10 Numbers That Prove That We Are Rapidly Becoming A Nation Of Government Dependents
ZeroHedge.com Fri, 10/26/2018 - 17:45
Authored by Michael Snyder via The Economic Collapse blog,
As the middle class disintegrates and poverty grows, more Americans than ever are becoming dependent on the government just to survive.
Today, we live in a country where most workers do not earn enough to support a middle class family, and we are seeing the homelessness crisis spiral out of control in major cities on both coasts. During this election cycle, many conservatives have been freaking out that an increasing number of Democrats are openly embracing socialism, but the truth is that we are already most of the way to becoming a socialist country. In fact, as you will see below, more than half of all Americans currently receive more money from the government than they pay in taxes. We have become absolutely addicted to government money, and this is one of the major trends that is eating away at our nation like cancer.
The government is not supposed to take care of us from the cradle to the grave.
Rather, our founders understood that the proper role of government is to create and protect an environment of liberty and freedom where we would be empowered to take care of ourselves.
Today, most Americans cannot independently take care of themselves, and that makes them dependents. And when you are a dependent, you aren’t really free.
One of the reasons why I write so much about the decline of the middle class is because it is an existential threat to our way of life. If you look around the world, or if you go back through history, you will see that tyrannical regimes tend to thrive when populations are poor and cannot stand up for themselves. If we want our Republic to survive, we need a strong, independent population that is not economically dependent on the government. That is what we had throughout most of our history, and that is now what we are rapidly losing.
Just because you are working does not mean that you are independent. At this point, most jobs do not pay enough to support a middle class family, and the ranks of the “working poor” continue to explode. In reality, Americans are working harder than ever in 2018, and yet things continue to deteriorate.
The following are a few numbers that prove that we are rapidly becoming a nation of government dependents…
–Over half the country now receives more in government transfer payments than they pay in taxes.
-According to one recent survey, the cost of living is higher than the median income in 42 U.S. states.
-Today, 50 percent of all American workers make less than $30,533 a year.
–62 percent of Americans say that their financial situations have not improved since the last presidential election.
And here are six more from my friend Alan Yerushalmi…
History has shown that once national governments begin to expand in size, they usually keep expanding until they ultimately collapse.
Sadly, a large portion of the population has become convinced that the government should be in the business of handing out as much “free stuff” as possible. Housing, healthcare and college education are now being called “human rights”, and tens of millions of our fellow citizens feel that they are entitled to be given these things by the government. Needless to say, this has chilling implications for the future of our country, and I really like how Ryan McMaken made this point in his most recent article…
The political implications of this are considerable. As Ludwig von Mises once noted, once we get to the point that a majority of the voting population receives more in benefits than it pays in taxes, then voters will demand more and more wealth be transferred to them through government programs. It will then become politically necessary to extract larger and larger amounts of wealth from a minority in order to subsidize the majority.
Market economics will become less and less popular because the voters will have realized they can — in the words of James Bovard — “vote for a living” instead of work for a living.
Every additional dollar that the federal government spends is an additional dollar that is being stolen from our children and our grandchildren, and we are already more than 21 trillion dollars in debt.
We have been on the greatest debt binge in human history, and that debt binge delayed our day of reckoning, but it did not cancel it.
In fact, one of my contacts just emailed me with some deeply troubling information. He has a customer that is a Bank of America board member, and that board member told him that they expect things to really start falling apart by late March “at the latest”. This is word for word what my contact told me…
“I had a customer this past Saturday who was a very high ranking Bank of America board member, and she said in the meetings, they expect late March, at the latest, that things will really start to disintegrate fairly quickly or very quickly. That was AT THE LATEST she said.”
When I say that “dark days are ahead”, I am not using hyperbole. We really have reached a turning point, and things will never be the same again.The relentless march of time is inexorable, and eventually the clock runs out for everyone. America has been living on borrowed time for quite a while, and a perfect storm is looming on the horizon.
Is The Market Predicting A Recession?
ZeroHedge.com Thu, 10/25/2018 - 13:21
Authored by Lance Roberts via RealInvestmentAdvice.com,
There has been lot’s of analysis lately on what message the recent gyrations in the market are sending.
Is this just a correction in an ongoing, and seemingly never-ending, bull market?
Maybe. Anything is possible.
Or, is the financial market starting to pick up on what we have been warning about for the last several months which is simply higher rates, slowing global growth, and trade wars are going to impact the economy?
The consensus is that with the current spat of strong economic growth, unemployment and jobless claims at record lows, and confidence near record highs, there is simply no way the economy is even close to starting a recession. Furthermore, with economic growth slated to come in at 3.4% for the 3rd-quarter, this is further evidence a recession is “nowhere in sight.”
“Finally, it’s here. The bad news the financial media has been searching for, doggedly, for the last six months. As stocks plunge across the planet, fears of a recession are resurfacing.
We can say this with some confidence: The stock market panic is overblown. And a US recession is not imminent.” – Gwynn Guilford, Quartz
And what is the basis for Gwynn’s vote of confidence?
“American growth is indeed strong. Last quarter, the US economy expanded a whopping 4.2%, in real annualized terms. Unemployment is at 48-year lows. Inflation is in check. Consumer confidence is strong. Wages are rising (if only grudgingly). Investment could be better, for sure. But the fact of the matter is, overall, things are looking pretty good right now.”
