Interest Rates

The Federal Reserve Is Increasing The Pace Of Interest Rate Hikes Just In Time For The 2018 Mid-Term Elections

If the Federal Reserve really wanted to hurt the U.S. economy, the quickest way that it could do that would be by aggressively raising interest rates.  Lower interest rates make it less expensive to borrow money, and therefore economic activity tends to expand in a low interest rate environment.  Alternatively, higher interest rates make it more expensive to borrow money, and economic activity tends to slow down in a high interest rate environment.  Since 1913, the Federal Reserve has engaged in 18 previous rate hiking cycles, and every single one of them resulted in a huge stock market decline and/or a recession.  It will be the same this time around as well, and the “experts” at the Federal Reserve know exactly what they are doing.  Interest rates are being aggressively jacked up just in time for the 2018 mid-term elections, and that is very bad news for the Republican Party and the Trump administration.

On Wednesday, the Federal Reserve announced an interest rate hike for the 2nd time this year…

The Federal Reserve increased a key interest rate again Wednesday, which will trigger higher rates on credit cards, home equity lines and other kinds of borrowing.

Wednesday’s action, which was widely expected, was the second Fed rate hike this year — and the seventh since it began boosting them in 2015. The latest increase puts the federal funds rate in a range between 1.75 and 2 percent. The Fed previously nudged rates up in March.

Because so much is based on what the Federal Reserve does, now interest rates will be going up throughout our economy.

For example, we should expect the average rate on a 30-year fixed mortgage to surpass the 4.66 percent mark that we witnessed earlier this year…

Mortgage rates have been climbing. The average rate on a 30-year fixed rate mortgage climbed to 4.66% this year in May, the highest in seven years, before falling slightly in recent weeks.

Home mortgage rates tend to move with the bond market, but rates can also rise because of a higher federal funds rate. A higher rate makes it more expensive for banks to borrow money, which can translate into higher borrowing rates for consumers.

Needless to say, this is going to have a huge impact on the housing market.

Interest rates will also be going up on credit cards, auto loans and just about every other kind of debt that you can imagine.

This will inevitably slow down economic activity, and it will make the party that is in power in Washington (the Republicans) look bad.

Originally, it was anticipated that the Federal Reserve would raise rates only three times in 2018, but now they are indicating that rates will be raised a total of four times this year.  The following comes from NPR…

The Fed also signaled that it will raise rates more this year than previously expected — four times rather than three.

This is economic sabotage, but nobody in the mainstream media will ever admit this.

Most people do not understand that the Federal Reserve has far more power over the performance of the U.S. economy than anyone else does.  It was the Fed’s ultra-low interest rates and easy money policies that fueled the relative economic improvement that we have witnessed early in Trump’s presidency, and it will be the Fed’s policy of aggressively raising rates that will inevitably cause huge economic turmoil in the coming months.

So why would the Federal Reserve do this?

According to Federal Reserve Chair Jerome Powell, the Fed decided to raise interest rates to keep the economy from overheating…

The decision reflected an economy that’s getting even stronger. Unemployment is 3.8%, the lowest since 2000, and inflation is creeping higher. The Fed is raising rates gradually to keep the economy from overheating.

“The main takeaway is that the economy is doing very well,” Fed Chairman Jerome Powell said at a news conference. “Most people who want to find jobs are finding them, and unemployment and inflation are low.”

Of course that is a load of nonsense.

As I discussed yesterday, if honest numbers were being used our unemployment rate would be at 21.5 percent, inflation would be at about 10 percent, and GDP growth would be negative.

The U.S. economy is definitely not “overheating”.  In fact, it needs as much help as possible to pull out of the deep slump that it has been in for many, many years.

Fed Chair Jerome Powell is supposed to be a Republican, and I suppose that it is possible that he actually believes that he is doing the right thing for the country by aggressively raising interest rates.

But any sort of an economic slowdown will be extremely favorable for the Democrats.  American voters are notorious for “voting their pocketbooks”, and when things get bad they always blame whoever is in power at the time.

In this case, it will be Donald Trump and the Republicans in Congress that get the blame for what the Federal Reserve has done.

We know that some among the elite are already discussing the possibility of “a crashing economy” as a way to “get rid of Trump”.  In the short-term, however, the best way to neuter Trump politically would be to have Democrats do extremely well in the 2018 mid-term elections.

If the Democrats take back control of either the House or the Senate in November, Trump’s agenda will come to a crashing halt, and thanks to the Federal Reserve that scenario has just become much more likely.

Michael Snyder is a nationally syndicated writer, media personality and political activist. He is the author of four books including The Beginning Of The End and Living A Life That Really Matters.

