Archive for category Economy
This article was written by Lizzie Bennett and originally published at Underground Medic
Also posted at oathkeepers.org
I was born in 1960…yes, I know, I sound much younger! Anyway moving swiftly on…
Rationing finally ended in England in 1953, seven years before I was born, but my parents didn’t get over it quite that quickly. I grew up in a house where nothing was wasted, where there was always at least 10 pounds of sugar in the cupboard, nestling alongside tinned meats (plain nasty as I recall) a wide variety of canned fruit and enough canned soup to float a battle ship.
It was even worse down at Gran’s place in the heart of the Devon countryside. Living four miles from the nearest street light let alone shop, and living in a cottage with no running water or mains gas or electricity frugality was the order of the day.
Every bit of string was stored for future use, brown paper from packages folded and pressed in the back of the huge family Bible, and God help you if threw out a newspaper rather than cut it into the required sized sheets for future outhouse use.
Just like at home there was a cupboard so stuffed with tinned foods and home bottled jams, chutneys and pickles we could have survived for months no problems at all, and as they explained to me as I got older, that was the whole point.
My grandparents and my parents lived in fear of further food shortages…and it showed.
Without even knowing it, they were the preppers, the first I came into contact with, so blame them for my obsession with food security.
They remembered the times when money was short, but food was shorter still, when having money in your pocket made no difference to ordinary people. The rich could still get almost anything on the black market, but ordinary working people just couldn’t afford those prices.
For them it was a ration card. They were allocated a certain amount of almost every foodstuff, they got the card stamped when they collected that weeks portion of meat or butter or whatever, and that was it until the following week.
Even clothing was rationed the raw materials were in such short supply. I was raised on make do and mend.
As unscrupulous store owners jacked up the prices to levels unaffordable to the man in the street, working people turned to barter. Those with large gardens, which was far more common then than now, had two vegetable patches, one for the basic needs of the family and a second, the contents of which had been agreed upon by other gardeners as well as the owner of the plot. The idea was to not end up with three tons of carrots and no cabbages. The produce would be swapped when it was harvested, or given to others should the harvesting times not match, in the sure knowledge that you would get your ‘exchange’ veg within a couple of hours of it being dug up.
In rural areas vegetables and fruit, eggs and sometimes cheese is still ‘swapped’ for produce that you don’t have. Informal gardening ‘clubs’ where who grows what is agreed in the school playground or at the local pub are incredibly common outside of the cities and for the most part it works well. I didn’t get much choice this year, as the newcomer to the island and as I will be growing in raised beds I am tasked with producing extra carrots as they do not grow well in the ground here. My reward will be some very nice plums, apples and greengages from another gardeners fruit trees, trees that I don’t have at this point.
The local greengrocer is always ready to take home grown produce that’s surplus to requirements. No money changes hands of course, but a dozen eggs a week for an agreed amount of time always comes in handy.
War isn’t just about the death and destruction wrought by guns and bombs, though God knows there was enough of that to last many generations of lifetimes. War comes in many forms, and not all of it involves tanks and missiles. War disrupts the general scheme of things, it alters the parameters we live within, in ways you wouldn’t consider.
Our just in time food supply chain for example, is vulnerable to disruption in so many ways. A cyber attack taking out the computer systems that control distribution would cause widespread panic and the storming of supermarkets. A failure of the power grid, either due to cyber attack, a physical attack or a solar kill shot would cause mayhem in a matter of hours.
There are many ways that war can be waged against an enemy.
Even a conventional war thousands of miles away can exert an effect on the rest of us, more so if major players are involved. Markets usually fall when instability and uncertainty levels are high. Any economic uncertainty or crisis is magnified, and recoveries are stunted. The price of essential goods start to rise, the money in your wallet buys less each week. More and more people drop below the poverty line, unable to feed their families. Unemployment rises and the state is stretched as the benefits bill increases.
The increasing costs of imported energy, as is the case with Europe getting a full 25% of it’s natural gas from Russia via Ukranian pipelines, results in fuel insecurity, which causes further price hikes. Eventually, the cycle breaks plunging people into fuel poverty.
Fuel, like food starts to be rationed. This leads to a reduction in productivity from industries considered to be non-essential. Anything produced by those companies will only be freely available until the stock holding has gone, and what is available will be sold at higher prices than usual. Once the stock levels have dropped those items will become scarce as the manufacturer works reduced hours due to reduced fuel. Workers will be laid off or face reduced hours, and with that reduced pay.
Petrol and diesel prices will rise quickly, just today oil rose 2% on the volatility in Ukraine.
This is by no means a comprehensive list of what awaits a sizable proportion of the global population in wartime conditions.
Don’t make the mistake of thinking a war half a world away won’t affect you, because one way or another, it will.