See, nothing to worry about? Obviously, the recent spasms of the market this year are really nothing more than just one of the normal market corrections which happen every now and then. The chart shows the S&P 500 going back to 1960 with some “interesting green dots.” (Cheap trick to get you to keep reading.)
Before we get to those “interesting green dots,” we need to make a point about Gwynn’s assessment of the current economic outlook.
While Gwynn is absolutely correct about the current state of economic growth, the view is also wrong.
The problem with making an assessment about the state of the economy today, based on current data points, is that these numbers are “best guesses” about the economy currently. However, economic data is subject to substantive negative revisions in the future as actual data is collected and adjusted over the next 12-months and 3-years. Consider for a minute that in January 2008 Chairman Bernanke stated:
“The Federal Reserve is not currently forecasting a recession.”
In hindsight, the NBER called an official recession that began in December of 2007.
But Gwynn goes on to state:
“And when the next recession does hit, chances are good that economic conditions will already feel quite different from the present moment.”
If Ben Bernanke did even know that we were in a recession will we?
Well, that isn’t necessarily correct. For example, let’s take a look at the data below of real (inflation-adjusted)economic growth rates:
“The recent decline from the peak in the market, is just that, a simple correction. With the economy growing at 3.07% on an inflation-adjusted basis, there is no recession in sight.”
You will note in the table above that in 6 of the last 9 recessions, real GDP growth was running at 2% or above.
At those points in history, there was NO indication of a recession “anywhere in sight.”
But the next month one began.
Let’s go back to those “interesting green dots” in the S&P 500 chart above.
Each of those dots are the peak of the market PRIOR to the onset of a recession. In 8 of 9 instances the S&P 500 peaked and turned lower prior to the recognition of a recession.
In other words, the decline from the peak was “just a correction” as economic growth was still strong.
In reality, however, the market was signaling a coming recession in the months ahead. The economic data just didn’t reflect it as of yet. (The only exception was 1980 where they coincided in the same month.) The chart below shows the date of the market peak and real GDP versus the start of the recession and GDP growth at that time.
The problem is in the waiting for the data to catch up.
Let’s take the chart of the S&P 500 index above, and add official recessions as dated by the National Bureau of Economic Research (NBER) and the dates at which those proclamations were made.
Prior to 1980, the NBER did not officially date recession starting and ending points.
The table below breaks down the data. For example:
You will also remember that during the entirety of 2007, the majority of the media, analyst, and economic community were proclaiming continued economic growth into the foreseeable future as there was “no sign of recession.”
At that time the trend of the data was obvious and the market was already suggesting that “something had broken.”Of course, it wasn’t until a full year later, after the annual data revisions had been released by the Bureau of Economic Analysis, that the recession officially revealed. Unfortunately, by then, it was far too late to matter.
Today, we are once again seeing many of the same early warnings. If you have been paying attention to the trend of the economic data, the stock market, and the yield curve, the warnings are becoming more pronounced. In 2007, the market warned of a recession 14-months in advance of the recognition.
So, therein lies THE question:
Is the market currently signaling a “recession warning?”
Everybody wants a specific answer. “Yes” or “No.”
Unfortunately, making absolute predictions can be extremely costly when it comes to portfolio management.
Note: In the table above, the time span between the market signal and the recession onset has been greatly compressed since 1973 when the NBER started dating recessions. This is due to the fact that when the NBER looks back they are seeing data after “revisions” by the BEA. Therefore, the data aligns more closely with what the market was signaling PRIOR TO the economic revisions.
There are three lessons to be learned from this analysis:
“Economic cycles are only sustainable for as long as excesses are being built. The natural law of reversions, while they can be suspended by artificial interventions, cannot be repealed.”
While there may currently be “no sign of recession,” there are plenty of signs of “economic stress” such as:
The best advice I have is the same as a recent quote from John Stepek:
“Be defensive when everyone else is being aggressive.
Why? So that when the time comes when there are lots of opportunities but hardly any money around (and it will come, because markets are cyclical and winter eventually arrives again), you’ll be in a position to take advantage.
And keep an eye on corporate debt. That’s where we’ll see the strains first.”
While the call of a “recession” may seem far-fetched based on today’s economic data points, no one was calling for a recession in early 2000, or 2007, either. By the time the data is adjusted, and the eventual recession is revealed, it won’t matter as the damage will have already been done.
The market may already be trying to tell you something.
Trump Is Right: The Federal Reserve Is Crazy And Here Are 101 Reasons Why It Should Be Shut Down
October 11, 2018 by Michael Snyder
The following is a list of 101 reasons why the Federal Reserve should be shut down that is an updated version of an earlier list from one of my previous articles…
#1 We like to think that we have a government “of the people, by the people, for the people”, but the truth is that an unelected, unaccountable group of central planners has far more power over our economy than anyone else in our society does.
#2 The Federal Reserve is actually “independent” of the government. In fact, the Federal Reserve has argued vehemently in federal court that it is “not an agency” of the federal government and therefore not subject to the Freedom of Information Act.
#3 The Federal Reserve openly admits that the 12 regional Federal Reserve banks are organized “much like private corporations“.
#4 The regional Federal Reserve banks issue shares of stock to the “member banks” that own them.
#5 100% of the shareholders of the Federal Reserve are private banks. The U.S. government owns zero shares.
#6 The Federal Reserve is not an agency of the federal government, but it has been given power to regulate our banks and financial institutions. This should not be happening.
#7 According to Article I, Section 8 of the U.S. Constitution, the U.S. Congress is the one that is supposed to have the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”. So why is the Federal Reserve doing it?