18 Times The Fed Has Gone Through A Rate Hiking Cycle, And 18 Times It Has Caused A Huge Stock Market Decline And/Or A Recession

Since 1913, the Federal Reserve has engaged in 18 distinct interest rate hiking campaigns, and in every single one of those instances the end result was a large stock market decline, a recession, or both.  Now we are in the 19th rate tightening cycle since 1913, but many of the experts are insisting that things will somehow be different this time.  They assure us that the U.S. economy will continue to grow and that stock prices will continue to soar.  Of course the truth is that if something happens 18 times in a row, there is a really, really good chance that it will happen on the 19th time too.  For years I have been trying to get people to understand that our country has been on an endless roller coaster ride ever since the Fed was created back in 1913.  Things can seem quite pleasant when the economy is on one of the upswings, but the downswings can be extremely painful.

It was economist Lance Roberts that pointed out this correlation between rate hiking cycles and economic troubles.  When I came across his most recent article, it really got my attention…

A sustained interest rate hiking campaign, as undertaken by the Fed, has always resulted in negative stock market returns.

Always. Not usually, not might-be-correlated-to. Always. As in, 18 out of 18 times. Until now. When we’ve had the single highest percentage increase in history (93.33% peak to trough, so far).

To support his claims, he posted this chart…

So far, however, there hasn’t been a huge stock market drop or a recession during this rate hiking cycle.

Has something changed?

Is the 19th time going to be fundamentally different?

Roberts believes that the unprecedented intervention by the Fed that we have seen in recent years that has fueled corporate buybacks has successfully “delayed the inevitable stock market correction”…

So what gives? Of course, it’s the Fed. Having kept interest rates near zero for years on end and having filled corporate coffers with super cheap debt used to fuel market-bubble-sustaining corporate buybacks, the Fed has delayed the inevitable stock market correction.

I definitely agree with Roberts – a colossal stock market correction is inevitably coming.

And the warning signs are all around us.  As I have discussed so many times before, junk bonds are often an early warning sign for a major financial crisis, and it is extremely interesting to note that it looks like Deutsche Bank is planning a “fire sale” of their energy junk bonds.  The following analysis comes from Zero Hedge…

Bloomberg reports that Deutsche is planning to sell the loan book as a whole and has marketed it to North American and European peers, said one of the people. The portfolio is expected to sell for par value, said the people, who asked not to be identified because they weren’t authorized to speak publicly; good luck with that!

The bank’s energy business is expected to wrap up on June 30, one of the people said. The bank has been an active lender in the energy space in the past year, participating in the financing of companies including Peabody Energy Corp. and Coronado Australian Holdings Pty., according to data compiled by Bloomberg.

So to summarize: Moody’s is warning that when the economy weakens we will see an avalanche of defaults like we haven’t seen before; Corporate debt-to-GDP and investor risk appetite is reminding a lot of veterans of previous credit peaks; and now the most desperate bank in the world is offering its whole junk energy debt book in a firesale… just as high yield issuance starts to slump.

Wow.

To me, that is one of the strongest indications yet that things are about to take a major turn for the worse for the global financial system.

And even former Federal Reserve chair Ben Bernanke is sounding quite pessimistic these days.  The following comes from a Bloomberg article entitled “Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020”…

The stimulus “is going to hit the economy in a big way this year and next year, and then in 2020 Wile E. Coyote is going to go off the cliff,” Bernanke said, referring to the hapless character in the Road Runner cartoon series.

When you read that quote, alarm bells should have been going off in your head.

If his forecast is accurate, that means that the U.S. economy’s Wile E. Coyote moment will come just in time for the 2020 election…

The timing of Bernanke’s possible slowdown would line up badly for Trump, who has called the current economy the best ever and faces reelection in late-2020.

Wouldn’t that be convenient for the elite?

U.S. voters tend to be extremely influenced by the performance of the economy, and so a major economic downturn would not bode well for Trump’s chances.

Similarly, if a major crisis erupts during the second half of this year, it will probably mean big problems for Republicans in November.  Timing is everything in politics, and when the next crisis comes most voters won’t even consider the fact that it had been building for a very, very long time.  All they will care about is who is in office at the time.

But for the moment, most of the “experts” are assuring us that things will be rosy for the foreseeable future.  For example, a couple of prominent analysts over at Goldman Sachs are saying that tech stock prices are likely to continue to rise…

“Unlike the technology mania of the 1990s, most of this success can be explained by strong fundamentals, revenues and earnings rather than speculation about the future,” strategists Peter Oppenheimer and Guillaume Jaisson wrote in a note. “Given that valuations in aggregate are not very stretched, we do not expect the dominant size and contribution of returns in stock markets to end any time soon.”

And the optimists will continue to be right up until the moment that the bubble finally bursts.

Whenever the Federal Reserve starts raising rates, it always results in a bad ending.

This time will be no different, and anyone that is trying to convince you otherwise is just being delusional.

Michael Snyder is a nationally syndicated writer, media personality and political activist. He is the author of four books including The Beginning Of The End and Living A Life That Really Matters.

