What a US Debt Default Could Bring

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A US debt default could trigger a nightmare scenario that many economists have been warning about. Eventually this shit pile of debt will have to be dealt with but is this the moment ? One thing is for sure, this can easily be avoided but as usual politicians like to play Russian roulette.

The following are 12 very ominous warnings about what a U.S. debt default would mean for the global economy…

#1Gerald Epstein, a professor of economics at the University of Massachusetts Amherst: “If the US does default, that will make the Lehman Brothers bankruptcy look like a cakewalk”

#2Tim Bitsberger, a former Treasury official under President George W. Bush: “If we miss an interest payment, that would blow Lehman out of the water”

#3Peter Tchir, founder of New York-based TF Market Advisors: “Once the system starts to break down related to settlement and payments, then liquidity disappears, as we saw after Lehman”

#4Bill Isaac, chairman of Cincinnati-based Fifth Third Bancorp: “We can’t even imagine all the things that might happen, just like Henry Paulson couldn’t imagine all the bad things that might happen if he let Lehman go down”

#5Jim Grant, founder of Grant’s Interest Rate Observer: “Financial markets are all confidence-based. If that confidence is shaken, you have disaster.”

#6Richard Bove, VP of research at Rafferty Capital Markets: “If they seriously default on the debt, what we’re really talking about is a depression”

#7Chinese vice finance minister Zhu Guangyao: “The U.S. is clearly aware of China’s concerns about the financial stalemate [in Washington] and China’s request for the US to ensure the safety of Chinese investments.”

#8The U.S. Treasury Department: “A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse”

#9Goldman Sachs: “We estimate that the fiscal pull-back would amount to 9pc of GDP. If this were allowed to occur, it could lead to a rapid downturn in economic activity if not reversed quickly”

#10Simon Johnson, former chief economist for the IMF: “It would be insane to default, but it’s no longer a zero-percent probability”

#11Warren Buffett about the potential of a debt default: “It should be like nuclear bombs, basically too horrible to use”

#12Bloomberg: “Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.”

Source: theeconomiccollapseblog.com

Government Creating Phony Crisis So They Can Pretend To Save Us

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Peter Schiff gives his take on the the Government shutdown.

Colorado Turns To Hemp

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The benefits of the wonder plant hemp are massive and Colorado has recently passed an amendment to enable the cultivation of production of hemp within the state. Capable of growing 6 feet in two weeks, it could provide a big boost to the community. Anything that generates revenue and provides employment needs to be taken seriously. In this case a natural product which has a multitude of uses including generating oil, fibre used to fortify products, clothing and a food source. Even hemp oil has been claimed to have properties to cure cancer. The wonder plant indeed. 🙂

(NaturalNews) The recent passage of Amendment 64 in Colorado, which legalizes the cultivation and recreational use of marijuana throughout the state, is having a major impact on the state’s agricultural sector. But the biggest potential for economic growth may actually come from marijuana’s non-psychoactive cousin hemp, which is right now being planted on U.S. soil for the first time in 60 years, thanks to the initiative’s passage.

According to reports, a 60-acre plot of land in the southeastern corner of Colorado will be brimming with hemp plants. It will be the first time that hemp has been grown commercially on American soil in more than 60 years, and many more plots of land throughout the Rocky Mountain state are expected to follow suit, as the latest figures estimate that the hemp industry will outpace the marijuana industry by a factor of 10 or more.

“I believe this is really going to revitalize and strengthen farm communities,” says Ryan Loflin, the man who intends to plant America’s first hemp crop on his 60 acres of arable land, which formerly supported alfalfa.

Hemp is not marijuana, and there is no legitimate reason for its continued prohibition by the Feds

Many Americans are still unaware that there is even a difference between hemp and marijuana, both of which are prohibited by the federal government from being cultivated on U.S. soil. But unlike marijuana, hemp contains little-to-no THC (tetrahydrocannabinol), the psychoactive component of marijuana that gets people “high,” which means that hemp cannot be smoked, and thus cannot be not used as a drug.

To the contrary, hemp is an amazingly robust industrial plant, the various components of which can be used in a variety of commercial and nutritional applications. Hemp seed oil, for instance, and hemp protein are popular, omega-3 fatty acid-rich food products consumed by millions of health-conscious individuals. Hemp fiber is also sometimes used to reinforce concrete and to fortify automobile bodies and frames. And beyond this, hemp naturally cleanses soil and water, which makes it a powerful force for good in the environment.

“Hemp is food, animal feed, fiber, fuel, shelter,” says Lynda Parker, a Colorado-based hemp supporter and founding member of a pro-hemp coalition in the Rocky Mountain state, as quoted by The Denver Post. “It cleans the air, the water, the soil. Hemp could be enormous for Colorado because we’re the first state to legalize it.”

Nationwide legalization of hemp would generate incalculable economic prosperity for Americans

But as previously mentioned, hemp somehow got lumped into the same category as marijuana as far as the federal government is concerned, which means Americans have been deprived for over half a century of reaping its many practical and economic benefits. Virtually all of the hemp used today in American products has to be imported from places like Canada due to legal prohibitions that block its cultivation here at home.But all of this is changing in Colorado, where a reanimated hemp industry is quickly emerging from the dust bins of history, and reviving the economic climate of struggling rural Colorado. Similar to the current situation in many other states, many rural communities in Colorado have long suffered from a lack of healthy industry. But hemp could set the state on a whole new course toward economic prosperity that will most assuredly be the envy of the rest of the country.“This is monumental for our industry,” says Bruce Perlowin, CEO of company known as Hemp Inc. “It will unlock a clean industrial revolution that will be good for the economy, good for jobs and good for the environment.”To learn more about the many benefits of hemp, as well as America’s rich, but little-known, hemp history, be sure to visit:http://hemphistory.org/

Source: Natural News

David Stockman: The Economy Is A Giant Ponzi Scheme

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David Stockman (fmr Budget director for Ronald Regan) sums up the US economy as a giant Ponzi scheme.

Jim Rickards – Texas Wants Its Gold Back

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Jim Rickards interview on Bloomberg regarding bi-partisan support for bill in Texas to take its gold back from the NY Fed.