#8 If you look at a “U.S. dollar”, it actually says “Federal Reserve note” at the top. In the financial world, a “note” is an instrument of debt.
#9 In 1963, President John F. Kennedy issued Executive Order 11110 which authorized the U.S. Treasury to issue “United States notes” which were created by the U.S. government directly and not by the Federal Reserve. He was assassinated shortly thereafter.
#10 Many of the debt-free United States notes issued under President Kennedy are still in circulation today.
#11 The Federal Reserve determines what levels some of the most important interest rates in our system are going to be set at. In a free market system, the free market would determine those interest rates.
#12 The Federal Reserve has become so powerful that it is now known as “the fourth branch of government“.
#13 The greatest period of economic growth in U.S. history was when there was no central bank.
#14 The Federal Reserve was designed to be a perpetual debt machine. The bankers that designed it intended to trap the U.S. government in a perpetual debt spiral from which it could never possibly escape. Since the Federal Reserve was established 100 years ago, the U.S. national debt has gotten more than 5000 times larger.
#15 A permanent federal income tax was established the exact same year that the Federal Reserve was created. This was not a coincidence. In order to pay for all of the government debt that the Federal Reserve would create, a federal income tax was necessary. The whole idea was to transfer wealth from our pockets to the federal government and from the federal government to the bankers.
#16 The period prior to 1913 (when there was no income tax) was the greatest period of economic growth in U.S. history.
#17 Today, the U.S. tax code is about 13 miles long.
#18 From the time that the Federal Reserve was created until now, the U.S. dollar has lost 98 percent of its value.
#19 From the time that President Nixon took us off the gold standard until now, the U.S. dollar has lost 83 percent of its value.
#20 During the 100 years before the Federal Reserve was created, the U.S. economy rarely had any problems with inflation. But since the Federal Reserve was established, the U.S. economy has experienced constant and never ending inflation.
#21 In the century before the Federal Reserve was created, the average annual rate of inflation was about half a percent. In the century since the Federal Reserve was created, the average annual rate of inflation has been about 3.5 percent.
#22 The Federal Reserve has stripped the middle class of trillions of dollars of wealth through the hidden tax of inflation.
#23 The size of M1 has nearly doubled since 2008 thanks to the reckless money printing that the Federal Reserve has been doing.
#24 The Federal Reserve has been starting to behave like the Weimar Republic, and we all remember how that ended.
#25 The Federal Reserve has been consistently lying to us about the level of inflation in our economy. If the inflation rate was still calculated the same way that it was back when Jimmy Carter was president, the official rate of inflation would be somewhere about 10 percent today.
#26 Since the Federal Reserve was created, there have been 18 distinct recessions or depressions: 1918, 1920, 1923, 1926, 1929, 1937, 1945, 1949, 1953, 1958, 1960, 1969, 1973, 1980, 1981, 1990, 2001, 2008.
#27 Within 20 years of the creation of the Federal Reserve, the U.S. economy was plunged into the Great Depression.
#28 The Federal Reserve created the conditions that caused the stock market crash of 1929, and even Ben Bernanke admits that the response by the Fed to that crisis made the Great Depression even worse than it should have been.
#29 The “easy money” policies of former Fed Chairman Alan Greenspan set the stage for the great financial crisis of 2008.
#30 Without the Federal Reserve, the “subprime mortgage meltdown” would probably never have happened.
#31 If you can believe it, there have been 10 different economic recessions since 1950. The Federal Reserve created the “dotcom bubble”, the Federal Reserve created the “housing bubble” and now it has created “the everything bubble” which threatens to plunge us into the worst economic downturn in world history once it bursts.
#32 According to an official government report, the Federal Reserve made 16.1 trillion dollars in secret loans to the big banks during the last financial crisis. The following is a list of loan recipients that was taken directly from page 131 of the report…
Citigroup – $2.513 trillion
Morgan Stanley – $2.041 trillion
Merrill Lynch – $1.949 trillion
Bank of America – $1.344 trillion
Barclays PLC – $868 billion
Bear Sterns – $853 billion
Goldman Sachs – $814 billion
Royal Bank of Scotland – $541 billion
JP Morgan Chase – $391 billion
Deutsche Bank – $354 billion
UBS – $287 billion
Credit Suisse – $262 billion
Lehman Brothers – $183 billion
Bank of Scotland – $181 billion
BNP Paribas – $175 billion
Wells Fargo – $159 billion
Dexia – $159 billion
Wachovia – $142 billion
Dresdner Bank – $135 billion
Societe Generale – $124 billion
“All Other Borrowers” – $2.639 trillion
#33 The Federal Reserve also paid those big banks $659.4 million in “fees” to help “administer” those secret loans.
#34 During the last financial crisis, big European banks were allowed to borrow an “unlimited” amount of money from the Federal Reserve at ultra-low interest rates.
#35 The “easy money” policies of Federal Reserve Chairs Ben Bernanke and Janet Yellen have created the largest financial bubble this nation has ever seen, and this has set the stage for the great financial crisis that we are rapidly approaching.
#36 Since late 2008, the size of the Federal Reserve balance sheet has grown from less than a trillion dollars to more than 4 trillion dollars. This is complete and utter insanity.
#37 During the quantitative easing era, the value of the financial securities that the Fed accumulated was greater than the total amount of publicly held debt that the U.S. government accumulated from the presidency of George Washington through the end of the presidency of Bill Clinton.