The Globalists Are Systematically Destroying America’s Middle Class

When people are dependent on the government they are much easier to control.  We are often told that we are not “compassionate” when we object to the endless expansion of government social programs, but that is not how the debate should be framed.  In America today, well over 100 million people receive money from the federal government each month, and the number of Americans that are truly financially independent is continually shrinking.  In fact, only 25 percent of all Americans have more than $10,000 in savings right now according to one survey.  If we eventually get to the point where virtually all of us are dependent on the government for our continued existence, that would give the globalists a very powerful tool of control.  In the end, they want as many of us dependent on the government as possible, because those that are dependent on the government are a lot less likely to fight against their agenda.

Back in 1992, the bottom 90 percent of American income earners brought in more than 60 percent of the country’s income.  But last year that figure slipped to just 49.7 percent.  The wealth of our society is increasingly being concentrated at the very top, and the middle class is steadily being eroded.  Surveys have found that somewhere around two-thirds of the country is living paycheck to paycheck at least part of the time, and so living on the edge has become a way of life for most Americans.

Earlier today, I came across a Business Insider article that was bemoaning the fact that the U.S. economy seems to be rather directionless at this point…

  • We do not have a real plan for health care, and costs continue to gobble up American wages.
  • We do not have a plan for dealing with globalization and economic change, but that change continues to shape our economy.
  • We don’t have a plan to update our decrepit infrastructure.
  • The one plan we did have — the Federal Reserve’s post-financial crisis program — is about to be unwound, marking the end of the last clear, executable plan to bolster America’s economy.

Ultimately, the truth is that we don’t actually need some sort of “central plan” for our economy.  We are supposed to be a free market system that is not guided and directed by central planners, but many Americans don’t even understand the benefits of free market capitalism anymore.

However, that Business Insider article did make a great point about globalization.   Most people don’t realize that our economy is slowly but surely being integrated into a global economic system.   This is really bad for American workers, because now they are being merged into a global labor pool in which they must compete directly for jobs with workers in other countries where it is legal to pay slave labor wages.

Even down in Mexico, many autoworkers are only making $2.25 an hour…

Most of the workers at the new Audi factory in the state of Puebla, inaugurated in 2016 and assembling the Audi Q4 SUV, which carries a sticker price in the US of over $40,000 for base versions, make $2.25 an hour, according to the Union.

Volkswagen, which owns Audi, started building Beetles in Puebla in 1967 and has since created a vast manufacturing empire in Mexico, with vehicles built for consumers in Mexico, the US, Canada, and Latin American markets.

Volkswagen, Ford, GM, or any of the global automakers, which can manufacture just about anywhere in the world, always search for cheap labor to maximize the bottom line.

Would you want to work for $2.25 an hour?

Over time, millions of good paying jobs have been leaving high wage countries and have been going to low wage countries.  The United States has lost more than 70,000 manufacturing facilities since China joined the WTO, and this is one of the biggest factors that has eroded the middle class.

In a desperate attempt to maintain our standard of living, we have gone into increasing amounts of debt.  Of course our federal government is now 20 trillion dollars in debt, but on an individual level we are doing the same thing.  Today, American consumers are over 12 trillion dollars in debt, and it gets worse with each passing day.

The borrower is the servant of the lender, and most Americans have become debt slaves at this point.  This is something that Paul Craig Roberts commented on recently…

Americans carry on by accumulating debt and becoming debt slaves. Many can only make the minimum payment on their credit card and thus accumulate debt. The Federal Reserve’s policy has exploded the prices of financial assets. The result is that the bulk of the population lacks discretionary income, and those with financial assets are wealthy until values adjust to reality.

As an economist I cannot identify in history any economy whose affairs have been so badly managed and prospects so severely damaged as the economy of the United States of America. In the short/intermediate run policies that damage the prospects for the American work force benefit what is called the One Percent as jobs offshoring reduces corporate costs and financialization transfers remaining discretionary income in interest and fees to the financial sector. But as consumer discretionary incomes disappear and debt burdens rise, aggregate demand falters, and there is nothing left to drive the economy.

This debt-based system continuously funnels wealth toward the very top of the pyramid, because it is the people at the very top that hold all of the debts.

Each year it gets worse, and most Americans would be absolutely stunned to hear that the top one percent now control 38.6 percent of all wealth in the United States…

The richest 1% of families controlled a record-high 38.6% of the country’s wealth in 2016, according to a Federal Reserve report published on Wednesday.

That’s nearly twice as much as the bottom 90%, which has seen its slice of the pie continue to shrink.

The bottom 90% of families now hold just 22.8% of the wealth, down from about one-third in 1989 when the Fed started tracking this measure.

So how do we fix this?