Some key points:

  • Prudent move in light of all the confiscation going on, most notably Cyprus.
  • When all else fails, you deflate against gold (gold never changes in value, it’s just currencies go up and down)
  • The US Government has a history of gold seizures, Texas doesn’t.
  • 13 states have pending legislation to make gold legal tender in the US.
  • With physical gold on deposit you can tell the Federal state get lost.
  • There is a global re-monetization of gold ongoing.

Jim Willie: The Collapse Is At Our Doorstep

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Jim Willie is not one for holding back and in his latest interview with Silverdoctors sums up where the global financial system currently stands. With each passing week the situation worsens. Willie see a global financial collapse now close at hand and the endgame will be triggered by a small-medium sized bank failure in Europe.

The European collapse will ignite a global Gold rush as the only remaining safe haven ultimately ending  USdollar as worlds reserve currency.

  The Doc began by asking the Golden Jackass what will most likely be the trigger event for a complete systemic collapse:

 I don’t think we’re going to see a default as a trigger event in gold or silver. I didn’t say we won’t see a gold and silver default, I said that it won’t be the trigger. There are just too many deep sources for gold that the central banks have access to. I refer to Basel Switzerland, the Roman catacombs, and the BOE, I think they’re pretty close to the bottom of their gold barrel, but they have big powerful friends in Rome and Basel Switzerland.

The trigger is not even going to come from within the US, because it’s just so controlled- the markets are being controlled from multiple different centers, in particular the Federal Reserve and the Treasury Dept, JPM, Goldman Sachs.

It’s just so corrupt to the core, and we’re seeing a blossoming of the fascist business model and the corruption that’s accepted.

Attention should be drawn to Europe. Look at some of the most recent events that are really quite staggering.

The Italian elections kicked out the GSax preppy Mario Monti. I’m surprised that he’s not being thrown off a palace balcony. It’s directly in response to hikes that Monti imposed on property tax to finance the bankers! The Italian people have a much more effective political system than the US!

Italy actually has elected a comedian! This is like electing John Belushi to form a coalition government! Mario Monti is on the way out. What does that mean?

The defense of their dead banks with liquidity lines and property tax hikes will end in the near future!

In Spain you have new high level financial corruption events that have paralyzed the nation at a time when they’ve already seen a string of big financial firm failures!

This at a time where they have 25% unemployment. I think that the likelihood of violence on the streets is greater in Spain than in any other country.

Spain’s bank insolvency and wretched unemployment is causing tremendous distress, and there will be a breaking point there.

Then in France you have Hollande, the leader of the socialist clowns has raised the highest tax brackets to 90%. The resulting capital flight to Scandinavia is astounding, leaving the nation extremely vulnerable.

Then you have the German economic slowdown which is really capturing some attention, which will remove ability and patience of bank rescues.

Then you have the London banks which are joined by French banks in broad deep exposure to Southern Europe. They’ve set themselves up to have their heads cut off.

Recall that the Draghi solutions like LTRO were recently insulted by debt downgrades, which was unprecedented.

Then you have the USFed, which is the only buyer of USTBonds, and the Euro Central Bank as the only buyer of PIIGS Govt Bonds.

Here is a note as to the stress in the system: the European banking system received $1.2 trillion in Dollar Swap funds from the NY Fed in January alone to prop up the ECB banking system.

European banks are collectively much larger than the US banks, but are in suspended animation while the US banks are being supported by narcotics money laundering.

A big European bust is coming. When the European bust events occur, the mad scramble for safety will be on, and they’re not going to be looking for Switzerland any longer because of their Euro peg. A massive rise in the European gold price is coming and it will be staggering, shocking and not reversible. It will ignite a global Gold rush, a massive short covering rally, and powerful 30% to 50% rise in the gold price will come in response to the European collapse.

Following that will come the arrival of the Gold Trade Finance platforms. Gold settlement for trade across the world- primarily though coming out of the East.

In other words, trade involving two parties not involving the US, one of them being an Eastern nation, and they will settle not in dollars anymore, they will settle in gold, and they will have some help from their friends in Turkey.

We’re going to see an end to the USDollar reserve status following these events, and the funeral will have a speech given by the Saudis to bring an end to the Petro-Dollar itself.

You have to look to Europe and not to the US, the US is a joke in regards to crisis, management, propaganda, the ESF, narcotics money laundering, sponsored fraud, it’s just unbelievable what’s going on in the US, it’s not going to be the trigger, the trigger will be Europe.

We have 15 to 20 potential sites to force the breakdown. It’s not just one or two. Every couple months there are a few more potential areas to cause the breakdown. That’s very, very dangerous, and new. We didn’t see that 3-5 years ago. Back in 07 it was really just sub-prime. We have about 12 different areas now which are just as dangerous as sub-prime, and both of them are in Europe.


With QE4 and the recent return of NINJA loans as the Fed attempts to re-inflate the housing bubble, The Doc asked Willie whether the Fed would be able to kick the can down the road one more time with one last bubble:

They have 15-20 fingers and toes, but there are just too many different areas that they need to plug.
This real estate bubble is a joke.  There’s no new bubble coming or even on the horizon.  What we’ve got is the US government has sponsored a whole new round of sub-prime mortgages.  Expect instead of the big banks underwriting them, it’s the Federal government.  We have not seen a rebound in demand for housing, even though the 30 year mortgage rate is under 4% and has been for quite a few months.

What’s not shown in the press is that there’s still 10 million homes that are sitting on the bank balance sheets.  They’re called REO’s, and they’re selling their REO’s or short sales, which ARE NOT INCLUDED IN THE CASE SHILLER INDEX! 

It’s a parallel of the discouraged workers no longer included in unemployment!  They’re bringing labor market calculations to the housing market.  They’re not going to revive the housing bubble for a simple reason- there’s not widespread finance available, it’s exclusively coming out of the FHA.  The other reason is that people have a great distrust for buying homes after they saw so many people foreclosed on.  Another reason is that the people don’t have brisk income.
The factors are not there, it’s kind of a lunatic claim to state that the housing market is going to be re-bubbalized.  Not even close, it’s stuck in a depression!



The Doc asked Jim whether we face a lost two decades like the Japanese, or what type of collapse we face in the US:


I said this back when Lehman Brothers fell in the autumn of 2008.  The US is on a path that cannot escape systemic failure and total dependence on the printing press to cover its debt and for a debt default of the US government debt, which will come in the form of a global conference to organize and co-ordinate the debt write down.  There will be US military outside the room to make sure everyone complies.