#38 Overall, the Federal Reserve now holds more than 32 percent of all 10 year equivalents.
#39 Quantitative easing creates financial bubbles, and when quantitative easing ends those bubbles tend to deflate rapidly.
#40 Most of the new money created by quantitative easing has ended up in the hands of the very wealthy.
#41 According to a prominent Federal Reserve insider, quantitative easing has been one giant “subsidy” for Wall Street banks.
#42 As one CNBC article stated, we have seen absolutely rampant inflation in “stocks and bonds and art and Ferraris“.
#43 Donald Trump once made the following statement about quantitative easing: “People like me will benefit from this.”
#44 Most people have never heard about this, but a very interesting study conducted for the Bank of England shows that quantitative easing actually increases the gap between the wealthy and the poor.
#45 The gap between the top one percent and the rest of the country is now the greatest that it has been since the 1920s.
#46 The mainstream media has sold quantitative easing to the American public as an “economic stimulus program”, but the truth is that the percentage of working age Americans that have a job is actually much lower than it was just prior to the last recession.
#47 The Federal Reserve is supposed to be able to guide the nation toward “full employment”, but the reality of the matter is that nearly 102 million working age Americans do not have a job right now. That number has risen by about 27 million since the year 2000.
#48 For years, the projections of economic growth by the Federal Reserve have consistently overstated the strength of the U.S. economy. But every single time, the mainstream media continues to report that these numbers are “reliable” even though all they actually represent is wishful thinking.
#49 The Federal Reserve system fuels the growth of government, and the growth of government fuels the growth of the Federal Reserve system. Since 1970, federal spending has grown nearly 12 times as rapidly as median household income has.
#50 The Federal Reserve is supposed to look out for the health of all U.S. banks, but the truth is that they only seem to be concerned about the big ones. In 1985, there were more than 18,000 banks in the United States. Today, there are only 6,891 left.
#51 The six largest banks in the United States (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) have collectively gotten 37 percent larger over the past five years.
#52 The U.S. banking system has 14.4 trillion dollars in total assets. The six largest banks now account for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.
#53 The five largest banks now account for 42 percent of all loans in the United States.
#54 We were told that the purpose of quantitative easing was to help “stimulate the economy”, but today the Federal Reserve is actually paying the big banks not to lend out 1.8 trillion dollars in “excess reserves” that they have parked at the Fed.
#55 The Federal Reserve has allowed an absolutely gigantic derivatives bubble to inflate which could destroy our financial system at any moment. Right now, four of the “too big to fail” banks each have total exposure to derivatives that is well in excess of 40 trillion dollars.
#56 The total exposure that Goldman Sachs has to derivatives contracts is more than 381 times greater than their total assets.
#57 Federal Reserve Chairman Ben Bernanke has a track record of failure that would make the Chicago Cubs look good.
#58 The secret November 1910 gathering at Jekyll Island, Georgia during which the plan for the Federal Reserve was hatched was attended by U.S. Senator Nelson W. Aldrich, Assistant Secretary of the Treasury Department A.P. Andrews and a whole host of representatives from the upper crust of the Wall Street banking establishment.
#59 The Federal Reserve was created by the big Wall Street banks and for the benefit of the big Wall Street banks.
#60 In 1913, Congress was promised that if the Federal Reserve Act was passed that it would eliminate the business cycle.
#61 There has never been a true comprehensive audit of the Federal Reserve since it was created back in 1913.
#62 The Federal Reserve system has been described as “the biggest Ponzi scheme in the history of the world“.
#63 The following comes directly from the Fed’s official mission statement: “To provide the nation with a safer, more flexible, and more stable monetary and financial system.” Without a doubt, the Federal Reserve has failed in those tasks dramatically.
#64 The Fed decides what the target rate of inflation should be, what the target rate of unemployment should be and what the size of the money supply is going to be. This is quite similar to the “central planning” that goes on in communist nations, but very few people in our government seem upset by this.
#65 A couple of years ago, Federal Reserve officials walked into one bank in Oklahoma and demanded that they take down all the Bible verses and all the Christmas buttons that the bank had been displaying.
#66 The Federal Reserve has taken some other very frightening steps in recent years. For example, back in 2011 the Federal Reserve announced plans to identify “key bloggers” and to monitor “billions of conversations” about the Fed on Facebook, Twitter, forums and blogs. Someone at the Fed will almost certainly end up reading this article.
#67 Thanks to this endless debt spiral that we are trapped in, a massive amount of money is transferred out of our pockets and into the pockets of the ultra-wealthy each year. This year, the federal government will spend more than half a trillion dollars just on interest on the national debt.
#68 In January 2000, the average rate of interest on the government’s marketable debt was 6.620 percent. If we got back to that level today, we would be paying more than a trillion dollars a year just in interest on the national debt and it would collapse our entire financial system.
#69 The American people are being killed by compound interest but most of them don’t even understand what it is. Albert Einstein once made the following statement about compound interest…
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
#70 Most Americans have absolutely no idea where money comes from. The truth is that the Federal Reserve just creates it out of thin air. The following is how I have previously described how money is normally created by the Fed in our system…
When the U.S. government decides that it wants to spend another billion dollars that it does not have, it does not print up a billion dollars.
Rather, the U.S. government creates a bunch of U.S. Treasury bonds (debt) and takes them over to the Federal Reserve.
The Federal Reserve creates a billion dollars out of thin air and exchanges them for the U.S. Treasury bonds.