Well, the truth is that we need to go back to a non-debt based system that does not funnel all of the wealth to the very top of the pyramid.  Unfortunately, most Americans don’t even realize that our current debt-based system is fundamentally flawed, and it will probably take an unprecedented crisis in order to wake people up enough to take action.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

The Middle Class Is Being Destroyed: Now Only 25 Percent Of All Americans Have $10,000 Or More In Savings

We just got more evidence that the middle class is being systematically eviscerated.  According to a GOBankingRates survey that was just released, more than half the country has less than $1,000 in savings.  So in the event of a major economic disaster of some kind, over 50 percent of the nation is going to be completely out of cash almost immediately.  For years I have been writing about the steady decline of the middle class in the United States, but I still get astounded by numbers such as these.  According to this new survey, only 25 percent of all Americans have $10,000 or more in savings at this point…

$0 saved: 39 percent
Less than $1,000 saved: 18 percent
$1,000 to $4,999 saved: 12 percent
$5,000 to $9,999 saved: 6 percent
$10,000 or more saved: 25 percent

Other surveys have come up with similar results.  One discovered that about two-thirds of the country is living paycheck to paycheck, and another which was conducted by the Federal Reserve found that 44 percent of all U.S. adults do not even have enough money “to cover an unexpected $400 expense”.

Most of us have grown accustomed to barely scraping by from month to month.  But that is not what being “middle class” is supposed to be about.  If you are in the “middle class” you should be making more than you are spending and building long-term wealth.

But just like our federal government, most of us are spending money like there is no tomorrow.  If we don’t have quite enough money for what we want to do, we just borrow more.  Right now, U.S. consumers are more than 12 trillion dollars in debt, and it is impossible to build any real wealth when you are constantly drowning in red ink.

We are willingly enslaving ourselves, but most people were never even taught about the dangers of going into too much debt.

Another major factor in the decline of the middle class is the fact that we have been shipping millions of good paying jobs overseas.  We have lost more than 70,000 manufacturing facilities since China joined the WTO, and we have been replacing good paying manufacturing jobs with low paying service jobs.

Without enough good paying jobs, our middle class has been steadily shrinking.  In 2015, the middle class became a minority of the population in the United States for the first time ever recorded.

If you go back to the early 1970s, the middle class was well over 60 percent of the population, but now that number is hovering in the high 40s.

And things continue to get even worse.  For example, NBC News recently reported that the number of Americans that can’t afford to be living in their own homes has more than doubled since 2001…

Over 38 million American households can’t afford their housing, an increase of 146 percent in the past 16 years, according to a recent Harvard housing report.

Under federal guidelines, households that spend more than 30 percent of their income on housing costs are considered “cost burdened” and will have difficulty affording basic necessities like food, clothing, transportation and medical care.

But the number of Americans struggling with their housing costs has risen from almost 16 million in 2001 to 38 million in 2015, according to the Census data crunched in the report. That’s more than double.

If we want to turn things around for the middle class, we need more entrepreneurs and more small businesses.

Small businesses have traditionally been the primary engine for job growth in this country.  But instead of encouraging small businesses to start and grow, the federal government has been absolutely killing small businesses with red tape and high taxes.

If I win my election, I am going to do all that I can to fight for entrepreneurs and small businesses.  Today, the percentage of Americans that work for themselves is close to a record low, and we desperately need to get that turned around.

So I I go to Congress, one of the first things I plan to do is to push for the elimination of the “self-employment tax”.

If you are an entrepreneur, then you already know how painful that particular tax can be.

We have got to get this economy growing again.  Barack Obama was the only president in our entire history never to have a single year when the U.S. economy grew by at least 3 percent, and overall we have not had a year when our economy grew by at least 3 percent in over a decade.

And as I noted earlier this week, “our economy has still only grown at an average rate of just 1.33 percent a year over the last 10 years.”

Is that acceptable to you?

I hope not, because it sure is not acceptable to me.

What we have been doing is simply not working.  In fact, if we were not propping up the economy with the greatest debt binge in human history, we would be a in a rip-roaring economic depression right now.

If we want America to once again become the greatest economic machine on the planet, we need to do the things that made us great in the first place.  We need an extremely limited federal government that stays out of the way of business, and we need to once again embrace the principles of free market capitalism.

Free markets work tremendously well if you allow them to do so.

But if we continue to march down the road toward big government socialism, we will get what we deserve, and it won’t be pretty.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Hillary Almost Proposed ‘A Universal Basic Income’ In 2016, And The Idea Is Catching Fire Among Grassroots Democrats

Should you get free money from the U.S. government every month simply for being alive?  That may sound like a crazy idea to many of us, but the truth is that this will likely be one of the biggest political issues in the 2020 presidential election.  At this point, 40 percent of all Americans already “prefer socialism to capitalism”, and the concept of a “universal basic income” is starting to catch fire among grassroots Democrats.  Many liberals are convinced that the time has come to fight for the right to “a minimum standard of living”, and one study by a “left-leaning” group found that giving every adult in the country $1,000 each month would increase the size of the U.S. economy by more than 2 trillion dollars…

Giving every adult in the United States a $1,000 cash handout per month would grow the economy by $2.5 trillion by 2025, according to a new study on universal basic income.