This article was written by Michael Snyder and originally published at The Economic Collapse
Also posted on oathkeepers.org
In order for our current level of debt-fueled prosperity to continue, the rest of the world must continue to use our dollars to trade with one another and must continue to buy our debt at ridiculously low interest rates. Of course the number one foreign nation that we depend on to participate in our system is China. China accounts for more global trade than anyone else on the planet (including the United States), and most of that trade is conducted in U.S. dollars. This keeps demand for our dollars very high, and it ensures that we can import massive quantities of goods from overseas at very low cost. As a major exporting nation, China ends up with gigantic piles of our dollars. They lend many of those dollars back to us at ridiculously low interest rates. At this point, China owns more of our national debt than any other country does. But if China was to decide to quit playing our game and started moving away from U.S. dollars and U.S. debt, our economic prosperity could disappear very rapidly. Demand for the U.S. dollar would fall and prices would go up. And interest rates on our debt and everything else in our financial system would go up to crippling levels. So it is absolutely critical to our financial future that China continues to play our game.
Unfortunately, there are signs that China has now decided to start looking for a smooth exit from the game. In November, I wrote about how the central bank of China has announced that it is “no longer in China’s favor to accumulate foreign-exchange reserves”. That means that the pile of U.S. dollars that China is sitting on is not going to get any higher.
In addition, China has signed a whole host of international currency agreements with other nations during the past couple of years which are going to result in less U.S. dollars being used in international trade. You can read about many of these agreements in this article.
This week, we learned that China started to dump U.S. debt during the month of December. Many have imagined that China would try to dump a flood of our debt on to the market all of a sudden once they decided to exit, but that simply does not make sense. Instead, it makes sense for China to dump a bit of debt at a time so that the market will not panic and so that they can get close to full value for the paper that they are holding.
As Bloomberg reported the other day, China dumped nearly 50 billion dollars of U.S. debt during the month of December…
China, the largest foreign U.S. creditor, reduced holdings of U.S. Treasury debt in December by the most in two years as the Federal Reserve announced plans to slow asset purchases.
The nation pared its position in U.S. government bonds by $47.8 billion, or 3.6 percent, to $1.27 trillion, the largest decline since December 2011, according to U.S. Treasury Department data released yesterday.
This is how I would do it if I was China. I would try to dump 30, 40 or 50 billion dollars a month. I would try to make a smooth exit and try to get as much for my U.S. debt paper as I could.
So if China is not going to stockpile U.S. dollars or U.S. debt any longer, what is it going to stockpile?
It is going to stockpile gold of course. In fact, China has been voraciously stockpiling gold for quite some time, and their hunger for gold appears to be growing.
According to Bloomberg, more than 80 percent of the gold that was exported from Switzerland last month went to Asia…
Switzerland sent more than 80 percent of its gold and silver bullion and coin exports to Asia last month, the Swiss Federal Customs Administration said today in an e-mailed report. It imported most from the U.K.
Hong Kong was the top destination at 44 percent on a value basis, with India at 14 percent, the Bern-based customs agency said in its first breakdown of the gold trade data since 1980. Singapore accounted for 8.6 percent of exports, the United Arab Emirates 7.9 percent and China 6.3 percent.
When China imports gold, most of it goes through Hong Kong. We know that imports of gold from Hong Kong into China are at an all-time record high, but we don’t know exactly how much gold China has accumulated at this point because they quit reporting that to the rest of the world a number of years ago.
When it comes to global finance, China is playing chess and the United States is playing checkers. China knows that gold is a universal currency that will hold value over the long-term. As the paper currencies of the world race toward collapse, China could end up holding most of the real money and that would be a huge game changer when they finally reveal that fact…
The announcement of China’s new gold hoard will send shockwaves through the financial markets, and make China and the Chinese yuan (their national currency) even bigger players at the international table.
International banking expert James Rickards compared it to a game of Texas Hold ‘Em poker:
“You want a big pile of chips. The U.S. has a big pile of chips, Europe has a big pile of chips. The U.S. has 8,000 tonnes [metric tons] of gold, 17 members of the euro system have 10,000 tonnes. China at 1,000 tonnes is not a player, but at 5,000 tonnes, they are a player.”
There are some really good points made in the quote above, but I do take exception with a couple of things. First of all, I believe that China now has far more than 5,000 tons of gold. Secondly, I seriously doubt that the U.S. still actually has 8,000 tons of gold or that Europe still actually has 10,000 tons of gold.
As China (and eventually the rest of the world) moves away from a U.S.-based financial system, the consequences are going to be dramatic.
For instance, right now the average rate of interest that the U.S. government pays on debt is just 2.477 percent. That is ridiculously low and it is way below the real rate of inflation. It is simply not rational for anyone to lend the U.S. government money so cheaply, and at some point we are going to see a dramatic shift.
When that day arrives, interest rates are going to rise dramatically. And if the average rate of interest on U.S. government debt rises to just 6 percent (and it has been much higher than that in the past), we will be paying out more than a trillion dollars a year just in interest on the national debt.
Even more frightening is what a rapidly changing interest rate environment would mean for our banking system. There are four large U.S. banks that each have exposure to derivatives in excess of 40 trillion dollars. You can find the identity of those banks right here. Interest rate derivatives make up the biggest chunk of those derivatives contracts. As John Embry told King World News just the other day, when that bubble bursts the carnage is going to be unprecedented…
“Stockman brought up a brilliant point, the fact that we have hundreds of trillions of dollars of interest rate swaps, which are polluting the world’s banking system. If we see growing volatility in interest rates, and I think that’s inevitable with what’s going on, that would cause spasms in the financial system. And if something goes wrong in the derivatives market, Heaven help us because the leverage that is imparted to the banking system through these derivatives is unholy.”