If the US goes ahead with sequester cuts, they’re talking about $4 trillion over 10 years.  I cannot emphasize how small that is.  But let’s go through some of the points why I believe the collapse is at our doorstep:

The collapse is happening now- it’s no longer ultra-slow motion like 2 years ago.   It’s a new event every few days or weeks.  The pace is quickening.   

The extreme nature of current events is alarming.  Just in the last few months:

The US Fed announces every month their extension of 0% forever (denigrating their own exit Strategy talk).

 $1.2 trillion was doled out by the USFed to European banks in January alone!

We have the Germans demanding repatriation of their official gold account (Allocated Accounts).

We have the Italians electing a comedian like John Belushi to halt the property tax hikes that bail out banks.  This is an insult to their entire political system which experienced that Mario Monti appointment without an election.

We have the London banks recently sponsoring a Chinese Yuan Swap Facility, cow-towing to Asia.  This is unprecedented!  New York will not do such a thing, but London did, which means that London and NY might be at odds!

We have an attack announced on Mali in North Africa to wrest gold & uranium timed when the  Germans asked for repayment of their gold reserves.  The quantities really fit.  There was a suspicious comment by the French and British saying it will be repaid in 7 years.  300 tons over 7 years is approximately what Mali produces in gold that will cover almost exactly the German repayment.  That was organized by France and the US. 

We have the shutdown of the gigantic Mongolian copper & gold mine by Rio Tinto which is an example of resource nationalism. 

We have raids larger and bolder of the GLD inventory that prevents a COMEX default and will produce a bigger price discount vs. the spot for GLD shares.  I think it will go down towards a 20% discount, which will cause alot of problems. 

We have the USFed preparing for QE5 (or rather QE187, as in QE to Infinity). 

We have events like the major central banks losing credibility while engaging in open currency war.  The franchise system of central banks is being questioned.  They’re in battle with each other. 

We have the US facing a fiscal cliff, which forces a quantum leap in job cuts (recession alert).

We have the Japanese ratcheting up the competitive currency devaluations (only USTBond buyer).

We have the Swiss managing their Euro-Franc peg, but suffering losses in Japanese & British bonds.

We have the Russians hosting a G-20 Meeting to coordinate the alternative to US$-based trade.

We have the emergence of Turkey and soon India as gold trade finance intermediaries.  They’re going to supply 1 of 2 parties engaged in trade with gold so they can make the settlement of the trade. 

We have the Iranian sanctions coming to a conclusion in US acquiescence.  The US is surrendering to the Iranians! 
All these events have occurred just since the new year began less than two months ago!  The pace of extreme events is quickening!

Extreme events have become the norm, putting tremendous additional stress on the system which the boys are trying to manage.  They don’t have enough people, enough resources, enough channels, and they don’t have enough brains to do it.

The managed system cannot succeed, it’s too complex.  They are attempting to work towards a system of total system management, and it’s just not going to work.

A series of climax events is coming very soon.  The changes will be rapid and breath-taking. 

Vast wealth has been moving East the past 3-4 years, and with it great power. 
Look for some seemingly minor bank failure to cause a ripple effect of deeper damage. 
It’s going to involve larger banks tied with commitments such as counter-party contracts or intermediary supply functions, and things are just going to start wrecking. 

I think vast wealth is going to be lost in the US and the West, except by gold and silver owners. 
Owning gold and silver will become harder to do because the rules are becoming stricter.
Those who have set themselves up in the last few years are going to be the big, big winners, and the ones who are bold enough and brave enough to do it now are going to be glad for their actions. 

I have a family member who refused my advice three years ago, and now that family member is facing the conversion of her very large privately managed IRA pension fund into these new special Treasury bonds.  That’s going to cause a real firestorm by the public, and they’re going to wish that they had converted their IRA’s into a gold account.

Source: SilverDoctors

So How Big Are American Banks?

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It would come as no surprise to anyone that the US’s largest banks use dodgy accounting practises to hide a multitude of sins. The following from Washington’s Blog explores the myth that American banks are much smaller that their european counterparts. Truth is, they are much better at hiding under the existing US accounting standards. Were international standards to apply, the banks may actually be twice the size they claim to be.

When Internationally-Accepted Accounting Methods Are Used, American Banks Are the World’s Largest

We have extensively documented that failing to break up the big banks is destroying America because:

In the face of such overwhelming criticism, apologists for America’s largest banks say that they are smaller than their European and Asian competitors … and that they have to be big to compete.

Current Vice Chair and director of the Federal Deposit Insurance Corporation – and former 20-year President of the Federal Reserve Bank of Kansas City – Thomas Hoenig destroyed that argument earlier this month.

Specifically, Bloomberg reports:

Warning: Banks in the U.S. are bigger than they appear.

That label, like a similar one on automobile side-view mirrors, might be required of the four largest U.S. lenders if Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp., has his way. Applying stricter accounting standards for derivatives and off-balance-sheet assets would make the banks twice as big as they say they are — or about the size of the U.S. economy — according to data compiled by Bloomberg.

“Derivatives, like loans, carry risk,” Hoenig said in an interview. “To recognize those bets on the balance sheet would give a better picture of the risk exposures that are there.”

U.S. accounting rules allow banks to record a smaller portion of their derivatives than European peers and keep most mortgage-linked bonds off their books.


Using international standards for derivatives and consolidating mortgage securitizations, JPMorgan Chase & Co. (JPM), Bank of America Corp. and Wells Fargo & Co. would double in assets, while Citigroup Inc. (C) would jump 60 percent, third- quarter data show. JPMorgan would swell to $4.5 trillion from $2.3 trillion, leapfrogging London-based HSBC Holdings Plc and Deutsche Bank AG, each with about $2.7 trillion.

World’s Largest

JPMorgan, Bank of America and Citigroup would become the world’s three largest banks and Wells Fargo the sixth-biggest. Their combined assets of $14.7 trillion would equal 93 percent of U.S. gross domestic product last year, the data show.


U.S. accounting rules for netting derivatives allow banks to erase about $4 trillion in assets, the data show. The lenders also can remove from their books most mortgages they package into securities, trimming an additional $3 trillion.

Off-balance-sheet assets and derivatives were at the root of the 2008 financial crisis. Mortgage securitizations kept off the books came back to haunt banks forced to repurchase home loans sold to special investment vehicles.


