Bread lines, sky high unemployment, falling stocks, excessive debt, foreclosures, bankruptcy, homelessness, food rationing, civil unrest, could this be the future of America?
According to the latest Fox News poll, 79 percent of U.S. voters believe "it’s possible the nation’s economy could collapse", and the poll found that this belief in the fragility of the American economy cuts across the entire political spectrum.
Lets take a look at the current economic situation and consider some rather interesting yet disturbing facts and trends.
In November of last year congress rammed the T.A.R.P. bailout through, citing a state of emergency. A few months later President Obama proposed and convinced congress to pass a stimulus package, that was designed to "reduce our pain". These corporate bailouts, appear to have slowed down the bleeding, but then again a tourniquet is only a temporary fix when one is hemorrhaging.
Lets' face it, the United States is in debt so far that the present system is unsustainable. Presently the U.S. is in debt more than 12 Trillion dollars, however in all actuality the number is much, much, much higher. The U.S. National Debt Clock allows you to view the debt in real time.
How did this happen? By permitting Shadow Banks to engage in massive borrowing, along with unstable funding and over investments the U.S. economy has been on a path toward failure since the early 1970's. A combination of increased dependency on the government welfare system, unsustainable pension promises, an ongoing war in two countries and the use of fiat money has put the U.S. on a collision course with the "D" word! The only way to prevent this disaster from happening in the past few months, was to implement a temporary fix , ie (the bailouts mentioned above.) Unfortunately, the quick fix, is about as useful as putting a band-aid on a severed limb. It just won't work!
Much like the symptoms of a cold, the American economy is starting to cough and sneeze, it is important to note that treating the symptoms of an ailment never actually cures the ailment. It does however provide temporary relief. The bailouts therefore, have done nothing to treat the actual problem just reduce the symptoms, albeit temporarily.
So, here we are experiencing a global recession. The trade deficit continues to increase and social security and Medicare are over 60 trillion in unfunded liabilities. To add more fuel to the flame consider the fact that state revenues are down, taxes and debt spending is up and the national unemployment rate is sitting at 9.7%. These numbers alone are enough to raise eyebrows, but they only represent a small fraction of the problems facing our economy.
One of the more alarming facts is the recent discussion of the possibility that Moody's is considering removing Americas AAA status, if this happens it will lead to an increase in interest rates imposed on government borrowing which in turn will be passed onto consumers. This only makes things worse for current home owners and it tips the scales against the 5.1% of new mortgage holders who are 90 days or more late on home loans. If America's AAA status is reduced, the 24% of home loans that were underwater in 2009 will look good compared to what is about to happen. Another important consideration for homeowners is that during 2010, the adjustable rate mortgages will be reset and more than likely the interest rates will increase even more.
Finally, look take a look at what is going on presently in our country. Every dollar that comes into existence enters the economy as DEBT. It is estimated that our government will borrow more money than all of the governments in the world, COMBINED, in 2010. This along with the impending trillion dollar debt of Obama Care thrown into the mix, should provide just enough water to sink the ship!
Whether the U.S. plunges into a second Depression or not is yet to be seen. It is important to note, that if such a collapse takes place, it most assuredly will be worse than the 1930's. Why? There are several factors to take into consideration but in a nut shell, the amount of debt our country has accrued is staggering in size when compared to that of the 1930's. Nations will not be willing nor able to forgive the massive amount of debt owed to them. The possibility of government assistance with such debt, similar to what happened with Roosevelt's New Deal, will be near to impossible using Fiat money, after all who in their right mind would be willing to honor a hyper inflated worthless piece of paper?
The only logical solution to the problem would be the return to the Gold or Silver standard, accompanied by a huge decrease in taxes and a major overhaul in government spending. Even then, it could take years or even decades to recover from such a disastrous collapse. However, there is another alternative, that appears to be more realistic,............ total government!
Due to the fact that so many Americans are dependent on government entitlements, whether it be welfare subsidies, pension programs, social security or health care, sacrifices will have to be made. Is the American public prepared to see the end of the Welfare State? Are we prepared to cut spending, start saving, and become less dependent on government, or will we follow the path of the Weimar Republic and sacrifice our liberty and freedom for a promise of false hope?
I contend that the American people would prefer the former, but there are some leaders in Washington who dream of the latter!