The report was released in August by the left-leaning Roosevelt Institute. Roosevelt research director Marshall Steinbaum, Michalis Nikiforos at Bard College’s Levy Institute, and Gennaro Zezza at the University of Cassino and Southern Lazio in Italy co-authored the study.

What an incredible idea, eh?

All we have to do is give out free stuff and the economy grows like magic.  And the study also discovered that the larger the universal basic income is, the more the economy would grow.

So why not make it $10,000 a month for everyone?

Well, it turns out that there is a catch.  According to the study, the economy only grows if the universal basic income is funded by deficit spending.  If we have to raise taxes to pay for it, there is no positive benefit to the economy at all…

These estimates are based on a universal basic income paid for by increasing the federal deficit. As part of the study, the researchers also calculated the effect to the economy of paying for the cash handouts by increasing taxes. In that case, there would be no net benefit to the economy, the report finds.

Oh.

What a bummer.

Getting free stuff from the government always sounds like a great idea until you realize that we are going to end up paying for it one way or another.

Unfortunately, that little detail isn’t stopping potential Democratic presidential candidates such as Mark Zuckerberg from “exploring” the idea.  And actually, it is being reported that Hillary Clinton almost made a “universal basic income” part of her platform in 2016…

In her new book “What Happened,” and in a recent subsequent interview with Vox Editor-in-Chief Ezra Klein, Clinton explains how she seriously considered including a version of universal basic income — a radical solution to poverty, currently being tested in cities and countries around the world — as one of her platforms in the 2016 US presidential election.

The platform would have been called “Alaska for America,” in homage to the state’s Permanent Dividend Fund. Every year since 1982, Alaskans have received a yearly check — typically ranging from $1,000 to $2,000 — as a kickback from the pot of money that has been set aside in case oil reserves dry up.

If the left is ever able to get this implemented, do you think that we will ever be able to take it away?

Over time, government just keeps getting bigger and bigger and so does our national debt.  In fact, we just hit a major milestone in that regard.  According to CNS News, we just surpassed the 20 trillion dollar mark for the first time ever…

The federal debt officially surpassed $20 trillion for the first time on Friday, as the debt subject to the legal limit set by Congress jumped $317,645,000,000 in one day–following President Donald Trump’s signing of a spending-and-debt-limit deal that will fund the government through Dec. 8.

If the left wants a “universal basic income”, they are going to have to get the money from somewhere.  Our budget deficit is already larger “than the entire GDP of Argentina”, and hard working Americans are already being taxed to death.

The truth is that the money simply isn’t there.  As it is, we need to dramatically cut back our borrowing because the path that we are currently on leads to national suicide.  Just consider the following numbers…

Here’s the problem: the national debt is growing MUCH faster than the US economy. In Fiscal Year 2016, for example, the debt grew by 7.84%.

Yet even when including the ‘benefits’ of inflation, the US economy only grew by 2.4% over the same period.

This is not even close to the realm of being sustainable.  We are steamrolling toward an inevitable financial collapse, and yet most Americans don’t seem to care.

And thanks to our rapidly aging population, our entitlement spending is set to absolutely explode in coming years.  The following comes from David Stockman…

The Federal spending machine is almost entirely on autopilot and heading for disaster owing to ballooning populations and debt. Ten years from now the combined cost of mandatory programs and debt service will reach $5.12 trillion compared to just $2.87 trillion during FY 2018.

Entitlement spending will be nearly double — even if Congress took a 10-year recess!

As shown below, that means the Federal spending share of GDP is now inexorably climbing toward 30% owing to baby boom retirements, even as revenue under current law is stuck at about 18% of GDP. The CBO’s latest projection of the widening fiscal gap — soon more than 10% of GDP annually — leaves nothing to the imagination.

There is no such thing as “free money”.  In the end, we all have to pay for any “free stuff” that the government gives out.

But the “free stuff army” is going to continue to demand more free stuff from the government, and the Democrats are going to be more than happy to give it to them.

To many of you this may sound like complete and utter insanity, but the truth is that the path that we are already on is completely insane as well.  If we don’t find a way to right the ship, it is just a matter of time before it goes under, and anyone that tries to tell you otherwise is not being straight with you.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Debt Nightmare: Does Anyone Actually Care That Our Exploding National Debt Is Destroying Our Future?