The U.S. Financial Accounting Standards Board and the International Accounting Standards Board pledged a decade ago to converge the two bookkeeping systems. After six years of meetings, they remain divided. Proposed rules for how much money banks need to set aside for loan losses may make European and U.S. lenders even less comparable.


“Having no uniform standard is challenging for issuers and users,” said John Hitchins, head of U.K. banking and capital markets at PricewaterhouseCoopers in London. “Analysts and investors can’t compare companies’ financials across borders. Banks have to prepare multiple versions of their financial statements in different countries where they have units.”


If the banks used international standards for derivatives and consolidated mortgage securitizations, the ratio for JPMorgan and Bank of America, the two largest U.S. lenders, would fall below 4 percent. It would be just above 4 percent for Citigroup and Wells Fargo.

That would make the biggest U.S. banks look no better capitalized, or worse, than European peers such as HSBC at 5.6 percent or France’s BNP Paribas SA at 3.9 percent at the end of last year. It also could require them to raise more capital. Spokesmen for all four banks declined to comment.


“The U.S. leverage ratio doesn’t capture off-balance-sheet risks,” said [former FDIC boss] Bair, now chairman of the Systemic Risk Council, a private regulatory watchdog. “Once U.S. banks start publishing the new Basel-mandated ratios, more off-balance-sheet assets will become obvious.”


Bair said she favors raising the simple capital ratio as high as 8 percent. Hoenig, the FDIC vice chairman, has called for 10 percent. U.S. regulators are still debating how to implement the rules. Because Basel isn’t an international treaty, each country needs to adopt its own version.


Progress on common standards slowed after Mary Schapiro became SEC chairman in 2009 and faced lobbying by companies opposed to what they said would be costly accounting changes, according to four people with knowledge of the discussions who asked not to be identified because the talks were private.


After failing to agree on common standards for derivatives netting and consolidation of securitizations, rule-setters are now heading in different directions as they debate how to account for loan-loss reserves.

Source: Washington’s Blog

This Time Its Different

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ZeroHedge posted the following chart looking at the relationship between ISM new orders and unemployment rates. Of course this time its different 😉


American Serfs

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After the property crash, Wall Street and big companies such as Blackstone Group are buying up foreclosed houses on the cheap and renting them back at a huge profit. Trends in the US show more and more people are moving towards rental rather than owning as the way forward into serfdom.

And as we mentioned on Friday, Americans continue to turn into “neo-serfs.”

“Wall Street is running a new profit game,” writes Shabnam Bashiri at Salon.com, “by buying foreclosed houses and renting them back to their former owners.”

Yes… nice business. Even better than it looks. It’s why the rich get richer… and the 1% are way ahead of the other 99%. Writes Bashiri:

Every day, it seems a new report comes out praising the ongoing housing recovery. In Georgia, home prices are up 5% over last year, a year in which we also had one of the highest foreclosure rates in the country. Seems a little odd, doesn’t it? Don’t foreclosures usually drive down the market?

That’s because the housing “recovery,” as they’re calling it, is fueled almost entirely by Wall Street private equity firms, hedge funds and the Fed’s unwavering support. After creating a massive bubble in home prices that eventually burst and caused our economy to go into a tailspin, these guys have decided to come back for more and figured out a way to profit off their destruction — by turning foreclosed homes into rentals and securitizing the rental income…

The Blackstone Group, the biggest player in the new REO [real estate owned] to rental market, has spent $2.5 billion in the last year purchasing 16,000 homes, a number that amounts to over $100 million per week.

Property records show that many of the homes Blackstone has acquired in Fulton County over the last few months were purchased on the courthouse steps at the monthly foreclosure auction, or through short sales — when a lender agrees to accept less than the amount owed on a loan. The vast majority of these homes are not empty, but occupied by homeowners who fell behind during the Great Recession…

Gone are the days of calling up your landlord to let them know rent will be there on the 7th instead of the 1st this month. As more and more Americans live paycheck to paycheck, and wages continue to decline or remain stagnant, paying rent a few days late could lead to a negative credit score, impacting their ability to secure resources and move up the ladder of the middle class.

“Paycheck to paycheck.” That’s the way serfs live. In someone else’s house. On someone else’s money. Often driving in someone else’s automobile. And sometimes even sitting on someone else’s furniture.

Got a health problem? Oh, yes — check into someone else’s health system.

Want an evening out at a restaurant? Put it on a credit card; let someone else pay for it.

Serfs don’t necessarily live poorly; they live badly. Because they’re not in control of the resources they need to live well. They are dependent, not independent.

We saw an ad for a new Smart car. “Just $199 a month,” said the ad.

People don’t own cars anymore. They just lease them… or not even. A lot of young people use Zipcar — a car-sharing service by which you “rent” a car using your iPhone. You never go to a rental agency or see a rental agent. You get a code via iPhone. You use the code to unlock the car. Easy. Peasy.

Some young people we know don’t own anything. They say it’s “liberating.” But that is something else. Not owning anything can be a smart financial strategy. But not owning a house because it was foreclosed… and not owning a car because you can’t afford one… does not sound very smart.

The Suits Take Over

You want a smart financial strategy?

Look at Blackstone. One of the houses it bought — probably much like the others — was bought for $90,000. It has a mortgage on it of $200,000. The former owners are still living in it. Instead of a mortgage, they’re now paying rent. Now they’re serfs.

Do the math. If they bought the house in 2005, they probably had a 6% mortgage. Six percent of $200,000 is $12,000. Add in another, say, $3,000 in amortization and charges… and they probably had a monthly payment of about $1,250.

Now the suits take over. Thanks to the conniving of other suits at the Fed, they are able to borrow 30-year money for about 3.5%. Let’s add another $10,000 to their purchase price (closing, taxes, maintenance) to make the math easier.

That gives them a monthly capital cost of less than $300 per month. And because these guys have big hearts as well as big wallets, they reduce the renter’s monthly payment to only $1,000.

Everybody comes out ahead. The former homeowners don’t have to move. They save money each month. And Blackstone — which may have only about $10,000 of its own money in the deal — earns (are you ready for this?) as much as $6,000, net, per year. That’s about a 60% rate of return on its cash.

But wait. It gets better. Because Blackstone is not counting on a real bull market in housing. Nope, the geniuses at Blackstone are making a big bet on interest rates.