Unfortunately, very few of the “experts” will ever see this crash coming.
Very few of them saw it coming in 2000.
Very few of them saw it coming in 2008.
And very few of them will see it coming this time.
I really like what Paul B. Farrell had to say about this…
Early warnings of a crash are dismissed over and over (”just a temporary correction”). They gradually numb us about the inevitable. Time after time we forget history’s lessons. Until finally a big surprise catches us totally off-guard. Financial historian Niall Ferguson put it this way: Before the crash, our world seems almost stationary, deceptively so, balanced, at a set point. So that when the crash finally hits — as inevitably it will — everyone seems surprised. And our brains keep telling us it’s not time for a crash.
Till then, life just goes along quietly, hypnotizing us, making us vulnerable, till a shocker like Lehman Brothers upsets the balance. Then, says Ferguson, the crash is “accelerating suddenly, like a sports car … like a thief in the night.” It hits. Shocks us wide awake.
Don’t let the upcoming crash take you by surprise.
The warning signs are very clear.
Get ready while you still can.
This article was written by Michael Snyder and originally published at The Economic Collapse
Also posted at oathkeepers.org
Did you know that the U.S. state that produces the most vegetables is going through the worst drought it has ever experienced and that the size of the total U.S. cattle herd is now the smallest that it has been since 1951? Just the other day, a CBS News article boldly declared that “food prices soar as incomes stand still“, but the truth is that this is only just the beginning. If the drought that has been devastating farmers and ranchers out west continues, we are going to see prices for meat, fruits and vegetables soar into the stratosphere. Already, the federal government has declared portions of 11 states to be “disaster areas”, and California farmers are going to leave half a million acres sitting idle this year because of the extremely dry conditions. Sadly, experts are telling us that things are probably going to get worse before they get better (if they ever do). As you will read about below, one expert recently told National Geographic that throughout history it has been quite common for that region of North America to experience severe droughts that last for decades. In fact, one drought actually lasted for about 200 years. So there is the possibility that the drought that has begun in the state of California may not end during your entire lifetime.
This drought has gotten so bad that it is starting to get national attention. Barack Obama visited the Fresno region on Friday, and he declared that “this is going to be a very challenging situation this year, and frankly, the trend lines are such where it’s going to be a challenging situation for some time to come.”
According to NBC News, businesses across the region are shutting down, large numbers of workers are leaving to search for other work, and things are already so bad that it “calls to mind the Dust Bowl of the 1930s“…
In the state’s Central Valley — where nearly 40 percent of all jobs are tied to agriculture production and related processing — the pain has already trickled down. Businesses across a wide swath of the region have shuttered, casting countless workers adrift in a downturn that calls to mind the Dust Bowl of the 1930s.
If you will recall, there have been warnings that Dust Bowl conditions were going to return to the western half of the country for quite some time.
Now the mainstream media is finally starting to catch up.
And of course these extremely dry conditions are going to severely affect food prices. The following are 15 reasons why your food bill is going to start soaring…
#1 2013 was the driest year on record for the state of California, and 2014 has been exceptionally dry so far as well.
#2 According to the U.S. Drought Monitor, 91.6 percent of the entire state of California is experiencing “severe to exceptional drought” even as you read this article.
#3 According to CNBC, it is being projected that California farmers are going to let half a million acres of farmland sit idle this year because of the crippling drought.
Given that California is one of the largest agricultural regions in the world, the effects of any drought, never mind one that could last for centuries, are huge. About 80 percent of California’s freshwater supply is used for agriculture. The cost of fruits and vegetables could soar, says Cantu. “There will be cataclysmic impacts.”
#5 Mike Wade, the executive director of the California Farm Water Coalition, recently explained which crops he believes will be hit the hardest…
Hardest hit would be such annual row crops as tomatoes, broccoli, lettuce, cantaloupes, garlic, peppers and corn. Wade said consumers can also expect higher prices and reduced selection at grocery stores, particularly for products such as almonds, raisins, walnuts and olives.
#6 As I discussed in a previous article, the rest of the nation is extremely dependent on the fruits and vegetables grown in California. Just consider the following statistics regarding what percentage of our produce is grown in the state…
-99 percent of the artichokes
-44 percent of asparagus
-two-thirds of carrots
-half of bell peppers
-89 percent of cauliflower
-94 percent of broccoli
-95 percent of celery
-90 percent of the leaf lettuce
-83 percent of Romaine lettuce
-83 percent of fresh spinach
-a third of the fresh tomatoes
-86 percent of lemons
-90 percent of avocados
-84 percent of peaches
-88 percent of fresh strawberries
-97 percent of fresh plums
#7 Of course it isn’t just agriculture which will be affected by this drought. Just consider this chilling statement by Tim Quinn, the executive director of the Association of California Water Agencies…
“There are places in California that if we don’t do something about it, tens of thousands of people could turn on their water faucets and nothing would come out.”
