Medicare

If you want to frighten Baby Boomers, just show them the list of statistics in this article.  The United States is headed for a retirement crisis of unprecedented magnitude, and people are woefully unprepared for it.  At this point, more than 10,000 Baby Boomers are reaching the age of 65 every single day, and this will continue to happen for almost the next 20 years.  The number of senior citizens in America is projected to more than double during the first half of this century, and some absolutely enormous financial promises have been made to them. So will we be able to keep those promises to the hordes of American workers that are rapidly approaching retirement?  Of course not. The pension nightmare that is at the heart of the horrific financial crisis in Detroit is just the tip of the iceberg of the coming retirement crisis that will shake America to the core.

If we analyze inflation by these two metrics (purchasing power - which declines as real income stagnates and prices rise - and by exposure to real costs), we find the middle class is increasingly exposed to skyrocketing real-world prices. Pundits in the top 5% have the luxury of pontificating on the accuracy of the CPI while those protected by government subsidies and coverage have the luxury of wondering what all the fuss is about. Only those 100% exposed to the real costs experience the full fury of actual inflation.

Facts are treasonous and dangerous in an empire of lies, fraud and propaganda. It is maddening to watch the country spiral downward, driven to ruin by a psychotic predator class, while the plebs choose to remain willfully ignorant of reality and distracted by their lust for cheap Chinese crap and addicted to the cult of techno-narcissism. We are a country running on heaping doses of cognitive dissonance and normalcy bias, an irrational belief in our national exceptionalism, an absurd trust in the same banking class that destroyed the finances of the country, and a delusionary belief that with just another trillion dollars of debt we’ll be back on the exponential growth track. The American empire has been built on a foundation of cheap easily accessible oil, cheap easily accessible credit, the most powerful military machine in human history, and the purposeful transformation of citizens into consumers through the use of relentless media propaganda and a persistent decades long dumbing down of the masses through the government education system. This national insanity is not a new phenomenon. Friedrich Nietzsche observed the same spectacle in the 19th century: “In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.”

The gorilla in the room may sleep soundly for the rest of July and August, but expect a foul temper when he wakes up in September. At that time, Congress once again haggles over our debt ceiling.

Anyone that thinks that the U.S. economy can keep going along like this is delusional.  We are in the terminal phase of an unprecedented debt spiral which has allowed us to live far, far beyond our means for the last several decades.  Unfortunately, all debt spirals eventually end, and they usually do so in a very disorderly manner. 

China is similar to Japan in the 1980s in terms of financial imbalances and challenges for the real economy, but, as JPMorgan notes, China differs in terms of its stage of economic development. Turning possibility into reality is not an easy task, especially as China’s structural slowdown is accompanied by mounting financial imbalances. In the near term, overcapacity and decline in the rate of return on investment are the major challenges to be addressed by policymakers, and rising debt in the corporate sector and local governments needs to be contained and gradually reduced. In our view, this would require reform not only on the economic front (e.g., fiscal reform, land reform, financial reform, and SOE reform), but also social reform (e.g., hukou reform) and governmental reform (e.g., changing the role of the government and de-monopolizing). The list of tasks is daunting, but policy inaction could be even more dangerous - a delay in economic restructuring in China could lead to a repeat of Japan’s experience.

Sovereign debt is the bonds that are issued by national governments in foreign currencies with the intent to finance a country’s growth. The risk involved is determined by whether that country is a developed or a developing country, whether that country has a stable government or not and the sovereign-credit ratings that are attributed by agencies to that country’s economy.

The "coming economic collapse" has already been happening.  You see, the truth is that the economic collapse is not a single event.  It has already started, it is happening right now, and it will accelerate during the years ahead.  The statistics in this article show very clearly that the U.S. economy has fallen dramatically over the past ten years or so. The mainstream media will continue to scoff knowingly, "An economic collapse is never going to happen.  We can consume far more wealth than we produce forever.  We can pile up gigantic mountains of debt forever.  There is no way that the party is over.  In fact, the party is just getting started.  Woo-hoo!"Anyone with half a brain should be able to see what is coming.  Just open your eyes and look at the facts...

