. economy.

And these are the people running our economy?

Are we all caught in an episode of The Twilight Zone?

Well, as far as rising oil prices are concerned, the Fed will almost surely get its wish.  As I have written about previously, the price of oil is almost certainly heading to 100 dollars a barrel.

But if the price of oil shoots up, isn’t that going to cause significant inflationary pressure on the prices of thousands of other goods and services?

Of course.

Unfortunately, very few of our leaders seem too concerned about inflation or about protecting the value of the U.S. dollar these days.

In fact, now even the IMF is publicly proclaiming that the U.S. dollar is “overvalued”.

What a mess.

But there is another aspect of a new round of “quantitative easing” that the American people really wouldn’t like if they could actually figure out what is going on.

You see, the truth is that “quantitative easing” is not only just a way to stimulate the economy, it is also a way to give backdoor bailouts to the big banks without having to go through the U.S. Congress.

In a previous article, I described how this works….

1) The big U.S. banks have massive quantities of junk mortgage-backed securities that are worth little to nothing that they desperately want to get rid of.

2) They convince the Federal Reserve (which the big banks are part-owners of) to buy up these “toxic assets” at significantly above market price.

3) The Federal Reserve creates massive amounts of money out of thin air to buy up all of these troubled assets.  The public is told that all of this “quantitative easing” is necessary to stimulate the U.S. economy.

4) The big banks are re-capitalized and have gotten massive amounts of bad mortgage securities off their hands, the Federal Reserve has found a way to pump hundreds of billions (if not trillions) of dollars into the economy, and most of the American people are none the wiser.

Now how do you think the American people would feel about “quantitative easing” if they really understood all this?

But unfortunately, most Americans will be watching the election results on Tuesday night without having even a basic understanding of how our economy is really run.

Already, there are a ton of signs that the U.S. economy is heading in a very bad direction, and dumping a handful of Congress critters out of office might feel good, but it isn’t going to do much to really change our economic problems.

The American people desperately need to be educated about how our financial system really works.  But unfortunately, most Americans will likely not wake up until the whole house of cards comes crashing down.

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