#8 The Sierra Nevada snowpack is only about 15 percent of what it normally is. As the New York Times recently explained, this is going to be absolutely devastating for Californians when the warmer months arrive…
Experts offer dire warnings. The current drought has already eclipsed previous water crises, like the one in 1977, which a meteorologist friend, translating into language we understand as historians, likened to the “Great Depression” of droughts. Most Californians depend on the Sierra Nevada for their water supply, but the snowpack there was just 15 percent of normal in early February.
#9 The underground aquifers that so many California farmers depend upon are being drained at a staggering rate…
Pumping from aquifers is so intense that the ground in parts of the valley is sinking about a foot a year. Once aquifers compress, they can never fill with water again. It’s no surprise Tom Willey wakes every morning with a lump in his throat. When we ask which farmers will survive the summer, he responds quite simply: those who dig the deepest and pump the hardest.
#10 According to an expert interviewed by National Geographic, the current drought in the state of California could potentially last for 200 years or more as some mega-droughts in the region have done in the past…
California is experiencing its worst drought since record-keeping began in the mid 19th century, and scientists say this may be just the beginning. B. Lynn Ingram, a paleoclimatologist at the University of California at Berkeley, thinks that California needs to brace itself for a megadrought—one that could last for 200 years or more.
#11 Much of the western U.S. has been exceedingly dry for an extended period of time, and this is hurting huge numbers of farmers and ranchers all the way from Texas to the west coast…
The western United States has been in a drought that has been building for more than a decade, according to climatologist Bill Patzert of NASA’s Jet Propulsion Laboratory.
“Ranchers in the West are selling off their livestock,” Patzert said. “Farmers all over the Southwest, from Texas to Oregon, are fallowing in their fields because of a lack of water. For farmers and ranchers, this is a painful drought.”
#12 The size of the U.S. cattle herd has been shrinking for seven years in a row, and it is now the smallest that it has been since 1951. But our population has more than doubled since then.
#13 Extremely unusual weather patterns are playing havoc with crops all over the planet right now. The following is an excerpt from a recent article by Lizzie Bennett…
Peru, Venezuela, and Bolivia have experienced rainfall heavy enough to flood fields and rot crops where they stand. Volcanic eruptions in Ecuador are also creating problems due to cattle ingesting ash with their feed leading to a slow and painful death.
Parts of Australia have been in drought for years affecting cattle and agricultural production.
Rice production in China has been affected by record low temperatures.
Large parts of the UK are underwater, and much of that water is sea water which is poisoning the soil. So wet is the UK that groundwater is so high it is actually coming out of the ground and adding to the water from rivers and the sea. With the official assessment being that groundwater flooding will continue until MAY, and that’s if it doesn’t rain again between now and then. The River Thames is 65 feet higher than normal in some areas, flooding town after town as it heads to the sea.
#14 As food prices rise, our incomes are staying about the same. The following is from a CBS News article entitled “Food prices soar as incomes stand still“…
While the government says prices are up 6.4 percent since 2011, chicken is up 18.4 percent, ground beef is up 16.8 percent and bacon has skyrocketed up 22.8 percent, making it a holiday when it’s on sale.
#15 As I have written about previously, median household income has fallen for five years in a row. So average Americans are going to have to make their food budgets stretch more than they ever have before as this drought drags on.
If the drought does continue to get worse, small agricultural towns all over California are going to die off.
For instance, consider what is already happening to the little town of Mendota…
The farms in and around Mendota are dying of thirst. The signs are everywhere. Orchards with trees lying on their sides, as if shot. Former farm fields given over to tumbleweeds. Land and cattle for sale, cheap.
Large numbers of agricultural workers continue to hang on, hoping that somehow there will be enough work for them. But as Evelyn Nieves recently observed, panic is starting to set in…
Off-season, by mid-February, idled workers are clearly anxious. Farmworkers and everyone else who waits out the winter for work (truckers, diesel providers, packing suppliers and the like) are nearing the end of the savings they squirrel away during the season. The season starts again in March, April at the latest, but no one knows who will get work when the season begins, or how much.
People are scared, panicked even.
I did not write this article so that you would panic.
Yes, incredibly hard times are coming. If you will recall, the 1930s were also a time when the United States experienced extraordinarily dry weather conditions and a tremendous amount of financial turmoil. We could very well be entering a similar time period.
Worrying about this drought is not going to change anything. Instead of worrying, we should all be doing what we can to store some things up while food is still relatively cheap. Our grandparents and our great-grandparents that lived during the days of the Great Depression knew the wisdom of having a well-stocked food pantry, and it would be wise to follow their examples.
Please share this article with as many people as you can. The United States has never faced anything like this during most of our lifetimes. We need to shake people out of their “normalcy bias” and get them to understand that big changes are coming.
This article was written by Ron Paul and originally published at Ron Paul’s Texas Straight Talk
Also posted on oathkeepers.org
A week from now, the Federal Reserve System will celebrate the 100th anniversary of its founding. Resulting from secret negotiations between bankers and politicians at Jekyll Island, the Fed’s creation established a banking cartel and a board of government overseers that has grown ever stronger through the years. One would think this anniversary would elicit some sort of public recognition of the Fed’s growth from a quasi-agent of the Treasury Department intended to provide an elastic currency, to a de facto independent institution that has taken complete control of the economy through its central monetary planning. But just like the Fed’s creation, its 100th anniversary may come and go with only a few passing mentions.
