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Friday, April 13, 2012

More Proof of the Coming Economic Collapse

ETF Daily, basically an investors information-financial intelligence site often produces excellent articles dealing with the U.S. and World financial situation. Not necessarily from a "gloom and doom, the collapse is coming" perspective, ETF Daily does provide some insight into the possiblities of a national and world wide economic spin downward and that of course is the economic collapse, one of many possible SHTF scenarios, that we have been prepping for.

I have copied some of a recent article by ETF concerning government created bubbles and major events that will cause them to burst and herefore bring the economic collapse closer to the surface if not
bubbling over and effecting life as we know it. Read the entire article here.

The Tech and Housing Bubbles That Created These Giant Failures Were SMALL in Comparison to the Greatest Bubble of All, Being Created RIGHT NOW! I’m talking about the massive growth of the federal government that we’ve seen over the past few years.

Not only is the government bubble the biggest of all time, but it is rapidly expanding in four separate ways:

First, we have an unprecedented Government Debt Bubble: Washington has spent a record $16.3 trillion since 2007 … has added $6.5 trillion to the national debt … and is CONTINUING to run up trillion-dollar-plus deficits every year.

Second, we are witnessing the Greatest Monetary Bubble in U.S. history: Just since 2008, the Federal Reserve has dumped more than $1.8 trillion newly-created U.S. dollars directly into the economy. Plus, the Fed is creating even MORE money by holding interest rates low in order to
increase loan demand. Never forget: When banks lend money, they effectively create new U.S. dollars out of thin air.

Third, we have a Government Employment Bubble. The Heritage Foundation reports that since December 2007, even while the private sector workforce has shrunk by 6.6%, shedding more than 7.5 million jobs … the federal government workforce has grown by 11.7%, adding 230,000 jobs.

Fourth, and most dangerous, there’s the Entitlement Bubble: Just consider the facts:

One in every five Americans now relies on federal assistance.

Nearly 46 million Americans need food stamps to keep body and soul together — 34% more than just two years ago.

The average recipient of federal aid collects $32,748 in benefits — about $300 more than the average tax-paying family gets in disposable income.

The biggest of all: The government’s obligations for Social Security, Medicare and Medicaid are now $65 trillion, nearly five times the value of all the goods and services produced by the entire country.

But Soon, Three Major Events Will Burst This Massive Bubble …

First, the U.S. government is going to lose its primary creditors — overseas investors. In fact, there’s abundant evidence that this deadly process has already begun. That’s why Lawrence Goodman a former Treasury official and president of the Center for Financial Stability, pointed out last week that major U.S. creditors like Japan and China, that once scooped up U.S. debt, are shunning it. Such foreign purchases of U.S. debt amounted to 6 percent of GDP and has since fallen by over eighty percent to a paltry 0.9 percent.

Second, that’s why the Federal Reserve has had no choice but to temporarily fill the gap. Last year the Fed used printed money to purchase a stunning 61% of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis. This raises the question: What happens when the Fed’s actions drive fuel, food and other prices through the roof? Treasury interest rates surge — the first sign that the government bubble is bursting.

Third, ultimately entitlements must be cut — just like they’re being cut in Europe. In Spain, Greece, Portugal and Italy, those cuts are taking massive amounts of money out of the economy and plunging them into deep recessions.

Imagine what will happen when the world’s largest government with the world’s largest entitlement obligations begins making similar kinds of cuts!

Make no mistake: This great government bubble — probably the greatest mankind has ever seen — is destined to burst. And when it does, blood will run hip deep down Wall Street and effect every aspect of our lives.

1 comment:

  1. It is inevitable that countries have booms and busts. While the tech or housing bubbles may be blamed if it weren't that it would have been something else. The important thing to understand is because we (Obama) mishandled the recovery we are either in or on the verge of a depression and instead of a 12-20 month recession we will probably have a 5-10 year long depression.