- Politics and Social Issues
America's Impending Financial Disaster and Collapse
In these difficult economic times, most families in the United States are struggling to keep their heads above water. Businesses are closing their doors and people are loosing their jobs at an alarming rate. Bankruptcies and foreclosures are far too commonplace and tent cities are popping up all over the country. It is estimated that 1 in 10 homes are in a state of foreclosure or pre-foreclosure. The Government says that unemployment is just over 10%, but that figure only comes from the number of people receiving unemployment checks. However, once a person on unemployment no longer qualifies for unemployment benefits, they fall off the system and are no longer counted. The true figure could be more in the line of 17-20% or more.
There are several theories as to why the economy is in such disarray. However, the answer is quite simple. The media attempts to place the blame on the wealthy, the oil companies, speculators, Wall Street, wars, and various other reasons. But truth be told, these theories are minor contributors to the real culprit, spending.
The United States has become a debtor nation. The majority of Americans are in debt and many, over their heads. Currently, our country is over fourteen trillion dollars in debt. The term trillion has become far too common and unfortunately, most Americans have no idea what a trillion dollars actually is. One trillion dollars ($1,000,000,000,000.00 ) is a million, million or a thousand billion. Click the links below to see what a trillion dollars looks like in $100.00 bills and then multiply it by 14 and that is the amount of debt we are in.
What is causing such debt to build up? There are many things as mentioned previously, but it really boils down to spending money we don’t have.
The average American knows what it means to be in debt. Well, lets say we see a great 50” HDTV and it costs $2000.00. Unfortunately, we don’t have $2000.00 to spend on a new TV, but we really would like to have it now. So Mr. Salesman come up and tells us, “if you like, you can finance with no money down for the 1st 6 months with no interest.”
Sounds good to us and a few minutes later, we own a new $2000.00 TV and didn’t have to pay a dime up front. In the next six months our washing machine and the furnace breaks down and of course these are necessities that we must have and since we can’t afford to pay for these up front, we charge another $5300.00 to our Visa card. Since these extra costs have driven up our monthly payments, we can’t afford to pay for the TV in six month and after six months the interest goes up to 29.9%.
Within a year or so, next thing we know, gasoline is no longer $2.20 per gallon and now we are paying $4.00 per gallon. Since we no longer have cash to pay for my gas since we are over our heads, we start charging gasoline. Of course, our monthly payments keep going up and the interest is barely being paid, let alone the principle amounts. In that same time, the cost of food has gone up 10-20% and now our budget is no longer suffice to pay for our food needs, so we use our Visa card to pay for food. We figure, once the bill comes in, we can pay the food back to avoid the interest on. That day never comes. Soon, our credit cards are maxed and we no longer have money to pay for the necessities. The only option is to pick and choose what we should pay. Well, we don’t want to go without food for our children and we will need gas to get to and from work, so we will have to skip our credit card payments. Unfortunately, 1 missed payment drives all of the cards up to 29.9% interest and the penalties start to stack up.
To top it off, that 7 year ARM we took out when we purchased our home just jumped from $1500.00 per month to $2000.00 per month and the property and school taxes increased by 20% so we now pay a month payment (Loan + Taxes) of $2800.00 per month. Now, we have to think of something else to cut; the car payment? The house payment? Gasoline? Food? Utilities? Student Loan? Medical Bills? Clothes? Obviously, the choice becomes more and more difficult with each new financial situation.
The above scenario is not uncommon to many. It can take a few years or it can happen very quickly. Many people are all too familiar with it happening quickly. Just imagine going to work and your company telling you, “due to an economic downturn, we are forced to close the doors and must let everyone go.”
This is happening to many Americans and it is likely to become even more commonplace. Companies are downsizing; other are shutting their doors and letting everyone go. Downsizing is happening in many companies, especially state and local government employees.
The United States is the largest consumer nation in the world. In fact, it is a larger consumer than almost all of the other nations combined. 1/3rd of all of the oil in production is being consumed by the United States. The U.S. has dropped behind many smaller countries in exports. There was a time when the United States was the number one exporter of manufactured products. It was that way for almost 100 years, but unfortunately, something began to change. America transformed from an Industrial nation to a consumer nation.