#71 What does the Federal Reserve do with those U.S. Treasury bonds? They end up getting auctioned off to the highest bidder. But this entire process actually creates more debt than it does money…
The U.S. Treasury bonds that the Federal Reserve receives in exchange for the money it has created out of nothing are auctioned off through the Federal Reserve system.
There is a problem.
Because the U.S. government must pay interest on the Treasury bonds, the amount of debt that has been created by this transaction is greater than the amount of money that has been created.
So where will the U.S. government get the money to pay that debt?
Well, the theory is that we can get money to circulate through the economy really, really fast and tax it at a high enough rate that the government will be able to collect enough taxes to pay the debt.
But that never actually happens, does it?
And the creators of the Federal Reserve understood this as well. They understood that the U.S. government would not have enough money to both run the government and service the national debt. They knew that the U.S. government would have to keep borrowing even more money in an attempt to keep up with the game.
#72 Of course the U.S. government could actually create money and spend it directly into the economy without the Federal Reserve being involved at all. But then we wouldn’t be 21 trillion dollars in debt and that wouldn’t serve the interests of the bankers at all.
#73 The following is what Thomas Edison once had to say about our absolutely insane debt-based financial system…
That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt.
Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 — that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost.
But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good.
#74 The United States now has the largest national debt in the history of the world, and we are stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day in a desperate attempt to keep the debt spiral going.
#75 Thomas Jefferson once stated that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing…
I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.
#76 At this moment, the U.S. national debt is sitting at $21,594,438,319,301.65. If we had followed the advice of Thomas Jefferson, it would be sitting at zero.
#77 When the Federal Reserve was first established, the U.S. national debt was sitting at about 2.9 billion dollars. On average, we have been adding more than that to the national debt every single day since Barack Obama first entered the White House.
#78 We accumulated nearly as much new debt during the 8 years of the Obama administration than we did under all of the other presidents in all of U.S. history combined.
#79 If all of the new debt that has been accumulated since the Republicans took control of Congress had been given directly to the American people instead, every household in America would have been able to buy a new truck.
#80 Between 2008 and 2012, U.S. government debt grew by 60.7 percent, but U.S. GDP only grew by a total of about 8.5 percent during that entire time period.
#81 Since 2007, the U.S. debt to GDP ratio has increased from 66.6 percent to 105.4 percent.
#82 According to the U.S. Treasury, foreigners hold approximately 5.6 trillion dollars of our debt.
#83 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.
#84 As I have written about previously, if the U.S. national debt was reduced to a stack of one dollar bills it would circle the earth at the equator 45 times.
#85 If Bill Gates gave every single penny of his entire fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
#86 Sometimes we forget just how much money a trillion dollars is. If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.
#87 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
#88 In addition to all of our debt, the U.S. government has also accumulated more than 200 trillion dollars in unfunded liabilities. So where in the world will all of that money come from?
#89 The greatest damage that quantitative easing has been causing to our economy is the fact that it is destroying worldwide faith in the U.S. dollar and in U.S. debt. If the rest of the world stops using our dollars and stops buying our debt, we are going to be in a massive amount of trouble.
#90 Over the past several years, the Federal Reserve has been monetizing a staggering amount of U.S. government debt even though the Fed previously promised that this would never happen.
#91 China recently announced that they are going to quit stockpiling more U.S. dollars. If the Federal Reserve was not recklessly printing money, this would probably not have happened.
#92 Most Americans have no idea that one of our most famous presidents was absolutely obsessed with getting rid of central banking in the United States.
The following is a February 1834 quote by President Andrew Jackson about the evils of central banking…
I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. You tell me that if I take the deposits from the Bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out and, by the Eternal, (bringing his fist down on the table) I will rout you out.
#93 There are plenty of possible alternative financial systems, but at this point all 187 nations that belong to the IMF have a central bank. Are we supposed to believe that this is just some sort of a bizarre coincidence?
#94 The capstone of the global central banking system is an organization known as the Bank for International Settlements. The following is how I described this organization in a previous article…
An immensely powerful international organization that most people have never even heard of secretly controls the money supply of the entire globe. It is called the Bank for International Settlements, and it is the central bank of central banks. It is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City. It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws. Even Wikipedia admits that “it is not accountable to any single national government.” The Bank for International Settlements was used to launder money for the Nazis during World War II, but these days the main purpose of the BIS is to guide and direct the centrally-planned global financial system. Today, 58 global central banks belong to the BIS, and it has far more power over how the U.S. economy (or any other economy for that matter) will perform over the course of the next year than any politician does. Every two months, the central bankers of the world gather in Basel for another “Global Economy Meeting”. During those meetings, decisions are made which affect every man, woman and child on the planet, and yet none of us have any say in what goes on. The Bank for International Settlements is an organization that was founded by the global elite and it operates for the benefit of the global elite, and it is intended to be one of the key cornerstones of the emerging one world economic system.
#95 The borrower is the servant of the lender, and the Federal Reserve has turned all of us into debt slaves.
#96 Debt is a form of social control, and the global elite use all of this debt to dominate all the rest of us. 40 years ago, the total amount of debt in our system (all government debt, all business debt, all consumer debt, etc.) was sitting at about 3 trillion dollars. Today, the grand total is approaching 60 trillion dollars.
#97 Unless something dramatic is done, our children and our grandchildren will be debt slaves for their entire lives as they service our debts and pay for our mistakes.