At no extra cost, they have gotten a free “put option” on the bond market. That’s right: They’re short the bond market in a major way. When bond prices finally fall (perhaps this process has already begun), Blackstone is going to get another big jackpot.

And this payoff is practically guaranteed. Blackstone’s got its money-printing friends at the Fed to make sure it happens.

Indeed, Bloomberg ran a story of Hughes the billionaire who made his money from renting storage is now only second to Blackstone for renting homes in the US. Its a trend thats catching on.

B. Wayne Hughes, a sharecropper’s son who became a billionaire pioneering warehouses for Americans needing storage space, is buying thousands of houses to rent as more people find homeownership out of reach.

Hughes, 79, has purchased about 10,000 properties through his American Homes 4 Rent, making the Malibu, California-based firm the second-biggest owner of single-family rentals after Stephen Schwarzman’s Blackstone Group LP. Hughes is using $600 million from the Alaska Permanent Fund Corp. and other fundraising to buy real estate, mostly at foreclosure auctions, according to Paul Saylor, chairman of CS Capital Management Inc., who advises the Alaska fund.

Hughes founded Public Storage 40 years ago and turned it into the biggest storage-rental company in the world. Now he’s competing with an expanding pool of institutional buyers and individuals seeking low-priced properties in regions hardest hit by the housing crash. The firms are helping to drive the recovery, with home prices rising in December by the most since 2005, even after a record level of foreclosures makes it harder for millions of Americans to qualify for a mortgage.

The Alaska Permanent Fund’s joint venture with American Homes 4 Rent has spent $750 million to purchase about 4,500 of Hughes’ 10,000 single-family houses, according to Michael Burns, chief executive officer of the $44.8 billion Alaska fund, which invests state oil royalties that have financed annual dividends for Alaska residents since 1982. The American Homes 4 Rent venture should yield unleveraged returns of 6 percent to 7 percent from rents, before home prices and rents rise, according to Burns. By comparison, high-yield, high-risk company debt, or junk bonds, are yielding about 6.6 percent.

Alaska picked Hughes for the venture even though his background was largely storage, because “nobody has a track record in this space,” Burns said in a telephone interview from Juneau, Alaska. “Public Storage’s assets seemed to be the closest.”


Rental Need

The need for rentals has increased after more than 5 million homeowners lost their houses since prices peaked in 2006, triggering the worst recession since the Great Depression, when Hughes’ family fled Oklahoma. The U.S. homeownership rate fell to 65.4 percent at the end of 2012, matching the level last seen in 1997 and down from a peak of 69.2 percent in June 2004, the Commerce Department reported.

Mortgage availability has also become more restrictive after lax standards fueled the housing boom and crash. Borrowers whose loans for purchases closed in 2012 had an average credit score of 740, according to data compiled by real estate data service CoreLogic Inc., up from 716 in 2006.

“Even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected,” President Barack Obama said yesterday in the State of the Union address.

Single-family rentals have represented more than 10 percent of the U.S. housing stock since 2000, said Wally Charnoff, chief executive officer of Westminster, Colorado-based data provider RentRange LLC. “So even when the market normalizes, buying homes to rent should prove a good long-term strategy for investors,” he said.


Source: Bill Bonner’s Diary,   Bloomberg

All Wars Caused By Bankers

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JHK: Cattle Drive From Bonds To Stocks

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Recently Bill Gross warned of the “credit Supernova” whereby we could see a looming explosion that could see investors lost in space. James Howard Kunstler laughs at the Fed’s money printing which will ultimately cause huge damage to the bond market as investors move towards stocks in their droves.

 How hilarious is the Federal Reserve’s cattle drive of cash money (i.e. “liquidity”) into the stock markets? I’ll tell you: if that cash is outflow from bonds that pay ZIRP interest rates, then this attempt to stampede investment into the stock market is only going to succeed in ravaging the bond market and by extension the credibility of the dollar, the US banking cartel, and then the world financial system as a whole. 

If bond-dumpers rush into stocks, then who are the next bond buyers at ZIRP? The USA can’t keep going without continuous bond selling. Somebody has to buy the darn things. The Federal Reserve is now buying around 70 percent of US issue — a lot of it via secondary market pass-thru shenanigans involving “Primary dealers” (a.k.a. Too Big To Fail banks, who get to cream off a premium when they flip bonds to the Fed — tidy little racket). If the other 30 percent of issue can’t find willing buyers at ZIRP then interest rates will have to go up. If interest rates go up, then interest paid out on bonds (that is “debt service”) by the US government will go up catastrophically, because the aggregate debt is so colossal and most of the debt is short term, meaning that in a post-ZIRP world the interest rate ratchets up automatically every 13 weeks as bonds roll over. The US will then only be able to pretend that it can service the debt at higher interest rates. Everybody in the world will recognize this — surely only increasing the velocity of the stampede away from bonds. The question is: how long can pretending to service debt go on before it is just called by it’s real name: default? Or, if countered with additional furious computer “money” creation: hyperinflation? Either way, of course, you end up broke.

Deliberate intention to pretend all is well.

This cattle drive into stocks is strictly a political gambit. The cattle are being driven to the slaughterhouse. It’s discretionary strategic national financial suicide. They’re driving up the stock markets for cosmetic purposes, to make it appear that an economic recovery is going on, and with the aim of setting in motion a self-reinforcing financial feeding frenzy in this rush to “equities.” By the way, in case my manner seems didactic today I am attempting to define my terms as I go along because most other financial bloggers seem to assume that ordinary people understand all their jargon, which I am quite sure they do not.

   Returning to my point… the Fed and their auditors on Wall Street and in government, are jacking up the stock markets in the hopes of stirring up “animal spirits,” as the financial psychologists say, to put over the story that it equals a vibrant economy — which is nonsense, of course, to anyone who shoots a casual glance at the economic wreckage all around them. Anyway, since the stock market action these days is dominated by high frequency trading robots running on algorithms, where exactly would animal spirits even factor in? If anything the absence of real animal spirits in this action also implies the absence of its counterpart, animal survival instinct, of which human intelligence is an order. What can come of stirring up animal spirits among robots? A train wreck is exactly what.

 Now, I ask you: at a moment in history when vast interlinked global financial markets have never been so unstable, so primed for unintended consequences courtesy of the diminishing returns of technology, so ripe for a massive, cascading “accident,” is it a prudent thing to fuck around with such crude PsyOps?