After WWII, employers were producing like never before and people had jobs. Most folks were happy with their jobs and life was pleasant. On-the-other-hand, some people were unhappy with their jobs. They felt that they were being taken advantage of, (long hours, no sick days, no vacations, low wages, etc…) and rightfully so. Unfortunately, there were some employers who were taking advantage of their employees. This resulted in the proliferation of unions. Don’t get me wrong, some unions were doing the right thing and what they did was justifiable, but one downside of this advance in union activity was that it provided an opportunity for the mafia (which was being forced into mice holes by the Feds) to do legally what they had already been doing illegally. Having people pay them for protection. All they had to do was stir people up and get them to join the union and get a percentage of the membership dues. It became a legal way to extort money from businesses.
Many great things came out of collective bargaining, but over time, many of these same things became federal and state laws. To date, there are numerous laws that have been enacted that protect the worker. On their own merit, they protect the worker fairly well. However, many businesses have been run down and forced to close their doors because they could no longer afford to pay the wages and benefits that were demanded by the unions. The cost to manufacture a product and charge a reasonable price to the consumer (in order to compete with countries like China) was becoming too difficult. Many of these businesses closed their doors for good. Some decided to move shop to other countries where labor and taxes were cheap with few restrictions. The result: these businesses make money, the economies of these other countries go up and people in these other countries have jobs and money to spend. However, people in America are left without jobs and they have no money to spend and the economy takes a hit.
When this happens on a massive scale, as it has been for the last twenty years, America declines and other nations like China and India become more and more powerful. As poverty increases in this nation, the poor look to the government for help, which this government has provided. In so doing, the government must raise taxes to pay for that assistance. They can either tax the middle-class, the wealthy, or both. Many politicians will verbally tell you that the wealthy should pay more taxes and they will try to do that. However, the result is that the company will feel a burden that is more than their stockholders want to bear and they sometimes decide to either make cut backs, close their doors, or pick up and move to another country. Any way you slice it, American jobs are lost.
In the end, the government realizes that they still need more money to pay for all of the assistance and so the taxes of middle-class go up and consumer spending goes down resulting in even more job loss.
Continuing in this process becomes a downward spiral. People become more and more dependent. This results in people going through foreclosure, bankruptcy or default. This causes the lenders to loose money and as a result, banks begin to fail. If this happens too much too fast, it would eventually cause a run on the banks (this is when average people remove their money from the banks due to fear that the bank will collapse). A run has not yet happened, because the FDIC (a government agency) insures your money in the bank up to a certain limit. Unfortunately, there is a problem with this. What if the government doesn’t have the money to insure your money? This will very likely happen at the rate we are going if the government continues to spend more than they have.
At this point, the American middle-class are taxed beyond reason and they can no longer bear the burden of large government. The politicians are on hot coals and must keep the promises they made to the poor, while not adding even more taxes on the middle-class. On top of this, they want to keep businesses like car companies and Banks from folding so they give billions to them to keep them from doing so. Of course, it only temporarily delays the inevitable. Then there are multiple wars to pay for and the promise of Universal Healthcare, which costs trillions. All this is thrown into the pot and soon we have no money to pay for all this.
Where does the money come from? In a nutshell, on top of collecting taxes, the government sells Treasury Bonds. They are basically a promissory note which says, if you buy this piece of paper (debt) for so much money, we will pay you the purchase price plus any accrued interest on it when you go to cash it in. America has sold trillions in treasury bonds and our biggest buyer was China. China has approximately 1.6 trillion dollars in treasury bonds. They buy them so that we can continue to buy their goods. America can’t even afford to pay the interest on these bonds, let alone the principle. China knows America is about to go bankrupt so they have been selling some of these Treasury bonds off. No one really knows just how many have been sold off, but we do know that in addition to selling off some, China has cut back in buying them.
Unfortunately, no one else wants to buy them either. So what does our government decide to do? Buy our own treasury bonds. Did I lose you yet? Doesn’t make sense? You’re right. It makes no sense at all. If we have no money to pay for our spending, and we can’t afford to pay China back what we owe them, how can we possibly afford to pay for our own treasury bonds? By making more money. We can simply pay the countries we owe money to with freshly printed money. Unfortunately, it isn’t even worth the paper it is printed on because none of it is backed up by gold. America was taken off the gold standard almost 40 years ago. Since 1971, America uses a common monetary system, which much of the world uses as well. It’s called Fiat money, which is, essentially, money that is not backed up by anything and only has value because it is regulated by the government. It is a system which, from it’s onset is doomed to collapse.