Note: See Cloward and Piven Strategy
According to the latest Fox News poll, 79 percent of U.S. voters believe "it’s possible the nation’s economy could collapse", and the poll found that this belief in the fragility of the American economy cuts across the entire political spectrum.
Lets take a look at the current economic situation and consider some rather interesting yet disturbing facts and trends.
In November of last year congress rammed the T.A.R.P. bailout through, citing a state of emergency. A few months later President Obama proposed and convinced congress to pass a stimulus package, that was designed to "reduce our pain". These corporate bailouts, appear to have slowed down the bleeding, but then again a tourniquet is only a temporary fix when one is hemorrhaging.
Lets' face it, the United States is in debt so far that the present system is unsustainable. Presently the U.S. is in debt more than 12 Trillion dollars, however in all actuality the number is much, much, much higher. The U.S. National Debt Clock allows you to view the debt in real time.
How did this happen? By permitting Shadow Banks to engage in massive borrowing, along with unstable funding and over investments the U.S. economy has been on a path toward failure since the early 1970's. A combination of increased dependency on the government welfare system, unsustainable pension promises, an ongoing war in two countries and the use of fiat money has put the U.S. on a collision course with the "D" word! The only way to prevent this disaster from happening in the past few months, was to implement a temporary fix , ie (the bailouts mentioned above.) Unfortunately, the quick fix, is about as useful as putting a band-aid on a severed limb. It just won't work!
Much like the symptoms of a cold, the American economy is starting to cough and sneeze, it is important to note that treating the symptoms of an ailment never actually cures the ailment. It does however provide temporary relief. The bailouts therefore, have done nothing to treat the actual problem just reduce the symptoms, albeit temporarily.
So, here we are experiencing a global recession. The trade deficit continues to increase and social security and Medicare are over 60 trillion in unfunded liabilities. To add more fuel to the flame consider the fact that state revenues are down, taxes and debt spending is up and the national unemployment rate is sitting at 9.7%. These numbers alone are enough to raise eyebrows, but they only represent a small fraction of the problems facing our economy.
One of the more alarming facts is the recent discussion of the possibility that Moody's is considering removing Americas AAA status, if this happens it will lead to an increase in interest rates imposed on government borrowing which in turn will be passed onto consumers. This only makes things worse for current home owners and it tips the scales against the 5.1% of new mortgage holders who are 90 days or more late on home loans. If America's AAA status is reduced, the 24% of home loans that were underwater in 2009 will look good compared to what is about to happen. Another important consideration for homeowners is that during 2010, the adjustable rate mortgages will be reset and more than likely the interest rates will increase even more.
Finally, look take a look at what is going on presently in our country. Every dollar that comes into existence enters the economy as DEBT. It is estimated that our government will borrow more money than all of the governments in the world, COMBINED, in 2010. This along with the impending trillion dollar debt of Obama Care thrown into the mix, should provide just enough water to sink the ship!
Whether the U.S. plunges into a second Depression or not is yet to be seen. It is important to note, that if such a collapse takes place, it most assuredly will be worse than the 1930's. Why? There are several factors to take into consideration but in a nut shell, the amount of debt our country has accrued is staggering in size when compared to that of the 1930's. Nations will not be willing nor able to forgive the massive amount of debt owed to them. The possibility of government assistance with such debt, similar to what happened with Roosevelt's New Deal, will be near to impossible using Fiat money, after all who in their right mind would be willing to honor a hyper inflated worthless piece of paper?
The only logical solution to the problem would be the return to the Gold or Silver standard, accompanied by a huge decrease in taxes and a major overhaul in government spending. Even then, it could take years or even decades to recover from such a disastrous collapse. However, there is another alternative, that appears to be more realistic,............ total government!
Due to the fact that so many Americans are dependent on government entitlements, whether it be welfare subsidies, pension programs, social security or health care, sacrifices will have to be made. Is the American public prepared to see the end of the Welfare State? Are we prepared to cut spending, start saving, and become less dependent on government, or will we follow the path of the Weimar Republic and sacrifice our liberty and freedom for a promise of false hope?
I contend that the American people would prefer the former, but there are some leaders in Washington who dream of the latter!
Note: See Cloward and Piven Strategy
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