Like many other horrible and unconstitutional pieces of legislation, the bill which created the Fed, the Federal Reserve Act, was passed under great pressure on December 23, 1913, in the waning moments before Congress recessed for Christmas with many Members already absent from those final votes. This underhanded method of pressuring Congress with such a deadline to pass the Federal Reserve Act would provide a foreshadowing of the Fed’s insidious effects on the US economy—with actions performed without transparency.
Ostensibly formed with the goal of preventing financial crises such as the Panic of 1907, the Fed has become increasingly powerful over the years. Rather than preventing financial crises, however, the Fed has constantly caused new ones. Barely a few years after its inception, the Fed’s inflationary monetary policy to help fund World War I led to the Depression of 1920. After the economy bounced back from that episode, a further injection of easy money and credit by the Fed led to the Roaring Twenties and to the Great Depression, the worst economic crisis in American history.
But even though the Fed continued to make the same mistakes over and over again, no one in Washington ever questioned the wisdom of having a central bank. Instead, after each episode the Fed was given more and more power over the economy. Even though the Fed had brought about the stagflation of the 1970s, Congress decided to formally task the Federal Reserve in 1978 with maintaining full employment and stable prices, combined with constantly adding horrendously harmful regulations. Talk about putting the inmates in charge of the asylum!
Now we are reaping the noxious effects of a century of loose monetary policy, as our economy remains mired in mediocrity and utterly dependent on a stream of easy money from the central bank. A century ago, politicians failed to understand that the financial panics of the 19th century were caused by collusion between government and the banking sector. The government’s growing monopoly on money creation, high barriers to entry into banking to protect politically favored incumbents, and favored treatment for government debt combined to create a rickety, panic-prone banking system. Had legislators known then what we know now, we could hope that they never would have established the Federal Reserve System.
Today, however, we do know better. We know that the Federal Reserve continues to strengthen the collusion between banks and politicians. We know that the Fed’s inflationary monetary policy continues to reap profits for Wall Street while impoverishing Main Street. And we know that the current monetary regime is teetering on a precipice. One hundred years is long enough. End the Fed.
During The Best Period Of Economic Growth In U.S. History There Was No Income Tax And No Federal Reserve
Time for a little history lesson. Yes, there was a time before the Federal Reserve and the Income Tax, and America prospered! – Shorty Dawkins, Associate Editor
Also posted at oathkeepers.org.
by Michael Snyder
How would America ever survive without the central planners in the Obama administration and at the Federal Reserve? What in the world would we do if there was no income tax and no IRS? Could the U.S. economy possibly keep from collapsing under such circumstances? The mainstream media would have us believe that unless we have someone “to pull the levers” our economy would descend into utter chaos, but the truth is that the best period of economic growth in U.S. history occurred during a time when there was no income tax and no Federal Reserve. Between the Civil War and 1913, the U.S. economy experienced absolutely explosive growth. The free market system thrived and the rest of the world looked at us with envy. The federal government was very limited in size, there was no income tax for most of that time and there was no central bank. To many Americans, it would be absolutely unthinkable to have such a society today, but it actually worked very, very well. Without the inventions and innovations that came out of that period, the world would be a far different place today.
It is amazing what can happen when the government just gets out of the way. Check out all of the wonderful things that Wikipedia says happened for the U.S. economy during those years…
“The rapid economic development following the Civil War laid the groundwork for the modern U.S. industrial economy. By 1890, the USA leaped ahead of Britain for first place in manufacturing output.
An explosion of new discoveries and inventions took place, a process called the “Second Industrial Revolution.” Railroads greatly expanded the mileage and built stronger tracks and bridges that handled heavier cars and locomotives, carrying far more goods and people at lower rates. Refrigeration railroad cars came into use. The telephone, phonograph, typewriter and electric light were invented. By the dawn of the 20th century, cars had begun to replace horse-drawn carriages.
Parallel to these achievements was the development of the nation’s industrial infrastructure. Coal was found in abundance in the Appalachian Mountains from Pennsylvania south to Kentucky. Oil was discovered in western Pennsylvania; it was mainly used for lubricants and for kerosene for lamps. Large iron ore mines opened in the Lake Superior region of the upper Midwest. Steel mills thrived in places where these coal and iron ore could be brought together to produce steel. Large copper and silver mines opened, followed by lead mines and cement factories.
In 1913 Henry Ford introduced the assembly line, a step in the process that became known as mass-production”
This is part of a speech given by the author of “The Creature From Jekyll Island”. As usual, G. Edward Griffin hits the nail on the head.
This article was written by Mac Slavo and originally published at SHTFplan.com
In 2006, when Americans were flying high on ever-expanding credit and double digit real estate growth, hedge fund manager Kyle Bass came to the conclusion that something was very wrong. He and his investors determined that a massive real estate bubble was forming in sub-prime mortgages. But rather than just making a prediction, they put their money where their mouth was, and took a $4 billion gamble that the real estate market was about to detonate.
At the time, many in the industry and within financial circles thought him crazy.
History, however, proves he was right.