When will America finally wake up?  The borrower is the servant of the lender, and we now have a colossal 20 trillion dollar chain around our collective ankles.  We have willingly enslaved ourselves, our children and our grandchildren, and yet our addiction is so insatiable that we continue to add more than 100 million dollars to our debt load every single hour of every single day.  The national debt is sitting at a grand total of $20,162,176,797,904.13 at this moment, but now that the debt ceiling has been lifted that number is expected to shoot up very rapidly toward 21 trillion dollars by the end of the year.  The national debt had been held down by accounting tricks to keep it under the debt limit for many months, but every time this has happened before we have seen the national debt absolutely explode back to projected levels once the debt ceiling was raised.

But very few of our “leaders” in Washington seem to care that we are in the process of committing national suicide.  There is no possible way that we will be able to continue to be the most powerful economy on the planet if we continue down this road.  During Obama’s eight years in the White House, we added more than 9 trillion dollars to the national debt.  That certainly improved things in the short-term, because if we could go back and take 9 trillion dollars out of the economy over the past 8 years we would be in an absolutely nightmarish economic depression right now.

But even with all of this borrowing and spending, our economy has still only grown at an average rate of just 1.33 percent a year over the last 10 years.

And by going into so much debt, we are literally destroying the future for our children and our grandchildren.

What we are doing to them is beyond criminal, and people should be going to prison over this.  But instead we just keep rewarding these Congress critters by sending the same cast of characters back to Washington over and over again.

Are we insane?

The feds are now projecting that the official yearly budget deficit will reach 1.4 trillion dollars by 2027.  Of course federal projections always end up being far more optimistic than reality.

And we are already spending about 500 billion dollars a year just on interest on the national debt, and by 2027 that number is projected to jump to 760 billion dollars a year.

This is complete and utter insanity, and yet we just can’t control ourselves.  The government continues to throw around money as if there is no tomorrow, and our tax dollars are being wasted on some of the most ridiculous things imaginable.

For instance, the U.S. military is spending 42 million dollars each year on Viagra.

We must stop this madness, and we must stop it now.  I really like how an editorial in the Houston Chronicle made this point…

Tax-and-spend politics are bad, but borrow-and-spend is worse. While we have some control over whether our lawmakers raise taxes, our children and grandchildren don’t get a vote on whether we burden them with debt.

Over the long run, huge government debt takes cash out of the economy and drives up interest rates, slowing economic growth and hurting private enterprise.

To protect the U.S. economy, Republicans need to nip plans to eliminate the debt ceiling in the bud and then get to work balancing the federal budget.

Will we ever learn?

Since the beginning of our nation, many of our most prominent statesmen have been warning about the dangers of accumulating government debt.  For example, during his farewell address President George Washington instructed the country to “avoid … the accumulation of debt not only by shunning occasions of expense but by vigorous exertions to discharge the debts, no throwing upon posterity the burden which we ourselves ought to bear.”

And Thomas Jefferson famously said that he wished that he could have added one more amendment to the U.S. Constitution which would have banned government borrowing…

“I wish it were possible to obtain a single amendment to our constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of it’s constitution; I mean an additional article, taking from the federal government the power of borrowing.”

This is one of the primary reasons why we must abolish the Federal Reserve system.  The Federal Reserve was actually designed to create a government debt spiral from which we could never possibly escape.  That is why the size of our national debt has gotten more than 5000 times larger since 1913, and we are never going to permanently solve our national debt problem until we get rid of the Fed.

Most Americans don’t realize this, but the path that we are currently on is not sustainable by any definition.  Debt levels are growing much, much faster than GDP, and that is a recipe for disaster.  The following is an excerpt from one of my previous articles…

We are living in the greatest debt bubble in the history of the world.  In 1980, total government and personal debt in the United States was just over the 3 trillion dollar mark, but today it has surpassed 41 trillion dollars.  That means that it has increased by almost 14 times since Ronald Reagan was first elected president.  I am searching for words to describe how completely and utterly insane this is, but I am coming up empty.  We are slowly but surely committing national suicide, and yet most Americans don’t even understand what is happening.

According to 720 Global, total government debt plus total personal debt in the United States was just over 3 trillion dollars in 1980.  That broke down to $38,552 per household, and that figure represented 79 percent of median household income at the time.

Today, total government debt plus total personal debt in the United States has blown past the 41 trillion dollar mark.  When you break that down, it comes to $329,961.34 per household, and that figure represents 584 percent of median household income.

Sadly, most people are entirely clueless about what we are doing to ourselves.  Investors are the most optimistic that they have been in years, and most of the talking heads on television seem to believe that the party can go on indefinitely.

But that is simply not possible.

And the same thing is true from a global perspective as well.  The following comes from Chris Martenson…

First: our entire economic model, which dependent on borrowing at a faster rate than income (GDP) grows, is something that simply cannot be maintained at its current rate or level. Check.

Second: depleting species, soils and aquifers are all wildly unsustainable practices that are accelerating. Check.

