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It’s GAME OVER For the US
If the US
were a company, it’d already be in Chapter 11.
FoxNews
published a WHOPPER of a story yesterday, though it somehow has not caught the
attention of most people. If you have issues with Fox them at the door for a
moment and simply focus on the numbers.
For the first time since the Great
Depression, the US is now officially paying out more in benefits than it takes
in via tax receipts.
If the US
were a company, it’d be spending more in salaries than it makes in sales. Aside
from being unprofitable, it’s also got a MASSIVE debt load. And it’s current
policy of paying out more than it makes only increases this debt load… which
begs the question… who’s going to pay the interest payments on the debt?
Now, about
those payments…
More than half of all Americans (59%)
receive a Government payout in one form or another. This is not a sliver of the population… it is endemic
to the system. So those who complain endlessly about Government spending
need to consider they as well as half of everyone they know, likely gets some
kind of assistance in the form of social security, Medicare, food stamps or
what have you.
Here’s
another zinger: Government payouts
account for 79% of household growth since 2007. In other words, the only
thing that has kept the US consumer afloat in the last four years is payouts
from Uncle Sam.
Put another
way, the private sector has contributed roughly one out of every five dollars
in household growth since the Great Depression 2.0 started in 2007.
To say that
these policies are unsustainable is the understatement of the year. The only
reason the US hasn’t seen a complete debt implosion followed by hyperinflation
is because the Federal Reserve is propping up the debt market with money
printing.
Yes, we are supporting our debt load by
creating more money out of thin air. It is absolute insanity and a clear signal
that we’re rapidly approaching GAME OVER for the US’s monetary system.
There is
only one way out of this mess and that is default. The US cannot EVER pay back
its debts. A US default is going to happen GUARANTEED (hyperinflation induced
by endless money printing is just another form of default). When this happens,
the US Dollar will collapse, lose reserve currency status, and inflation will
rip through the system destroying the purchasing power of anything
paper-related.
So if you’re
not preparing for mega-inflation already, you need to start doing so NOW. The
Fed WILL continue to pump money into the system 24/7 and it’s going to result
in the death of the US Dollar.
If you’ve
yet to take steps to prepare your portfolio for the coming inflationary
disaster, our FREE Special Report, The
Inflationary Disaster explains not only why inflation is here now, why the
Fed is powerless to stop it, and three investments that absolutely EXPLODE as a
result of this.
All in all
its 14 pages contain a literal treasure trove of information on how to take
steps to prepare AND profit from what’s to come. And it’s all 100% FREE.
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and click on FREE REPORTS.
Good
Investing!
Graham
Summers
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Okay, here's a suggestion...invest a portion of your $600k into a nice piece of land you could live on if need be. I'm not talking more than 5 to 10 acres...that shouldn't cost you more than $5k/acre...spend another $10k on a 40 foot shipping container and some well-chosen tools and supplies...now you have security and $500k left to make deals with.
I think we will end up with deflation on everything but food. There will be shortages and food is the ultimate commodity.
If I had $600k, I could semi-retire or completely pay for a start-up that would generate sufficient living money for the remainder of my life. I don't know what the fuck your problem is and no, that isn't chump change to some of us. Spending money is easy, earning it is the hard part (unless you wield systemic influence).
If you are trying to analyze the inflation/deflation debate you have to remember that the accounting rules were changed in 2009. The asset side of the balance sheet had been pumped up by the creation of money out of thin air. The carrying cost of this artificial appreciation could no longer be born by the real economy. The natural resolution of this situation would be for the asset side to shrink with a corresponding shrinkage of the liability/equity side, ie deflation, as the artificially inflated assets are written down to fair value and the corresponding fake credits are removed. This is money destruction or deflation. The phony money just disappears, as it was never really worth anything.
In order to avoid this outcome, a decision was made to allow the assets to be carried at their artificially inflated values, in order to stave off the deflation which was in full swing by early 2009. The money printing the Fed is engaging in now is allowing the system to limp along for a while longer, like blowing air into a balloon while it rushes out the un-patched hole as fast as it's coming in. The moment of truth is coming in June when the Fed decides how much air, if any, to continue putting into the un-patched balloon. If the air stops the balloon deflates. If they keep pumping they run out of air eventually, ie. dollar collapses.
RE
well put. All i'd add is the Feds money printing (QE) has made little difference nor will its removal. The real economy (90% small and medium sized businesses) does what it does. What Benny has been doing has no impact whatsoever, he's just pumping up his buddies in the bankrupt banks and bankrupt US Govt
The real economy is a mixed bag at the moment of carnage and some doing well picking up business from competitors going bankrupt. I think the tipping point will be another 10-20% drop in property prices, nothing to do with either oil prices, food prices or Bennys QE
Thanks for the in depth reply ZG and RE. I really appreciate it.
the driving force for deflation is imploding debt. It is the unserviceable retail bwankers credit (debt) creation that is the 20 stone Gorilla in the room. Like US Govt debt the contracting economy means contracting revenue to service that collosal debt because of more bankruptcies, more unemployment, less consumer spending (70% of US GDP).