When the real estate bubble did finally burst, stock markets plummeted and mortgage backed securities fell to pennies on the dollar. Bass and his hedge fund made billions in the process.
Bass’ foresight was 20/20, and now he has issued a warning so dire that it, like the real estate crisis and recession that followed, is unimaginable for most Americans.
In many of these situations the quantitative analysis is already done. It’s just a question of when will this unravel and how will it unravel, which I think is the key when we’re thinking about the chronology of events and the likelihood of events going forward.
Something that I think is really important to pay attention to, in the last 10 years debts around the world – this is total credit market debts, this is on balance sheets, sovereign obligations, corporate debt, household debt – has grown from $80 trillion to just over $200 trillion.
We sit today at the world’s largest peacetime accumulation of debt in world history…
…You know how this ends right?
This ends through war…
…I don’t know who’s going to fight who, but I’m fairly certain in the next few years you will see wars erupt, and not just small ones…
You’re going to see more social unrest.
You saw HUGE riots in Greece, and you’re seeing HUGE riots in other parts of the world over food (and lack of food) and those are actually derivatives of the financial problems that we’re seeing. We’re exporting inflation to some other nations. Going forward it’s going to be a problem.
They’re not going to tell you [that a collapse is coming]. You’re going to have to see it for yourself. [During the Tequila crisis], the Mexican government affirmed they would not default, that they would not devalue, almost daily. The day after they said “we wont devalue,” they devalued by 60%.
The government’s never going to tell you that it’s going to happen.
Greece’s Yunker said recently, ‘When it becomes serious – you have to lie’. These guys are never going to tell you the truth, because they can’t tell you the truth. Their job is to promote confidence, not to tell you the truth.
Watch Kyle Bass:
Full Speech at the AmerCatalyst 2012 Conference (Approx 1 hour)
The United States, Europe and the rest of the world have created more debt than has ever existed in the history of the world. Debt is nothing more than a representation (and expectation) of future earnings – future work. But, as many of us know, there has been so much money borrowed that we can’t possible every expect to pay it back. In fact, the only thing we can expect is that we will continue to take on even more debt.
At some point in the (near) future, the plug is going to be pulled and no one is going to lend anyone any more money. We saw this on a small scale in 2008 when credit markets around the world froze up. No one was lending money. There was so much risk that banks not only refused to lend money to individuals and businesses, but they refused to even lend each other money.
Central banks around the world, namely the U.S. Federal Reserve, calmed financial markets by pumping out trillions of dollars in emergency lending. This gave many a perception that things were returning to normal, but as Kyle Bass points out, we are in anything but a normal situation.
Debt has sky rocketed and we’re not going to pay it back – ever.
Like the mafia does when debts don’t get paid, our creditors are eventually going to resort to ‘breaking some legs.’
But we’re talking about debts of entire sovereign nations here, so the tools used to ‘take care of it’ won’t be crowbars or baseball bats, but rather, soldiers, tanks and intercontinental ballistic missiles.
War is coming – just as it has throughout history.
And the 99% of Americans who believe in a benevolent, all knowing, all caring government will be the last ones to get the memo.
Ignore the warnings at your peril.
This article was written by Mac Slavo and originally published at SHTFplan.com
Now that the election is over, the propaganda media can back off the burying of those critical stories that they couldn’t be bothered to report in the lead up to the re-election of President Obama.
What are we talking about?
For starters, the Federal Reserve’s recent report, which received nary a comment from the political and financial pundits on television.
While the economy was on the minds of most voters last night, what they didn’t know may have very well swung the election to one candidate over another.
And this particular tidbit of data is as important as it gets when we’re talking about economic health:
Here’s an interesting new data point that the St Louis Fed has put together to calculate recession probabilities:
“Recession probabilities for the United States are obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables: non-farm payroll employment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales. “
What’s interesting about this index is the current reading. At 20%, the index is at a level that has ALWAYS been followed by a recession. As you can see below, the index has never approached 20% without a subsequent recession. All 6 recessions since 1967 have coincided with 20%+ readings in the US Recession Probabilities index.
It’s no secret that the economy is still hurting. According to this report we are on the verge of another recession within the midst of a broader ‘depression.’ Contrarian analysts have already suggested this is the case, with many saying we’ve been in recession since at least summer.
Moreover, if you look at the real numbers behind the numbers, like the rate of real inflation, and bounce those against this purported economic growth you may be surprised to find that we never exited the recession!
Look at the chart below. You see that red line? That’s the government’s official GDP, a measure for economic growth. The government shows it in positive territory and its been heralded without question by the mainstream machine as the proof for an economic recovery.
Now look at the blue line. That’s the unofficial GDP as calculated by economist John Williams using algorithms that account for distortions in the way government calculates inflation.
A recession, as defined by most traditional measures of economics, is a period of two consecutive quarters with negative economic growth.
That’s right — this whole time during which millions were losing jobs and homes, and as food stamp usage doubled, we have been in recession. That’s over four years now.
But did we really need a report from the Federal Reserve to confirm that for us?
On another (related) note, stock markets are down over 300 points as of this writing. Apparently Europe is in shambles (again).