When OPEC decided to make our dollar, the standard for purchasing oil, it was a blessing to the United States. The rest of the world pays 2, 3, and even 6 times what we pay for oil, so it really is a blessing. However, the honeymoon is just about over; OPEC no longer wants the dollar to be the standard. Russia, China, the IMF (International Monetary Fund), and many other countries want a new standard currency. This would ultimately, destroy the dollar for good and we could see gas prices shoot up to 7, 8 or even 10 dollars per gallon. Just imagine what gas prices that high would do to America.
The printing of money that has nothing to back it up inflates the dollar. The cost of everything would go up and soon, the money you are making wouldn’t even be enough to cover the bare essentials. It would soon lead to Hyper-inflation, which is a type of inflation that requires enormous amounts of money to purchase items that should only cost very little.
Prior to WWII, the German people were used to the expression wheelbarrow of money because it literally took that much money to put food on the table. That was result of the German government printing ridiculous amounts of money to pay off their debts. If/when this happens in the US, businesses would not be able to remain open and many will close down for good. Many of those that do remain will stop taking dollars as payment because they fear that it will devalue even more. In other countries, many businesses will not accept U.S. dollars as a form of payment. You must go to a bank for an exchange and many times the rates are not favorable and some will no longer exchange your dollars.
Why is the government bankrupting this country? There are a lot of theories out there from secret societies trying to make a One World Government, to pro-socialist agendas, to pure stupidity. Personally, I believe this is on purpose. Either that or the country has become so depraved that it can’t even make simple decisions. The average American can see what is happening and they don’t like what is going on, which is why groups like the Tea Party are popping up all over. Most American are disgusted and want action. However, the spending has not stopped or even slowed down. I believe that there are groups out there that are intent on crashing our economy. Why do they want to do it? Because they obviously have something to gain from doing so. Who are these groups? I have my suspicions and there are thousands of pages of info on the web pointing fingers, but I believe it is likely the same people who are buying up all of the world’s precious metals. You can certainly do the research and find all sorts of theories, but one thing is for sure. What is happening is on purpose.
There is a fact that most people don't realize. The Federal Reserve is who is printing the money. Whois the Federal Reserve? Well, One thing is for sure, they aren't Federal Government entity. "They are about as Federal As Federal Express" (Lindsey). The Federal Reserve is in fact, a conglmeration of Private banks. When they print more money they are devaluing the Dollar. Lets say you started saving for a new house and have managed to put $20,000 in a safe in your home over the last 5 years. With the price of everything seeming to go up, the actual value of your savings has gone down. The estimate if that inflation has gone up 30% over the last 5 years, That means that your $20,000 is now worth $14,000.
So we have to ask, " Where has the other $6,000 gone?" Some may say, "it's just gone because of inflation and that's how it works." This is simply not true. The money has gone somewhere; it has gone to the Federal Reserve bankers. They stole your money without you even batting an eye. By devaluing the dollar, they have been able to swindle the American people out of Billion or even Trillions of dollars. You are still producing the same amount of work ; are you not? But your pay is certainly not keeping up with inflation. Obviously, someone is benefitting from that. The Federal Reserve bankers and the super rich elites like George Soros are gaining that $6,000 loss you took and they are buying Gold bars by the truck load. As their weath is backed by gold and the price of gold keeps going up, they are making even more wealth. The average Joe can no longer afford to buy it since it is now at $1500 per troy ounce. The super rich are getting richer and the rest of us are getting poorer. This is not just happening in America, but all over the Westernized World. These same players are involved. Do the research. There are many theories about who these super rich are, but the fact remains, that someone or some group is definately gaining from this.
Most average Americans know that you should not spend what you do not have and America is a proud country that will not submit to any One World Agenda. However, if America is brought to their knees, without anyone even having to fire a bullet, the American people will eagerly join to get out of extreme financial hardship. Don’t think so? What would you do if you suddenly had no job, no money, and no way to provide for your family? What if a majority of the country was in the same boat? If a promise of prosperity was suddenly presented in a One World Government, Americans would do whatever they had to, to put food on their tables.
Unfortunately, this future dollar crash is closer than most people think. The price of gasoline, heating oil, and natural gas is going up at a dizzying rate due to the instability of the oil/gas markets and this is like the one domino that will start the whole collapse. For every cent that oil/gas moves, it takes more out of our pockets.