#98 Now that you know this information, you are responsible for doing something about it.
#99 Congress has the power to shut down the Federal Reserve any time that it would like. But right now most of our politicians fully endorse the current system, and nothing is ever going to happen until the American people start demanding change.
#100 The design of the Federal Reserve system was flawed from the very beginning. If something is not done very rapidly, it is inevitable that our entire financial system is going to suffer an absolutely nightmarish collapse.
#101 Shutting down the Federal Reserve would make Donald Trump a national hero, and potentially one of the greatest presidents in United States history.
The Great Depression II
ZeroHedge.com Tue, 10/16/2018 - 23:00
Authored by Jeff Thomas via InternationalMan.com,
Whenever a movie has been a huge hit, the film industry tries to follow it up by doing a sequel. The sequel is almost invariably far more costly, as there’s the anticipation by those who create it that it will be an even bigger blockbuster than the original.
The Great Depression of the 1930’s is seen by most people to be the be-all and end-all of economic catastrophes and there’s good reason for that. Although the economic cycle has always existed, the period leading up to October 1929 was unusual, as those in the financial sector had become unusually creative.
Brokers encouraged people to buy into the stock market as heavily as they could afford to. When that business began to level off, they encouraged people to buy on margin. The idea was that the buyer would only put up a fraction of the money for the purchase and the broker would “guarantee” full payment to the seller. As a condition to the agreement, the buyer would have to relinquish to the broker the right to sell his stock at any point that he wished, should he feel the need to do so to get himself off the hook in the event of a significant economic change.
Both the buyer and the broker were buying stocks with money that neither one had. But the broker entered into the gamble so that he could charge commissions, which he would be paid immediately. The buyer entered into the gamble, as he had been promised by the broker that stocks were “going to the moon” and that he’d become rich.
Banks got into the game, as well. At one time, banks took money on deposit, then lent that money out at interest. They would always retain a percentage of the deposited money within the bank to assure that they could meet whatever the normal demand for withdrawals might be. But, eventually, bankers figured out that, if they were prepared to gamble, they could lend out far more money – many times the amount that they had received on deposit. As long as very few loans turned bad, they would eventually get the money back, with interest.
And so, in the 1920’s, they loaned money to people so that they could buy into the stock market more heavily. From that point forward, an investor who was tapped out and couldn’t afford to buy more stock, then bought on margin. When he was no longer able to even afford to buy on margin, he borrowed money from the bank to buy on margin.
That meant that only a tiny percentage of the “money” that passed hands actually existed. The great majority of investment funds only existed on paper.
Of course, the very existence of this absurd anomaly depended upon a market that was thriving and moving steadily upward. If for any reason, there were a sudden loss of confidence in the banks, large numbers of depositors would demand to withdraw their deposits and there would be bank failures, as the banks had been playing with money that did not exist.
Likewise, if that loss of confidence were to take place with regard to the stock market, large numbers of stockholders would try to sell at the same time and the market would collapse, as the brokers had been playing with money that did not exist.
In the 1920’s, fortunes were being made by those who ran banks and brokerage houses – at a rate that greatly exceeded anything that had ever existed.
Unfortunately, they’d created the greatest financial bubble in history and, when it popped, as all bubbles do, it popped in a very big way.
Thousands of banks were wiped out. Thousands of brokerage houses were wiped out. And millions of investors were wiped out.
Not surprising that laws were then passed to assure that such a disaster could never occur again. Of particular importance was the Glass Steagall Act.
Then, in 1999, Glass Steagall was repealed. This was done under the advice of Fed chairman Alan Greenspan, and was accepted readily by then-president Bill Clinton, as he was assured that the repeal would mean a dramatic increase in investment, which would assure a shining legacy for him as he left office.
My own first reaction to the repeal was that, over the ensuing years, we’d see irrational investment in the real estate market, made possible through bank loans. This would lead to a crash in real estate, followed by a crash in the stock market. I believed that this debacle would be papered over by governments, eventually leading to a further crash, and that the latter crash would be of epic proportions.
But, why should this be? Why should the second crash be so much greater?
Well, the magnitude of a crash tends to be equal to the magnitude of the economic abnormality that preceded it. The crash of 1929 was greater than previous crashes, because bankers and brokers had found new ways to inflate the bubble beyond anything that had existed before.
Likewise, they’ve become even more creative this time around and have inflated the bubble far beyond what existed in 1929. The level of debt far exceeds anything the world has ever seen.
The 2008 crash was, in effect, a mini-crash. No correction ever took place. Instead, it was papered over by massive increased debt, assuring that, when the inevitable big crash did occur, the severity would be far beyond any other crash in history.
The sequel to the 1929 crash will be much like movie sequels. With movies, the producers invest more money into the sequel than they spent on the original movie, in the belief that, if they just throw enough money at it, it will somehow be better and make them even more money than the original.
Likewise in economic events, the assumption is that, if a great deal of money had been made in the buildup to the last major collapse, surely, by creating even more debt this time around, the profit to be made will be far greater than before.
And this has proven to be true. Financial institutions have entered into an era of profit that has historically been without equal. The original was a monster and the sequel will prove to be an even bigger monster.
Of course, there’s a difference between movies and economic events. With movies, the producers cash in when the moviegoers pay their admissions fee. With economic crises, the producers make their fortunes in the lead-up to the crash. The crash itself simply passes the bill for the disaster to the moviegoers.