It seems this is how financial markets around the world are celebrating the re-election of a President who has presided over the largest cumulative debt increase in the nation’s history.
Now that the election is over, we can return to our regularly scheduled programming.
This article was written by Norse Prepper and originally published at SHTFplan.com
Do you remember “the good old days”? It’s a simple question, but a question that induces different images to different people. I have found myself spending a lot of time lately thinking of the way things used to be and hoping that someday our country can somehow get back to those days again. Looking at our current state of affairs in this nation and around the world, there is only one conclusion that can be made…the good old days are over.
I wrote this article because children being born today, in my opinion, will not be able to look back and remember the near future as “the good old days”. As I write this, the US national debt is at $16.2 trillion with unfunded liabilities of $123.3 trillion. With Uncle Ben’s QE3 promising to print fiat money perpetually can there be any doubt that the days of the US dollar being the world currency are numbered. Everyone reading this article has a share of $442,881 of the nation’s debt and liabilities. If your children or grandchildren can’t read yet, please tell them that they also owe $442,881 as well and thank them for supporting our wasteful spending that got us to this point. Source: http://usadebtclock.com/
But don’t worry, there are elections coming. Surely the American public can see the dire straits our nation is in and elect leaders who can recognize and deal with the nation’s problems and bring us back to becoming a nation of producers instead of consumers, right? Leaders will be elected who will make the extreme sacrifices necessary to bring forth a United States where the outstretched hands of the masses will be filled with charitable donations from a robust society instead of being empty, waiting for them to be stuffed with their entitlement from the government, all the while feeling as though they earned it because they stand unproductively on dirt within our border.
I have to apologize for the last paragraph; I have always wondered what it would feel like to write fiction. The hard cold reality is that there is no possible orderly way out of the financial mess our society is in and the above mentioned dirt was probably the last thing made in the USA. To break it down simply, here are some simple and easy to understand economical facts:
- You need to produce more than you consume or you are broke.
- You cannot pay off a credit card with a credit card without consequences.
- There is no possible way the nation’s debts and unfunded liabilities will ever be paid.
Currently, the Federal Reserve purchases the vast majority of the US Debt. There simply aren’t many buyers left who believe it to be a sound investment anymore. In 2011, congress waited until the last minute to raise the debt ceiling after much political wrangling back and forth. Was there ever any doubt by anyone that it would happen? Is there any doubt that it will happen again? What happens when it hits $50 trillion? As long as we have the ability to continue to print more money to fund our yearly deficit and make payments on the interest of existing debt, it will continue. As it continues, the US dollar will continue to be worth less and less. Commodities such as food, gas and all physical goods purchased will get more and more expensive, leaving less and less purchasing power for the American people.
You don’t have to be Nostradamus to predict that we are on the cusp of a major financial collapse. I’m not only talking about the United States, I’m talking about the world. The can has been kicked down the road almost as far as it can be kicked and we just passed a dead end sign. We will soon see massive inflation or hyperinflation, riots in the streets as we have seen around the world and as I have heard stated many times, people with nothing left to lose will lose it.
So what can we do? The answer can be summed up in one word. Prepare. Prepare as though it may happen tomorrow. Prepare as though your life and the lives of your loved ones depend on it, because it does and they do. Start exercising and working out to prepare your body for the tough times coming. Prepare yourself mentally so that when it hits the fan you don’t find yourself in the panicked state that 95% of the public will be in. Prepare to be warm when it is cold outside or cool when it is hot outside. Prepare a plan of what you and your family will do at different levels of collapse. Prepare to eat when grocery store shelves are bare. Prepare to drink when the tap fails to deliver water. Prepare for what to do when your neighbors or family or friends show up at your doorstep because they were too busy watching television. Prepare to defend what needs to be defended. Prepare prepare prepare.
Realize that at this point there is nothing you can do about the debt of this nation. There is nothing you can do to change what is coming in the Middle East. Regardless of the result of the upcoming election, neither candidate has dared utter the words broke or sacrifice. Your only job at this point is to get yourself and your loved ones you choose to help through what is coming, whatever it may be. This isn’t being selfish. This, my friends…is survival.
I truly believe that when the dust settles, we will emerge as a great and free nation. Life will be hard, but there will be more meaning to the tasks of the day. Communities will be stronger. People will be healthier. Families will be closer. To get from this point to that, there will be much misery, but the greater the struggle, the greater the victory. It is up to us in the prepping community to get our families and loved ones through the upcoming collapse. I pray that someday, my children and grandchildren will be able to look back and say “Those were the good old days.” because I chose to prepare.
Proverbs 22:3 A prudent man sees danger and takes refuge, but the simple keep going and suffer for it.
Take refuge my friends.
This article was written by Mac Slavo and originally published at SHTFplan.com
When millions lose their jobs and have no hope of finding gainful employment, what options do they have for keeping food on the table?
The obvious answer for those who have become dependent on government safety nets is nutritional food assistance, and to date, more than 48 million Americans have come to rely on the program to stay alive.
But what if your country reaches its breaking point? What if the price of essential food gets so high due to inflation or supply issues that not even food stamps provide enough help to maintain a healthy diet? What if the very safety net established by government begins to tear? Then what?