The Social Contract is broken not by wealth inequality per se but by the illegitimate process of wealth acquisition, i.e. the state has tipped the scales in favor of the few behind closed doors and routinely ignores or bypasses the intent of the law even as the state claims to be following the narrower letter of the law. By this definition, the Social Contract in America has been completely smashed. The honest taxpayer is a chump, a mark who foolishly ponies up the swag that's looted by the smart operators. When scammers large and small live better than those creating value in the real economy, the Social Contract has ceased to exist. Once the chumps and marks realize there is no way they can ever escape their exploited banana-republic status as neofeudal debt-serfs, the scammers, cheats and grifters large and small will be at risk of losing their perquisites. As Voltaire observed, "No snowflake in an avalanche ever feels responsible": every claim, every game of the system, every political favor purchased is "fair and legal," of course. This is precisely how empires collapse.

Projections based on high rates of endless growth are delusional. Those who embrace these projections are equally delusional. Attacking critics who have taken the time to study the data and trends is not going to magically make these programs sustainable or fix what's broken. Placing one's faith in government projections that always forecast high rates of endless growth (because "growth" fixes everything) is embracing delusion. Reality trumps accounting trickery and delusional projections every time. Let's see how accurate all the government agency projections (including the SSA Trustees) turn out in September 2015, at the end of fiscal year 2015.

QE and hopes/beliefs in its perpetual nature continues to be the key market catalyst. Tracking estimates for Q2 GDP continue to drop below 1%. This is setting up a scenario where GDP for the previous 3 quarters will likely average 1%. If we didn't think that job creation is going to sustain its current pace of growth, we would say this market is heading towards the “Bearmageddon Scenario”. QE3 has fallen short on job creation and GDP growth. The only inflation it has managed to create is in the prices of financial assets- and yet the consensus view of Central Bankers and the market expectation is to do more of the same policies that have not worked. This is Central Banker hubris, believing they can fine tune an economy to specific inflation and unemployment levels only serves as a distraction to markets.

The aging 'me' generation is still putting itself first...

No, last week’s jobs report was not “strong”. It was just another edition of the “born again” jobs scam that has been fueling the illusion of recovery during the entire post-crisis Bernanke Bubble. In short, the US economy is failing and the welfare state safety net is exploding. And that means that the true headwind in front of the allegedly “cheap” stock market is an insuperable fiscal crisis that will bring steadily higher taxes, lower spending and a gale-force of permanent anti-Keynesian austerity in the GDP accounts. And for that reason, the Fed’s strategy of printing money until the jobs market has returned to effective “full employment” is completely lunatic. The bottom-line is that Bernanke is printing money so that Uncle Sam can keep massively borrowing, and thereby fund a simulacrum of job growth in the HES Complex. Call it the Bed Pan Economy. When it finally crashes, Ben Bernanke will be more reviled than Herbert Hoover. And deservedly so.

The next American Revolution will not be an event, it will be a process. We naturally turn to the past for templates of the future, but history has a way of remaining remarkably unpredictable. Indeed, all the conventional long-range forecasts made in 1900, 1928, 1958, 1988 and 2000 missed virtually every key development--not just in the distant future, but just a few years out. The point is that extrapolating the present into the future fails to capture sea changes and developments that completely disrupt the supposedly unchanging, permanent Status Quo. The idea that the next revolution will take a new form does not occur to conventional forecasters, who readily assume the next transition will follow past critical junctures: armed insurrection against the central authority (The first American Revolution, 1781), civil war (1861) or global war (1941). We submit that the next American Revolution circa 2021-23 will not repeat or even echo these past transitions. What seems likely to me is the entire project of centralization that characterized the era 1941-2013 will slip into irrelevance as centralization increasingly yields diminishing returns.

There are two problems with the vast, sprawling legacy systems we've inherited from the past: they're dysfunctional and cannot be fixed/reformed. America's legacy systems are like stars about to go super-nova. They have increased in size to the point where their stupendous mass guarantees that once their energy source (as measured in fossil fuels and money) falls below a certain threshold, the institution will collapse inward on itself.