When debt implodes (and spending declines) prices have only one way to go... down.
And anyone that believes in the myth of the Fed needs to do their sums. M1 shows despite Benny the Beans historical printing press orgy, money (including credit) in circulation has gone precisely nowhere. Fast as Benny prints, credit/debt is imploding (and banks aren't lending and won't be for years ahead).
There's still pockets of inflation everywhere like metals, food prices and stocks. But take a look at consumer and commercial property, retailers and car sales and you see a deflationary picture that has the economy in a vice-like grip and squeezing harder every month
Santelli pointed it out awhile back: that's *not* deflation. It's deleveraging.
Yeah, keep telling yourself that.
Who's going to be distracted chasing dollars to repay personal and corporate loans when the US government default on their obligations. Nobody. Every corporation and household will file BK, discharge their debt, and go on the best they can (if at all). Benny will react by printing to the moon to offset the destruction of the capital associated with these write-offs. Print, print, print....
Do yourself a favor. Take half that $600K and buy silver and gold coins and don't forget to take possession.
The only way to beat the coming revaluation of the dollar will be to have gold coins which have always been the standard for paper currency "valuations".
Dollar currency - 73.99 OUCH!!!
Government payouts account for 79% of household growth since 2007.
Do you have some statistics to support this statement?
In adddition, I am curious what the percentage would be if you took out "retired households."
Don Levit
Baby boomers are in their peak earning years now. But soon they will retire, causing tax revenues to plummet and SS/Medicare spending to soar. The situation is terrible now and will only get worse.
You'll have to hike your lazy ass over to Fox and ask them:
http://www.foxbusiness.com/markets/2011/04/20/government-cash-handouts-e...
And take a look at this:
http://money.msn.com/tax-tips/post.aspx?post=63c403d6-0a2f-4506-a8b8-25124d49889b
U.S. households getting more from Uncle Sam than they pay in A new study finds that for first time since the Great Depression, tax receipts from households total less than the government paid out in unemployment, Social Security and other programs.You toss that out as if it is a good thing that we have turned Granny and Gramps into government dependents instead of self-sustaining members of society who are drawing down the savings of years of productive work rather than recouping a portion of the "social security" taxes that were forcibly extracted from them for the better part of their working lives.
What exactly is your point, dude?
+44($T)
Payouts to a fraudulent and corrupt banking system makes the payouts to "the people" pale in comparison. Pure corporatism hidden behind the rhetorical veil of socialism
Fucking broken record this guy
And, he is wrong... where?
In older times he would have considered "A Drummer".
Trees don't grow to the sky. The question is when does this tree fall.
"I've seen the future; I can't afford it!"
http://www.youtube.com/watch?v=PHhOUYdg2S8
"...the only thing that has kept the US consumer afloat in the last four years is payouts from Uncle Sam."
I wonder how the corresponding rise in taxes during the last 4 years is included in this calculation. In other words, yes - only 20% real income growth; but is that also because the US consumer faced a X% rise in taxes.
Current tax rates (across the spectrum) are at historic lows, so I'm not sure your premise is correct. Indeed, this fact would be the genesis of the problem -- tax receipts have just recently crossed the expenditure line. A reversal of those trends (tax/spend) long ago WAS the solution, not so much any more. The game seems to be over.
http://www.ritholtz.com/blog/2011/04/taxes-plunge-for-rich/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29
BTW: The folks who think the reporting of all the "gloom 'n' doom" is uncalled for are among the same folks who think that criticizing the military is un-American -- it's not.
We need a better rating... NOT Moody's... NOT Standard & Poors... NOT CBO... How about one from Miss Cleo? Surely, she'll tell us what we need to hear...
While I realize the author has good reason to be bearish on the US, the constant stream of negative articles makes me wonder if they have ever once looked outside at the state of the rest of the developed world along with issues of demographics and entitlements. I acknowledge that people like to talk their book but if I had to pick a country in which to reside and secure my family - I think I could do a lot worse than the US. A huge number of internationally based families of means domiciled in 'strong and solid' countries seem to agree and establish a base here housing very significant assets. The world is not perfect, the US will have to restructure entitlements and cleanse its governments at Federal, state, and local levels. This is life and despite constant grass is greener or better model countries...it never really is.
My opinion anyway
I've lived other places, and they are not as pleasant or as convenient as America... but that has NOTHING to do with the kleptocrat state, and everything to do with decent, productive people. (However many have not yet been corrupted by the free bread and circuses.)
The financial system here is going down, and if we're really lucky, the loss of bread and circuses may cause a few people to wake up.
Maybe.
"the US will have to restructure entitlements and cleanse its governments at Federal, state, and local levels"
...and this my friend will never happen, therein the problem.
I used to think the same thing. Then I ran some numbers. It's too big not to happen. One way or another it gets done but no painless option for all, that's for sure. Plus we are going to witness the prescedent via state/local governments doing it first to get everyone warmed up.