In just five short years, the price of heating oil has gone up almost 300%. The cost of heating oil was about 1.69 per gallon. Today, that cost is now approximately $4.50 per gallon. That amounts to about $2000.00 more per year for the average American household living in the northern states. Gasoline has increased from $2.20 per gallon in 2006 to $4.00 per gallon in March 2011. That is an increase of 82%. In 2006 the average American spent about $250.00 per month on gasoline for one car. In 2011, that same person has to spend about $450.00 dollars per month for gasoline for one car. That’s $2,400.00 more per year per average car. SUVs and trucks have to spend far more than that.
On top of that, the cost of every product we use is affected. This increases the cost to manufacture goods because it takes energy to run the factories. The factories have to ship their products to the stores and warehouses and of course, this takes diesel and gasoline. If the products are plastic or nylon, this too requires oil. The retail markets need to keep the lights on and keep the heat going so this also costs. If they are Web-Based, the cost of shipping goes up. All of this is passed down to the customer, you.
Furthermore, the cost of food will and has gone up. Since the planting and harvesting of wheat, corn, barley, and various other vegetables is done with farming equipment, which utilizes gasoline and diesel, the extra fuel costs are passed down to the customer. In addition, farmers have found it more lucrative to plant corn, soy, etc for Bio-fuels and thus the supply of food for human consumption goes down and further increases the price of foods. This also increases the cost of beef and milk since 80% of the corn that was grown in the United States went to feeding cattle. Since the supply is now lowered, the demand increases, further increasing end costs to the consumer. If droughts, floods, or other natural catastrophic disasters occur, this could further devastate the supply and could see food prices rise to unreasonable prices.
Is there anything we can do to avoid this mess? Yes, stop the madness! Fire the politicians who are sinking our ship. Kick the unions to the curb. Turn our hedonistic, selfish American attitude to a, “Can Do” “Made in America” attitude. Unfortunately, many cuts will have to be made to the government freebies, the pork, the military budget, the size of the government itself and we will need to cut the taxes that keep businesses from prospering. This will affect many people, but with more business, there will be more jobs and America can once again become the shining beacon of light from the torch of Ms. Liberty.
Due to large number of Socialist minded individuals, who have failed to see the failure of Socialism in other countries, I don’t believe that this country will turn away from the disastrous ideologies that this government and many citizens are currently following. At the rate the current government is going, the crash could occur within the next couple of years.
What does this mean to us? Very soon, the markets will collapse. The dollar will be worthless and most Americans will be out of work and looking for a means to provide for their families and themselves. Few people make provision for this situation:
Do you have a mortgage? A car payment? Credit card payments?
Do you buy food from the grocery store or do you grow your own food?
Do you have a secondary means of trade other than dollars?
These are important questions because if the economy collapses, you will need to be ready for it. If you owe money for a car or a house and loose your job, you can loose your house and your means of transportation. If you buy food, food might be so expensive that the average person may have to work a full day just for a loaf of bread as they did in the former Soviet Union after the fall of Communism. And that is if you can even find work.
It is imperative to start thinking about this issue now! If we are not able to stop it, then we should at least prepare ourselves for it. Many will tell you to invest in stocks, but that is no good. Stocks are pieces of paper that say you own part of a company or commodity. What good is a piece of paper to someone who needs to buy food? Plus, the chance of a stock making it through a crash is minimal at best. There are a few things that will be valuable.
Gold is likely to be valuable since it has proven itself for millennia as an acceptable source of money. In 2002, Gold was at around 250.00 per ounce. Today, gold is climbing to over $1400.00 per ounce. That is close to a 600% increase in just 9 years. The chances of the price increasing over the next few years is extremely high and it is certainly a safe bet. However, Gold is very expensive and hard to break down into smaller amounts. For instance, Lets say the average person is able to feed himself and his family during the crisis for a full day’s work. Lets say, for numerical value, that a days work is valued at $100.00. If you are carrying around ½ (1/2 ounce, worth $750.00) or full gold dollars (1 troy ounce, worth $1500.00), how would you be able to make change for it? Some people prefer gold shot, which can be weighed. They are about the size of BBs, but even they can be broken down only so far. They could certainly buy you a $100.00 loaf of bread, but how about a $10 item. They would be would be worth more than that item.
Silver, on-the-other-hand, can be broken down much further than gold. This can certainly work for buy much of the small stuff. The vale of silver too, is on the rise.
From 1992 – 2004 silver hovered around $5.00 per ounce. The price of silver today (March 2011) is now $35.00 per ounce. In 7 years the price rose 700%. This is for several reasons, silver is becoming harder to find than it used to so the supplies are beginning to dwindle. It is used in things, like electronics, and especially computers.