Gross isn’t quite as specific as Kunstler but does warn of the credit bubble running out of energy.

Pimco’s Bill Gross looks at the investing universe and sees a dangerous supernova – a looming explosion that could see investors lost in space.

The head of the Pacific Investment Management bond giant has issued an ominous forecast in which he worries that the global central bank-induced credit bubble “is running out of energy and time.” (Read More: Federal Reserve Should Do Less, Not More: Morici)

As a result, investors will have to get used to an atmosphere of diminishing returns and portfolios that will hold more hard assets like commodities and fewer less-tangible financial assets like stocks.

“Our credit-based financial markets and the economy it supports are levered, fragile and increasingly entropic,” Gross said in his February newsletter.

Gross recommends gold, commodities and other currencies.

“When does money run out of time? The countdown begins when investable assets pose too much risk for too little return; when lenders desert credit markets for other alternatives such as cash or real assets,” he added.

Gross advocates investors turn to gold and other commodities for inflation protection and currencies and assets in other countries that don’t have such active central banks and huge debt loads. He favors Australia, Brazil, Canada and Mexico.

All this money printing but where is the growth?

In the U.S. alone, the Federal Reserve has created a shade under $3 trillion in new money to buy more than $1.7 trillion in Treasurys and $968 billion in mortgage-backed securities, according to the most recent Fed balance sheet. The Fed will be buying $85 billion a month of the two debt instruments as it seeks to continue stimulating the slow-growth economy, which actually contracted 0.1 percent in the fourth quarter.

The inability of central banks to generate robust growth despite all the money-printing has stoked concern about future returns by Gross and Pimco, which manages $1.92 trillion for clients.

“Unless central banks and credit extending private banks can generate real or at second best, nominal growth with their trillions of dollars, euros, and yen, then the risk of credit market entropy will increase,” Gross said.

His “credit supernova” metaphor describes a condition in which “our current monetary system seems to require perpetual expansion to maintain its existence” similar to the physical universe.

That expansion to $56 trillion, though, has generated consistently lower results, he said. Consequently, the investor base needed for the expansion to continue may not last.

“The end of the global monetary system is not nigh. But the entropic characterization is most illustrative,” Gross said. “Appreciate the supernova characterization of our current credit system. At some point it will transition to something else.”

Source: 24hGold.com,  CNBC

What The Presidents Said About US National Debt

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Talk is cheap.

John Williams: May 2013 – End of Road For The Dollar

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John Williams(shadowstats.com) in an interview with Greg Hunter goes through the latest government figures.

  • US Consumer accounts for > 70% of GDP.
  • Average guy is not keeping up with inflation.
  • The consumers liquidity is getting worse.
  • The real cost of living is 7-9%.
  • 2012 fiscal deficit was $6.9 trillion.
  • Fed is monetizing the debt and not enough is being raised in taxes to meet the debt.
  • Hyperinflation by 2014.
  • Dollar sell off in the 3-4 months.

US: Fiscal Disaster Up Ahead

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Excellent video presentation from McAlvaney Wealth Management of the fiscal disaster up ahead and how to prepare for it.

Peter Schiff: US Inflation Figures Are Deliberately Misleading

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Peter Schiff explains how misleading the US inflation figures are, as it’s in the Governments interests to downplay the true figures.

Some of the main points covered:

  • Keynesian economists reference the Government CPI figures to justify QE but the true figures show high inflation.
  • Money printing is Inflation and results in rising prices.
  • Government methodology is designed to hide the effects of inflation.
  • Before the election a Fox poll showed people are most concerned with inflation (i.e. people don’t believe CPI figures)
  • Government CPI figures from 1970-1980 while compared to a basket of goods was accurate but was way lower from 2002 to 2012.
  • Government figures are wrong. An example of this is the CPI reports a rise of 37% in magazines and newspapers from 1999 to 2012 but when you look at the cover prices over that period, the average increase is 131%.
  • Government figures show healthcare costs only rose 4% from 2008 to 2012. That alone tells you the CPI is misleading. A Kaiser survey showed that premiums increased by over 24% in that period (5.5 times faster than the Government’s figures)
  • Healthcare costs only have a 1% weighting in the CPI figures despite the fact for medium families income it is almost 33% of their expenditure.
  • It’s the Governments vested interest to fool the world into believing there is no inflation. After all if they admitted true inflation then they couldn’t continue stimulating the economy and would be forced to deal with the deficit.
  • The clowns in Washington say the current inflation figures are too high and want to change the way its reported.
  • The true rate of inflation would be similar to the 1970s somewhere between 7-10%.
  • Foreigners are absorbing the excess dollars and buying US Treasuries causing a bond bubble (exporting inflation). Eventually they are going to want spend their dollars and goods will be going out and money coming in causing huge inflation.

Paul Craig Roberts: America Going To Crash Big Time

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Paul Craig Roberts (fmr Assistant Treasury Secretary in the Reagan Administration) was warned that the US is heading for a major crash. Some of the points covered from interview on USAWatchdog:

  • Jobs were shipped overseas.
  • Rising taxes and crushing social programs
  • Consumer demand has collapsed.
  • Fed printing trillions in order to buy bad debt as dollar is being devalued.
  • No demand for US debt.
  • Foreign nations will eventually have to dump the dollar.
  • Gold price is manipulated and suppressed via paper gold. Any naked shorts can be backed by endless Fed mony printing.
  • Gold manipulation will continue until the World abandons the dollar.
  • Its cheaper for the BRICS not to use the dollar.
  • Asian countries are discussing using a common currency for trading.
  • When the dollar is dumped you are faced with hyperinflation.

Why Bernanke Is Wrong

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Bernanke is turning the US into Japan economically speaking. Instead of taking the banks down the route of Iceland and recovering quickly he has chosen the path of Japan and its slow demise.

There’s a problem with kicking the can down the road – Ben Bernanke, (December 12 2012)

I’ve taken this quote out of context — Bernanke was actually talking about the fiscal cliff, and not monetary policy. But kicking the can down the road is exactly what Bernanke is doing in his domain.

Instead of letting the shadow banking bubble burst and liquidate in 2008, Bernanke has allowed it to slowly deflate, all the while pumping up the traditional banking sector with heavy, heavy liquidity:

It’s been one long, slow brutal grind:

The Fed continues to fight a losing battle, in which it has no choice but to offset any ongoing deleveraging – be it through maturities, prepays, or counterparty failure, or just simple lack of demand for shadow funding conduits – in the shadow banking system.