The question that’s always asked prior to any crash is, “When will it happen?” Unfortunately, although crises can be analyzed and predicted beforehand, the date is more uncertain. The decisive factor is the loss of confidence by the general public. When they collectively get weak knees about the economic future – when they withdraw their deposits from banks and sell their shares in the market, the bubble will suddenly pop.
And so, the actual screening of this particular epic could be a year from now, or it could be next week. So, it might be premature to buy your box of popcorn now, but, when crashes come, they come suddenly and without warning.
Since it’s not possible to predict an exact date, those who don’t wish to be casualties of the collapse may wish to prepare for it – to get free of debt, to liquidate assets that will be devalued in a crisis, to turn the proceeds into real money (precious metals) and to relocate to a place that’s likely to be less impacted by the monetary and social crisis that will ensue.
Nomi Prins: 4 Pillars Of Debt In Danger Of Collapse
ZeroHedge.com Fri, 10/12/2018 - 19:05
Authored by Nomi Prins via The Daily Reckoning,
Last month I was in a series of high-level meetings with members of Congress and the Senate in Washington.
While there’s been major news about the Supreme Court, my discussions were on something that both sides of the aisle are coming to consensus over. You see, issues that impact your own bottom line are way more about economics than they are about politics. On Capitol Hill, leaders know that. They also know that voters react to what impacts their money. That’s why, behind the scenes, I’ve been discussing issues focused on protecting the economy.
Behind closed doors, we’ve been working on how to shield the economy from Too Big to Fail banks and how the U.S. can better fund infrastructure projects. These are initiatives that all politicians should care about.
Underneath the surface of the economy is a financial system that is heavily influenced by the Federal Reserve. That’s why political figures and the media alike have all tried to understand what direction the system is headed.
Also last week I joined Fox Business at their headquarters to discuss the economy, the Fed and what they all mean for the markets. On camera, we discussed this week’s Federal Reserve meeting and the likely outcomes.
Off camera, we jumped into a similar discussion that those in DC have pressed me on. Charles Payne, the Fox host, asked me what I thought of new Fed chairman, Jerome Powell, in general. Payne knew that I view the entire central bank system as a massive artificial bank and market stimulant.
What I told him is that Powell actually has a good sense of balance in terms of what he does with rates, and the size of the Fed’s book. He understands the repercussion that moving rates too much, too quickly, or selling off the assets, could have on the global economy and the markets.
Savvy investors know that if the U.S. economy falters, because everything is connected, it could reverberate on the world.
That’s why I could forecast that the Fed would raise rates by 25 basis points last week ahead of time. And they did. However, there’s now even less reason to believe the Fed will raise rates at the next meeting in December.
Why is that?
First, Powell has made clear that he doesn’t see inflation heating up as a threat. Second, even though last quarter’s GDP growth figures were relatively high, the reality is that much of that growth came from trade war spending and preparation.
Another big chunk of the GDP growth the U.S. has experienced is based on debt. When considering the real problem of debt, the record consumer debt numbers in the U.S. paints a picture so that you can see how and why the Fed will likely have to reverse course. At a time when we find ourselves “celebrating” the 10-year anniversary of the collapse of my old firm, Lehman Brothers, and the government bailout of banks, the structure of big banks has really not changed. They remain Too Big to Fail.
The big banks got subsidies and were propped up by quantitative easing (QE) to resurrect themselves into appearing financially healthy. The same cannot be said of all consumers in the country.
It’s consumers that have now piled on debt - and at much higher interest rates than the banks and large corporations have been given. Indeed, to make ends meet, there have been four main pillars of consumer debt that have hit new records.
According to a recent New York Federal Reserve Bank report, total consumer debt is at higher levels now than going into the financial crisis. By breaking down what that debt is, you can best understand how to navigate the world of finance, understand your own portfolio better and make more sound investments.
Here they are:
Overall Household Debt.
The state of household debt, which literally takes into account the combined debt within a given household, continues to flash red. According to a 2017 household financial survey by the Fed, “About one-quarter of U.S. adults have no retirement savings. And 41% say they would not have enough savings to cover a $400 emergency expense.”
The overall level of consumer debt has hit a new record. It’s now $618 billion higher than it was at its prior peak at $12.68 trillion during the third quarter of 2008 – right before the onset of the financial crisis.
The total borrowing of Americans hit $13.29 during the second quarter of this year. That’s up $454 billion from a year earlier. The fact is that borrowing has risen for 16 consecutive quarters.
Credit Card Debt.
The total of U.S. credit card loans has increased by $45 billion this year to a massive $829 billion total.
Despite cheap rates for banks, the average credit card interest payment rate is 15.5%. It was at 12.5% only five years ago. And, yet people keep borrowing. The total revolving credit card debt now stands at a record of $1.04 trillion, higher than its last 2008 peak.
Borrowers have paid a painful $104 billion in credit card interest and fees in just the last year. That figure is up 11% from the prior year, and up 35% over the past five years. What you should know if you have a credit card is that if the Fed continues to raise rates, that any associated debt will become even more expensive.
Student Loan Debt.
During my meetings in Washington and with even media figures, student debt continues to be a central topic of concern. The fact is, student loans cannot be given bankruptcy status and therefore are much more complex when evaluating the U.S. economy.
Currently, the amount of student loans grew to $1.41 trillion in the second quarter of 2018. That figure has nearly tripled since the beginning of the financial crisis. Student loan debt is now the second highest consumer debt held.