Last (and most glaring of all): the world’s leadership (and we use that term very loosely) continues to insist on adhering to the indefensible idea that infinite growth on a finite planet is possible  Checkmate.

The clock is ticking, and disaster awaits at the end of this road.

Will somebody please do something?

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Former Fed Chairman Alan Greenspan Ominously Warns That The Biggest Bond Bubble In History Is About To Burst

Are we right on the verge of one of the greatest financial collapses in American history?  I have been repeatedly warning that our ridiculously over-inflated stock market bubble could burst at any time, but former Federal Reserve Chairman Alan Greenspan believes that the bond bubble actually presents an even greater danger.  When you look at the long-term charts, you will see that an epic bond bubble has been growing since the early 1980s, and when it finally collapses the financial carnage is going to be unlike anything we have ever seen before.

Since the last financial crisis, global central banks have purchased trillions of dollars worth of bonds, and this has pushed interest rates to absurdly low levels.  But of course this state of affairs cannot go on indefinitely, and Greenspan is extremely concerned about what will happen when interest rates start going in the other direction…

Former Federal Reserve Chairman Alan Greenspan issued a bold warning Friday that the bond market is on the cusp of a collapse that also will threaten stock prices.

In a CNBC interview, the longtime central bank chief said the prolonged period of low interest rates is about to end and, with it, a bull market in fixed income that has lasted more than three decades.

“The current level of interest rates is abnormally low and there’s only one direction in which they can go, and when they start they will be rather rapid,” Greenspan said on “Squawk Box.”

And of course Greenspan is far from alone.  In recent months there have been a whole host of prominent voices warning about the devastation that will take place when the bond market begins to shift.  For example, the following comes from Nasdaq.com…

Advisors and investors beware, the long-swelling bubble in the bond market looks set to pop. Major bond investors are as worried as they have ever been, mostly because of the reduction in easing that is finally coming to markets. Central banks are letting off the gas pedal for the first time in almost a decade, which could have a devastating effect on the bond market. According to the head of fixed income at JP Morgan Asset Management, who oversees almost half a trillion in AUM, “The next 18 months are going to be incredibly challenging. I am not an equity investor, but I can just imagine how equity investors felt in 1999, during the dotcom bubble”. He continued, “Right now, central banks are printing money at a rate of around $1.5tn per year. That is a lot of money going into bonds. By this time next year, we think this will turn negative”.

So how will we know when a crisis is imminent?

Some analysts are telling us to watch the 30-year yield.  When it finally moves above its “mega moving average” and stays there, that will be a major red flag…

It’s still too soon to tell, but this could be the beginning of a realignment with both rates getting in sync again. This will not be confirmed, however, until the 30-year yield rises and stays above its mega moving average, currently at 3.18%.

As you know, this moving average is super important.

It’s identified and confirmed the mega downtrend in long-term interest rates ever since the 1980s. In other words, it doesn’t change often. So, if this trend were to change and turn up, it would be a huge deal.

Today, the 30-year yield moved up to 2.83 percent, and so we aren’t too far away.

There are so many prominent voices that are warning of imminent financial disaster, but there are others that believe that we have absolutely nothing to be concerned about.  In fact, Jim Paulsen just told CNBC that he believes that this current bull market “could continue to forever”…

The stock market “has an awful good gig going,” with the economic recovery reaching all corners of the globe and U.S. inflation and interest rates still at historic lows, Leuthold Chief Investment Strategist Jim Paulsen told CNBC on Friday.

“We’ve got a fully employed economy, rising real wages. We restarted the corporate earnings cycle. We’ve got strong confidence among business and consumers,” he said on “Squawk Box.”

“The kick is we can do all of this without aggravating inflation and interest rates,” he said. “If that’s going to continue, I think the bull market could continue to forever.”

I think that Paulsen will end up deeply regretting those words.

No bull market lasts forever, and analysts at Goldman Sachs are warning that there is a 99 percent chance that stock market returns will be sub-optimal over the next decade.

But most people believe what they want to believe no matter what the facts may say, and Paulsen apparently wants to believe that things will never be bad for the financial markets ever again.

In the aftermath of the financial crisis of 2008, the powers that be decided to patch the old system up.  Instead of addressing the root causes of the crisis, they chose to paper over our problems instead, and now we are in the terminal phase of the biggest financial bubble in history.

This time around, it is absolutely imperative that we do things differently.  The Federal Reserve is the primary reason why our economy is on an endless roller coaster ride.  We have had 18 distinct recessions or depressions since 1913, and now another one is about to begin.  By endlessly manipulating the system, they have caused these cycles of booms and busts, and it is time to get off of this roller coaster once and for all.

Like Ron Paul, I believe that we need to shut down the Federal Reserve and get our banks under control.  I also believe that we should abolish the federal income tax and go to a much fairer system.  From 1872 to 1913, there was no central bank and no federal income tax, and it was the greatest period of economic growth in U.S. history.  If we rebuild our financial system on sound principles, we could actually have a shot at a prosperous future.  If not, the long-term future for our economy looks exceedingly bleak.