Trillions and trillions of liquidity later, Bernanke is barely keeping the system afloat:

The reduction in shadow liabilities remains a massive deflationary and depressionary force (and probably the main reason why a tripling of the monetary base has not resulted in very severe inflation). We could have taken the pain in one go back in 2008 — let the failed banks and failed sectors fail, let the junk be written down, and let all efforts go toward rebuilding a more robust system less sensitive to counterparty risk. But we chose to kick the can down the road, and try to reinflate the biggest bubble in history through helicopter drops to the financial sector, the outcome of which has been booming incomes for the rich, and a total lack of growth and opportunity for the poor (except, perhaps for the dubious “opportunity” to join the masses of the long-term unemployment and claim a slice of the increasingly unsustainable welfare pie).

We chose the path of Japan (which has spent the last twenty years depressed) not the path of Iceland (which is emerging from its depression). We chose to kick the can down the road. Like Bernanke said, there is a problem with that. No amount of buying financial sector assets up to an unemployment or inflation or NGDP target — which empirically seems to do more to enrich the financial sector and the big banks than to create jobs  — will fix that. The system is rotten, and the debt load is unsustainable.

Source: azizonomics

Pressure Mounts On Syria As US And French Troops Prepare To Enter

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The war rhetoric on Syria has mounted in recent days and the latest news from the Presstitutes is the Assad regime is ready to use chemical weapons. Reports are now surfacing of US and French troops massing on the Syria border.

The 8 day mini war between Israel and Gaza has come and gone and any attempts at provoking a wider regional conflict, one involving Iran (if indeed this was the intention), have failed. Which means the fallback plan – Syria – is back in play. And sure enough, as both the most recent naval map update, which shows a US aircraft carrier and a big deck amphibious warfare ship, both of which house thousands of troops and numerous offensive aircraft, and an RT news flash, indicating that thousands of troops have amassed near the Syrian shore confirm, the time for a US invasion may be near. The alibi? “Chemical weapons” of mass or non-mass destruction. In other words the Iraq playbook all over again.

From RT

The USS Eisenhower, an American aircraft carrier that holds eight fighter bomber squadrons and 8,000 men, arrived at the Syrian coast yesterday in the midst of a heavy storm, indicating US preparation for a potential ground intervention.

While the Obama administration has not announced any sort of American-led military intervention in the war-torn country, the US is now ready to launch such action “within days” if Syrian President Bashar al-Assad decides to use chemical weapons against the opposition, the Times reports.

Some have suggested that the Assad regime may use chemical weapons against the opposition fighters in the coming days or weeks.

“We have (US) special operations forces at the right posture, they don’t have to be sent,” an unnamed US official told The Australian, which suggested that US military troops are already near Syria and ready to intervene in the conflict, if necessary.


The alibi used by the “democratic” press to justify what may imminently be a land invasion? Chemical weapons:

The Syrian military is prepared to use chemical weapons against its own people and is awaiting final orders from President Bashar Assad, U.S. officials told NBC News on Wednesday.

The military has loaded the precursor chemicals for sarin, a deadly nerve gas, into aerial bombs that could be dropped onto the Syrian people from dozens of fighter-bombers, the officials said.

As recently as Tuesday, officials had said there was as yet no evidence that the process of mixing the “precursor” chemicals had begun. But Wednesday, they said their worst fears had been confirmed: The nerve agents were locked and loaded inside the bombs.

Sarin is an extraordinarily lethal agent. Iraqi President Saddam Hussein’s forces killed 5,000 Kurds with a single sarin attack on Halabja in 1988.

U.S. officials stressed that as of now, the sarin bombs hadn’t been loaded onto planes and that Assad hadn’t issued a final order to use them. But if he does, one of the officials said, “there’s little the outside world can do to stop it.”


Tangentially, remember when Iraq was supposed to have warehouses full of “WMDs”, which story ended up being a fabricated lie. But at least Turkey is ready: after all NATO has already handed over various Patriot missiles to prevent a Syrian retaliation against the ruling Assad regime.

And just to make sure the escalation is complete, the French are coming.

France is preparing its special forces for a mission in war-torn Syria, French weekly magazine Le Point reports.

The mission would only involve a relatively small amount of special forces, and a number of NATO countries — including the UK and the US — would be involved. The mission would be modelled on the Western intervention in Libya, the magazine reports.

The action appears to be in response to fears that the regime is planning on using chemical weapons in the conflict. Earlier this week one US official told reporters that it was believed Bashar al-Assad’s forces had moved two key components of a deadly nerve gas in preparation for an attack (a later report refuted this, however).

Le Point says a large ground operation “is out of the question” and that a smaller action aimed largely at securing chemical weapon stockpiles.

Secretary of State Hillary Clinton today vowed a swift response if Assad’s regime used chemical weapons.

So putting it all together, it appears that once again the imminent escalation play is one where an antagonized Syria is forced to strike back, an act which “hopefully” will get Iran involved in the fray, and from there it is smooth sailing for both Israel and the “democratic” forces of the world.

The only wild card: Russia and China, both of which have made it very clear they have quite strategic interests in the Syria region on numerous prior occasions.

Source: ZeroHedge

Impending Dollar Collapse

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Much has been written and said of the impending USDollar collapse below is another cheery article 😉 but well worth the full read at CrisisHQ. The pressure is ever increasing, as 2013 brings with it $5-6 trillion in US debt to be repaid. The official debt figure of $16 trillion is nowhere near the mark. Its more like closer to $70 trillion.

U.S. government’s real financial burden is close to 70 trillion dollars. This is because the national debt of 16 trillion does not account for obligations like Social Security, Medicare, Public Employee Pensions and other liabilities which the government is already committed to.

These liabilities are ticking time bombs, primed to explode with each new wave of retiring baby boomers. On top of this, medical costs continue to rise across the board driving Medicare expenses through the roof.

Ultimately the unsustainable debts will lead to 2 options, default or permanent money printing which is the solution favoured by politicians as the people who run the financial system are part of the problem.


How long can we keep borrowing?