The majority will have no other option but to scrounge for food in the streets… or starve. We’re already seeing this across America and Europe as tens of millions of people struggle to adjust to a dead or dying consumptive paradigm. These people have not yet realized what has happened and they hold on to the hope that their political leaders will somehow change the inevitability of a disastrous outcome brought on by a system that has been overloaded with debt, overspending, irresponsibility and moral hazard.
Those, however, who have come to the realization that the economy is not rebounding, that jobs have either been vaporized or permanently outsourced, that things are going to get much worse before they have any chance of getting better, have begun taking steps to ensure that they’ll not only have larder for their families, but a source of income, however paltry.
As easy money made it possible for mass urbanization (and suburbanization) during the widespread global build-outs of the last two decades, the collapse of the lending system and credit in general over the last few years has forced many individuals in Europe and the United States to look at other options. In a scenario such as that in which we find ourselves today, where jobs are scarce, prices are high, and socialization becomes economically impossible to maintain, enlightened individuals are doing exactly the opposite of what they’ve been taught to do. They’re no longer heading to cities for high paying tech or finance jobs. They’re headed back to their ancestral roots – back to the rural countryside to try their hand at a different lifestyle.
As has been the case for the last few years, we can turn to Greece for an understanding of what’s to come, as they are a country that has taken the worst of the collapse so far, but one that is certainly not alone in the troubles being wrought on its people.
As he digs and gathers, he tells me his story.
“I worked as a sales representative for many years,” he explains.
“So many hours in the office, so many hours in my car. Many hours lost from my life.”
But those hours, those years of work did not end with happy retirement and a pension.
Instead, while still in his mid-40s, Aristotelis Loukas was made redundant.
Like so many others in Greece nowadays, perhaps 25% of the population, he found himself jobless, unable to find new work, and with a family to support.
But what Mr Loukas did have was an idea.
“I always wondered how it would be to be a farmer,” he says.
“Whatever happens with the economic crisis, the sky will still be blue.”
“We have had applications triple in just the past year,” says Dr Panos Kanellis, the Farm School’s president.
Many of those showing up have good degrees, even MBAs, but still cannot find a job in the Greece of today.
“I was shocked,” Dr Kanellis says.
“They wanted to know how they can use a piece of land that their grandfather owned in a village.
“They were trying to find an alternative.”
Certainly, he is aware of the changes demanded of him.
He laughs as he tells me how he used to be an athlete, but then got old and unfit: “Now in my forties, I have to re-make my body.”
He looks down at his somewhat rotund figure, and laughs again, a little nervously.
But in that laugh, there is mirth and optimism, as well as apprehension.
“When I look back at my life in the office, I think ‘that’s the past, now I have better things to do,’” he says.
“At least I don’t have thoughts on my mind about banks, about debts. I am okay with my family, and yes, I am happy.”
Source: BBC News Europe
Very few of those living in the old paradigm of consumption, debt, and 40-hour work weeks will be able to maintain this lifestyle over the coming decade.
Nearly four years after the financial collapse of 2008 the majority of global economic indicators in America, Europe and China are suggesting that the situation has worsened, not moved into a recovery phase. What we’ve seen so far in terms of the vaporization of wealth, the destruction of jobs and the impoverishment of millions of once middle-class families is but the opening salvo in a world-wide depression that is sure to change the presumptions we have about global economic and geo-political stability.
This is only the beginning.
As such, we urge those who have yet to take steps to protect themselves, to prepare now for a massive paradigm shift that promises to be like nothing we’ve even seen in our lifetimes. It has been suggested that the next decade of human history will be plagued with riots, violence and bloodshed.
There is, of course, the chance that we’re totally off base and that world leaders and top banking financiers will figure a way out of this mess. But given what has transpired thus far, it would behoove us to look at the alternative as a real possibility.
That being said, we can take a hint from the Greeks to learn about trends that will be developing here in America. As the economy continues its tailspin we can assume that more people will lose their jobs (permanently), prices for essential goods in terms of real income value will continue to rise, already strained government social safety nets will unravel (and eventually collapse), and the people will be left to fend for themselves.
This means we need to start focusing on how to preserve our well being now. And that starts with ensuring you will have a roof over your head, food on the table, and skills that will allow you to maintain some level of income or units of exchange to acquire essential goods.
For those who have the means to do so, consider acquiring rural property at which you can build a shelter, micro farm and raise livestock. For those without such means, there are creative ways to produce your own food and create urban backyard sustainability.
At the very least, create a preparedness pantry that includes core food groups that can last a lifetime. In a scenario where you experience a job loss or extreme swings in food prices you’ll at least be able to fallback on your reserve supplies, or use them to supplement your diet if money and food supplies get tight.
One key takeaway from the experience of nouveau Greek farmers is that being skilled in land management, gardening, micro-farming, irrigation, raising livestock, and sustainability are fields of expertise that can be worth more than gold. Experts in these fields, or entrepreneurs that can manufacture tools and equipment, or operate (or rent) farm machinery (or beasts of burden), will find that they can build successful businesses from this rapidly developing trend.
Now is the time to prepare for the exodus from urbanized metropolitan areas and a return to the rural lifestyle of Green Acres.