That crippling amount of debt makes it harder for graduates to find jobs that will help them alleviate the costs of their education. It also means that those with student loans will have less money to deploy into the economy — which will impact economic growth overall.
While the rising cost of manufacturing autos has impacted the automotive sector, it has not deterred consumers from borrowing money.
Total auto debt in the U.S. has shot up to $1.24 trillion. That figure is up $48 billion from just a year ago.
The reason this sector is so important now is that a lot of loans being given are of the subprime variety. Subprime loans were the exact kind of high rate loans that caused the last financial crisis — only last time they were given to mortgage borrowers.
Auto loan delinquency rates are already higher now than they were during the financial crisis. The auto loan sector will continue to be one to watch for signs of financial faltering.
* * *
As we head into the holiday season, these four debt triggers matter even more.
Companies that consumers buy products from, especially bulky items, could see a very tepid holiday season in terms of sales.
Any business that faces additional costs will likely pass that on to the consumer. That could come in the form of transportation expenses (shipping) required to get products to your door. Companies that work on that business model could struggle. The additional costs and the implied logistics demand that the bigger the item, the higher the cost — which all adds onto the debt.
The expectation is that consumers will be more selective in their year-end purchases, both because of their debt and the need to economize their own personal finances. That’s why shares in retailers like L Brands, Floor & Decor Holdings and Michaels Companies have each declined more than 30% year to date.
Our economy rests upon four crumbling pillars of debt. If one of these collapses, the entire superstructure may not be far behind.
Fed Inspector Turned Whistleblower Reveals System Rigged For Goldman Sachs
ZeroHedge.com Fri, 10/12/2018 - 19:25
Five years after we first reported on the "Goldman whistleblower" at the NY Fed, Carmen Segarra, the former bank examiner is out with a new book based on more than 46 hours of secret recordings.
"Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street" is a 340-page exposé which vastly expands on the breadcrumbs Segarra has been dropping since word of her recordings first came to light, according to the New York Post.
Segarra was a former bank examiner who looked into Goldman Sachs for the Federal Reserve Bank of New York, and claims she got fired in 2012 after making too much noise about Goldman’s alleged conflicts.
The New York Fed has often been blasted for its lackadaisical approach to overseeing banks leading up to the 2008 financial crisis. Its last president, William Dudley, was named in 2009 after spending 21 years at Goldman. But Segarra’s book claims that the problem persisted for years after the crisis, with regulators happy to act on the banks’ behalf.
“We want [Goldman] to feel pain, but not too much,” her boss — who goes by the pseudonym Connor O’Sullivan in the book — told her, Segarra claims. -NY Post
The recordings were made over a seven month period while Segarra worked at the New York Fed. Neither Goldman nor the NY Fed have disputed the authenticity of the tapes.
Central to allegations of shady reglulation was a 2012 deal in which energy giant Kinder Morgan would acquire rival El Paso Corp. for $21.1 billion - a deal which Goldman advised both sides of, while "its lead banker advising El Paso, Steve Daniel, owned $340,000 in Kinder Morgan stock" according to the Post.
That didn't matter to newly minted CEO David Solomon, who took over for Lloyd Blankfein last week. "A conflict is a perception, OK, of something that could affect the advice you’re giving, the judgment, et cetera," said Solomon during a secretly recorded meeting with the New York Fed. "Our job … is to discuss those things and to work collectively with [clients] to decide whether or not those perceptions inhibit us."
Solomon made the comments after Delaware Judge Leo Strine referred to Goldman's double-dealing in the Kinder - El Paso deal "disturbing" and "tainted by disloyalty" when he reluctantly OK'd the deal (and despite a class-action lawsuit brought by El Paso shareholders, alleging that the deal was designed to benefit Goldman). The shareholders ultimately won a $110 million judgement, wiping out the $20 million it would have collected in fees.
Segarra describes the New York Fed as "conflict-ridden, with regulators trading on inside information from bankers they're supposed to keep in line," writes the Post.
When Segarra told one unnamed colleague that insider trading was illegal, he quipped, “Not if you don’t get caught,” according to the book.
Another boss, Michael Silva, pushed Segarra to gloss over the fact that Goldman didn’t have a written conflict-of-interest policy, she claims. Silva, who now works in private practice, declined to comment.
Goldman spokesman Jake Siewert denied impropriety, telling the Post that "For decades we have had a dedicated team that reviews potential transactions to assess both potential conflicts and client sensitivities given the broad reach of our client franchise," and that "the firm takes that responsibility seriously, and the head of that group sits on our most senior leadership team."
Segarra's new book isn't the only bad press Goldman has received recently - after the New York Times reported in September that Solomon urged James Katzman, a former Goldman banker, to drop 2014 complaints that other traders tried to milk him for inside information. Solomon chalked Katzman's concerns up to nothing more than "the way Wall Street worked."
Goldman calls the exchange a miscommunication.
Meanwhile, the New York Fed says of Segarra's claims: "We continue to categorically reject Ms. Segarra’s allegations from her brief seven-month tenure as a junior examiner almost seven years ago," according to spokeswoman Andrea Priest, who added that "the staff of the New York Fed work diligently and with the utmost integrity in the fulfillment of their responsibilities."
Then again, Goldman is paid a $50 million penalty to settle accusations that former banker Rohit Bansal took New York Fed analyst, Jason Gross, to Peter Luger Steak House in Brooklyn - while receiving secret examination documents in return. Both men received probation and paid fines.