Precious metals like Silver and Gold are being purchased by the pallet loads by millionaires, billionaires and even countries like China. They see what is coming and are hoarding as much of the precious metals as possible. This is raising the price to purchase it to levels that the average American can not afford. Although, gold is very expensive right now, it will get higher. Some analysts see the price of gold getting up to $5000.00 per ounce. Who knows? Silver is still quite affordable though and most businesses will likely accept it during the upcoming crisis since it will be one of the only stable source of money available.
There are various ways to invest in either silver or gold. You can invest in precious metal refining companies, retail companies, mining companies, or just buy the metal itself and you hold onto it (in a safe, hopefully). I suggest owning the actual metal itself. The other investments are stocks, which are nothing more than pieces of paper during a crisis. However, although the metals have value today, depending on the severity of the crisis, gold and silver may be of no use, especially if there is no electricity, and there is no government left. As a general rule of thumb though, gold and silver is usually stable enough to support itself. The time is now to buy up as much as possible. The reason, is because the government does not track your purchases of gold and silver currently, but some legislators are looking to put a name to the purchase, which has no merit except to keep a tab on who has the precious metals, just in case they need to come and take it from you as they did during the depression. President Roosevelt made it illegal for a citizen to own gold and it could and will likely happen again in the next economic crisis. In April of 1933 President Roosevelt issued Executive Order 6102 Requiring Gold Coin, Gold Bullion and Gold Certificates to Be Delivered to the Government.
Read more at the American Presidency Project:
Another form of valuable trade is food itself. Since food will be expensive or scarce, owning lots of food will help you get through the turbulent times. People will gladly trade with someone who owns food. Obviously the only viable food will be canned food which can last several years.
Additionally, seeds are extremely valuable. They are valuable to you and to any honest person looking to just get through the crisis. If you have land, you can farm and provide for yourself and sell/trade what can be sold/traded. A self sustaining situation is best. Farm enough to get yourself and whoever is with you through the crisis. It is important to note that not all seeds are created equal. What you want are natural organic non-modified, non-hybrid seeds. Companies like Monsanto have genetically modified (GM) plants/seeds for various reasons. Many of these seeds do not produce fruit/vegetables capable of producing seeds, forcing farmers to buy new seed every year. In addition, no one really knows the long term effects of GM fruits/vegetables.
The best thing to do is to find natural seeds and store them as needed. If you don’t know the 1st thing about farming, it is important to learn. There are many places to find natural seed that can be stored for any future crisis. Below I have listed a good source for natural seeds. There are many out there so feel free to search around for others.
Another commodity during crisis is potable water. If a country collapses, it is quite possible that electricity could collapse as well. Without electric, most people would be without drinkable (Potable) water. Drinking out of streams and rivers is not an option since most of them have been contaminated by our pollutants. If you have the means now, have a manual pump read to draw water from your well if you have one. If not, a manual pump would certainly be a great asset for anyone looking to barter with someone who has a well, but no way to extract the water. If none of those are an option, I would look into water filtration systems and iodine pills. As a last resort, you may have to use creek water and a water filtration system or at least iodine pills can solve the issues of bacteria.
Unfortunately, in a total economic collapse, it could have several devastating results. People will likely want to fend for themselves and looting could get out of control. Just look at the aftermath of hurricane Katrina. Looting was out of control and people were shooting and killing each other. America is not the country it was during the Great Depression. If Katrina was any indicator of how people will react, it will be utter chaos. Even other countries that have fallen in the last 40 years show that the immediate reaction tends to be a propensity to selfishness and violence. I am not saying that all people would do this, but because there are so many who would, many non-violent people would likely become victims of that violence. This would likely be the case in more urban areas and even some suburban areas.
The ultimate travesty is civil war. America is more divided now than it was even prior to the Civil or Revolutionary Wars. If not, the United States would probably break up into territory countries. In any event, human casualties would be inevitable
Last, but certainly, not least is that survival is priority number 1. There is strength in numbers. Obviously, the safest areas, would be rural areas where people/communities are more prone to come together to resolve the situation with a concerted effort that benefits all in the community. The old saying “if a man does not work, he will not eat will usually come to fruition”. All will need to do their part, regardless of age, or handicap. Everyone would have to do something no matter how small a task. Government handouts would be a thing of the past as would nursing care facilities. It would be like being cast back 500 years into the past.