I agree. I think the negatives are primarily addressing the trend of direction, not a relative ranking.
Indeed, America is not the only contender in this race to the bottom.
cheer up johnny, everyone's screwed
not every one...those in southern hemisphere avoid getting fukushimad, those in S America are free from green house if they keepa Amazona... and those in Patagonia are blessed with sheep for warm blankets and wine for wet nights of sparkling chardonnay.
U.S. government debt should be marked down to "junk" status, where it belongs.
As long as we have silver-tipped missiles that won't happen. S&P's offices could simply disappear into a large sink-hole. After all, it's relatively easy to bring down very large office buildings and make it look like an oopsie.
Rocky--oopsies. TY. I have missed that word. I've been using the term "whoopsie daisies" instead of fucking disasters to show respect for those offended by my native tongue.
We hold a special place in our hearts for our colloquialisms. They remind us of our long lost childhoods. Sigh....
And the US still has an AAA rating? Yes ratings agencies as usual only properly downgrade waaaaay after the event
Unfortunately thinking of it as a 'game' means PCR was part of the problem.
In other words, the only thing that has kept the US consumer afloat in the last four years is payouts from Uncle Sam.
This is why Apple is such a microcosm (sp?) of what is going on. The government sends the check, the sheeple buy the iWhatever, the PD's free money buys the stock, and so the virtuous cycle goes....
And nothing will stop it other than increasingly out of reach food and oil prices when it really kicks the sheeple in the nuts. Why China wants to subsidize our existence is beyone me, unless it's part of their ultimate chess move.
unless it's part of their ultimate chess move.
This seems correct. Once Americans (or bankers) force US Govt to reign in spending and cut back on defense/global military bases thats when China will be able to secure its currency as the reserve currency - they have to back it up with military might, but that will cost China some debt-to-GDP.
You can't have a reserve currency without a premier military. When US loses that, china will go from 15% debt to GDP to 30% overnight but still, the bankers will win by eating up all untapped chinese production in taxes and government induced bonds.
China economy is ripe for the bondage. Why do you think they call it bonds?
And who do you think will live in China's empty 62,000,000 apartments? Americans looking for jobs.
Wash-Rinse-Repeat-Ricecakes <---New definition of an economic cycle
I don't get the connection between being a military superpower and reserve currency status. "Investing" in arms is not a really productive activity beyond a certain level, and the status of being a reserve currency seems more related to the size, strength and resiliency of your economic system. If this is the case I don't see China becoming a reserve currency for the same reason the US may lose that status - an asinine political system killing off productive economic activity through intervention.
I don't get the connection between being a military superpower and reserve currency status. "Investing" in arms is not a really productive activity beyond a certain level, and the status of being a reserve currency seems more related to the size, strength and resiliency of your economic system.
________________
Hey Dazed, you are kidding right? There is a funny little correlation between "having" and being able to keep. Hmmm....how does that go? Oh, the brain cells are kicking in about now...it goes like this: "Might makes right."
In other words, without the might our "right" will belong to China. Our "left" too, hee hee hee.
A military must be so big and so strong that just eyeballing it gives an enemy the shivers. And that's how you stay out of wars. The big ones especially, the ones where China says, "Now look at that there Yoonited States. All that nice growing land. Still a wee bit of clean water and air, even if the amount is diminishing at alarming rates due to their letting the third worlders in. Still, we'll take it if the price is right..."
And what's that price? Oh, a whole buncha Chinese men who due to the culturally induced infanticide of girl babies gots nothing to do but wage war because they won't ever have a warm snuggle from a woman. And of course, China has already created a beachhead in Washington State and Massachusetts, in particular. They are just counting the days to decide which one is good for a full-on invasion. Think not? OK, but as a hedge, let me just say, "I Love Chinese People!"
Just what I was wondering. I could actually see the Swiss Franc become the reserve currency before the Yuan. You can't get any less military than that.
You have to remember that the Swiss are "the big dog behind the fence". Should someone decide to brave the rugged terrain in order to invade, most of the male populace is armed and has at least basic military training. Their offense may not be much, but their defense is enough to keep all but the most foolhardy from scheduling a scrimmage...
..pretty much what any U.S. state which wishes to secede will have to do.
The Swiss have F/A-18s too.
That connection is called "what is necessary to give confidence to a fiat experiment". In this particular scenario, the military muscle is necessary to give the petrol dollar its backing. Without that military backing, the dollar would have died long ago. Maybe militaries aren't necessary in an academic vacuum, but in the real world they're absolutely necessary for those desiring to achieve and retain reserve status.
If the US were a bank it would be looking for Hank Paulson and crew to give them $14 trillion in bailouts.
yessiree bob we have to bail out those kleptocrats....print, ben, print....see ben print....faster, ben, faster.....print as fast as you can....
Can't resist...
Faster, Pussycat! Kill Kill
trailer
http://www.youtube.com/watch?v=Nwe3Ikngwyk