Some economists like to imagine that we can just grow our debt endlessly, because we have the ability to print dollars out of thin air. These “experts” allege that the treasury market is as strong as ever and we can just keep borrowing endlessly. These are the same “experts” that insisted that real estate prices will continue to rise perpetually, right up to the 2008 crash. According to them, we just need to raise the debt ceiling and keep growing that debt evermore.

But even though we can raise our debt ceiling time after time, there is still a natural debt limit we cannot cross. The notion that our government can keep growing our debt without end is preposterous.

First, it’s based on a foolish assumption that the rest of the world is willing to lend us money that they know we can’t pay back. Second, it ignores a mathematical consequence: exponential growth due to interest alone. Third, it presumes that the U.S. dollar will forever remain the world reserve currency.


The Federal Reserve has been keeping the interest artificially low to help the government keep borrowing. Of course this is no favor on the FED’s part because the end result is debt enslavement. Since whatever the government owes is inherited by the people, it’s the people who get screwed in the end. If the interest was allowed to return to market rates, it would help prevent the government from borrowing beyond its means.

However, at this point our lenders are realizing that our debt has long passed a sustainable level. If you have ever applied for a loan, you should be familiar with the following universal rule. When the borrower is in too much debt, the loan becomes high-risk and so the lender demands a higher interest to make the reward worthy of the risk. With every passing day, America plunges into a deeper debt pit and this makes lending to the U.S. (by buying treasury securities) a more and more risky investment.

To make things worse, the FED is devaluing the dollar at an increasing pace by issuing bailouts, stimulus packages, quantitative easing, etc… and our lenders are realizing this too. This means that the dollars that our creditors are loaning to us now are worth less when they get them back.

For these two reasons, the U.S. treasury securities (government IOU’s) are now high-risk, low-return investments. What was once considered the safest investment is now a Ponzi scheme at the point of collapse.

Who will bail out America when it runs out of lenders?


Our pool of willing lenders is starting to shrink as our creditors are waking up to the fact that treasuries are now a high-risk, low-return investment. To compensate for this the Fed is forced to buy up all the long term U.S. treasuries in an effort to artificially stimulate demand, to keep up the smokescreen. Of course this only inflates the U.S. bond bubble even more.

When the pool of willing lenders dries up, the scheme will reach its end and the final bubble will explode. Without lenders, the U.S. government has only two appalling choices, default on debt or hyper-inflate the dollar.


Option one

is to default on all debt. Essentially declaring bankruptcy to renegotiate all obligations. This would create a severe financial shock as the dollar collapses and loses its status as reserve currency. This would lead to a sharp increase in the cost of nearly everything, as more US dollars would be needed to pay for imports, resulting in a catastrophic economic impact for every American. The government will be forced to cut spending dramatically. A broad range of government payments would have to be stopped, including military salaries, Social Security and Medicare payments, unemployment benefits, tax refunds, etc. Companies would be crushed by a US consumer that would no longer have any buying power. In addition, credit would dry up virtually overnight, which would force untold numbers of companies to shut their doors. Unemployment in the country would spike to obscene levels. Interest rates would rise significantly forcing millions of families with adjustable mortgages to go into foreclosures.


Option two

is to have the Federal Reserve create trillions upon trillions of dollars out of thin air. This creates an illusion that the debt is being paid back, but in reality the dollars issued to pay the debt would become increasingly worthless, turning rapid inflation into hyperinflation. This would actually create a much worse scenario then the first option as hyperinflation will be even more economically destructive for the average American. Prices would soar to unimaginable levels, unemployment would skyrocket. The average American would be forced to work overtime just to put food on the table, that is if he or she is lucky enough to still have a job.

It’s worth mentioning that it is highly unlikely that the U.S. will choose default (option one). Even though hyper-inflation is by far more destructive for the American people in the long term, the government will most likely try to print its way out.

Either way the economy will collapse. Economically, the first option would feel like a heart attack and the second option like terminal cancer.

The ripple effects of either scenario would be unprecedented. It would not be the end of the world, but you can expect massive social unrest, protests, riots, looting, arson, etc., basic supply disruptions on all levels, utility failures and infrastructure decay, rampant violent crimes, especially in metropolitan areas, followed eventually by a long and very painful period of readjustment of living standards for most Americans.

What if we cut spending, raise taxes and balance the budget?


It’s amazing, that even now you hear the same old catch phrases like, “recovering economy”, “budget cuts” and “responsible spending”, thrown around by politicians on all the major news shows. But, anyone out there that insists that this crisis can be fixed under our current system is lying.

The spending cuts and tax increases that Congress is talking about are absolutely meaningless when compared to how rapidly our debt is exploding.

Calling those cuts and taxes “pocket change” would be an insult to pocket change.

No bailout, stimulus package or manipulation by the Federal Reserve is going to avoid the massive financial pain that’s coming our way.

So what can our government do to fix the current financial crisis and avoid the dollar crash? What would it take?

It would take the kind of measures that are our government considers too extreme to even discuss and so there’s no chance of them being approved. For starters we would need to abolish the Federal Reserve, go back to the gold standard, shut down overseas military bases, completely reform the tax code, restructure entitlement programs, etc.

Unfortunately, proposing such changes is the fastest way to lose your political funding, become the laughing stock of Washington and be ignored or ridiculed by the mainstream media. Just ask Ron Paul.

Our Congress knows full well that fighting against the system is political suicide. And so no meaningful change that would help lessen the impact of the coming crash will be approved.

As far as the oval office and Congress is concerned, postponing the crash by issuing bailouts and stimulus packages is a more politically favorable approach, even though this ensures an even bigger catastrophe in the end.

The bottom line is this: we’re on a path to an inevitable dollar crash. The ones that run our monetary system and hold the keys to our economy are actually part of the problem instead of the solution. The ones in power that can make the desperately needed changes dare not.

Rather then risk their careers, they will continue to shamelessly distribute our hard earned money among their friends on Wall Street. The handful of our honest politicians that are actually brave enough to stand up for the people are shut out by the system.

At this point, we’re on a run away train without brakes, so you better brace yourself. The good news is there is still time for you to prepare for what’s up ahead. Most people will be completely unprepared when the whole thing comes crashing down.

Don’t be part of that group.

Source: CrisisHQ

Dylan Ratigan Rant: US System is Screwed But Can Be Fixed

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Dylan Ratigan goes on a rant and accuretly sums up the corrupt system in the US run on behalf of banker interests. He goes on to say that it can be fixed. Interesting to watch.

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