If you believe in what I am trying to do, I would like to ask for your help.  I am running for Congress in Idaho’s First Congressional District, and since there is no incumbent running for this seat the race is completely wide open.  Every time I share my message, more voters are coming over to my side, and if I am able to get my message out to every voter in this district I will win.

And I would like to encourage like-minded people to run for positions all over the country on the federal, state and local levels.  Individually, there is a limit to what we can do, but if we work together we can build a movement which could turn this nation completely upside down.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Would You Like To Steal 128 Million Dollars?

What would you do with 128 million dollars?  Many people like to daydream about winning the lottery, and I have to admit that when I was much younger I would do the same thing.  If you were suddenly financially set for life, you could quit your job, buy your dream home, travel the world and spend your days doing whatever you felt like doing.  We only get one trip through this crazy journey called life, and an enormous mountain of cash could make the journey a whole lot nicer.  So if you could steal 128 million dollars and be absolutely certain that you could get away with it, would you do it?

You would probably be surprised at how many people out there would answer that question affirmatively.  Money is a very powerful motivator, and if the fear of getting caught was out of the equation a lot of people out there would certainly be willing to “bend the rules” for a cool 128 million dollars.

But let’s turn this around for a moment.

What if someone stole 128 million dollars from you?

How would you feel about that?

Every crime has a victim, and losing that amount of money would be unimaginable.

Perhaps you think that this scenario is way too outlandish to even be considering.  After all, who in the world could steal 128 million dollars from someone and get away with it?

Well, what if I told you that this has been happening every day?

And what if I told you that this has actually been happening every single hour of every single day for many years?

When Barack Obama entered the White House, the U.S. national debt was just over 10.6 trillion dollars, and when he left the White House 8 years later it was sitting just shy of 20 trillion dollars.

So during those 8 years more than 9 trillion dollars was added to the national debt.  But for purposes of this example we will round down to an even 9 trillion dollars.

When you divide 9 trillion dollars by 8, you get an average of 1.125 trillion dollars that was added to the national debt per year during the Obama era.

Dividing that figure by 365, you find that an average of $3,082,191,780 was added to the national debt every single day during the Obama administration.

And since there are 24 hours in a day, that means that an average of $128,424,657 was stolen from our children and our grandchildren every single hour of every single day while Barack Obama was president.

When you borrow and spend 128 million dollars that you do not have every single hour of every single day, of course that is going to have a huge impact on the economy.  I am often asked why we are not in a horrendous economic depression yet, and this is one of the biggest reasons.  If we were to go back and take 9 trillion dollars of government spending out of the economy over the last eight years, we would be in the worst depression in American history right now.

But even with all of this added debt, the U.S. economy has still only grown at an average yearly rate of just 1.33 percent over the past 10 years, and that is absolutely terrible.

Our leaders in D.C. were able to prop things up in the short-term by going on the greatest debt binge in U.S. history, but of course they have also made our long-term financial problems much, much worse in the process.

Many people don’t realize this, but the growth of the national debt was actually accelerating as the Obama era drew to a close.  In fact, we added more than 1.4 trillion dollars to the debt during fiscal year 2016.

Once upon a time a lot of people out there would get really upset about the growth of our debt, but these days most Americans seem to have accepted that this is how we do things.  This fiscal liberals seem to have won, and our nation is steamrolling down a road toward financial oblivion.

When you point out the economic disasters in Greece, Italy, Cyprus, Venezuela and Zimbabwe, it doesn’t seem to register with most Americans that our country is on the exact same path.

By borrowing money, you can live way above your means for a while, but eventually you have to pay a price for being so reckless.  This has been true all throughout human history, and it will be true in our case as well.

In a letter to John Taylor on November 26th, 1798, Thomas Jefferson explained that he wished that he could have added one more amendment to the U.S. Constitution…

I wish it were possible to obtain a single amendment to our constitution; I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of it’s constitution; I mean an additional article taking from the federal government the power of borrowing.

Jefferson wrote extensively about how government debt is a way for one generation to steal money from another generation.

And what we are doing to our children and our grandchildren is absolutely inexcusable.

The term “child abuse” is not nearly strong enough to describe what is taking place, and I don’t know why more people are not seething with anger over what is being done to them.  I am going to do whatever I can to stop this madness, and I hope that you will help me.

Have you ever run up a lot of credit card debt?  If you really wanted to, you could go out today and start living like a millionaire by running up huge credit card balances.  But eventually a day of reckoning would arrive, and you would get to a point where your debts were no longer sustainable.

It is the same thing on a national level.  We have been living way beyond our means for quite a while, but we have been stealing from future generations in order to do it.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

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