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.

Comments on the Collapse Factors

UrbanSurvivalSkills.com received the following comment from Anonymous on the Collapse Factors: "Since the beginning of the financial collapse, which started in Oct 2008 (but has it's roots back in 1998 and 9/11/01), I have been amazed at how long things have continued to work in an almost "normal" fashion. All of my economics training is telling me this will end badly, but the one area I have to be honest about is that it is taking longer than one might have expected. We might see a "lost decade" like Japan, or a continued slow motion train wreck as we have now. But it doesn't change the need to prepare for the eventual collapse.

Our country still has about $10 or $20 trillion of non-levereged net worth to borrow against. But that will go fast. Things could collapse soon if foreign governments demand gold instead of dollars. But if not, this existing situation could go on for a few more years. For me, the acid test will be interest rates. When the Fed cannot control interest rates, and we see the trend like Greece for the 2 year bond at 48% interest, the gig is up. Just my two cents worth.

UrbanMan replies: I think you're on the mark, but I think the beginnings of the collapse occured with F.D.R.'s new deal and several Administrations since,......one of those factos being coming off the Gold standard. I also think you're spot on with the slow collapse scenario. I think we are going to see that. It may hasten with a cataclysmic event like a nuclear or cyber terrorist attack, but the odds are on a slow slide into a pre-collapse depression like era.

But the situation cannot stay at this point forever. The question is just how long will this be until chaos and anarchy takes over,...SHTF,...which will be a natural result when this nation of people, the majority of which are used to a decent life, have to struggle to survive?

I think we'll be very much like Greece, and maybe very soon. I'm hoping to be able to move (no, not to the Great American Redoubt) and get better prepared to live it out,..but I feel the great weight of the debt, inflation, inept Federal Government response, dwindling resources, societal issues, and disenfranchised masses making it come sooner rather than later.

The Government cannot do much. Their Courses of Action remain: 1 - trying to control the people who have nothing and nothing to lose,...read "military control", or, 2 - Over taxation and confiscation of wealth and assets,...read "Socialist State".

What other choices does the government have? The vast entitlement society has got to be coming to an end. With 43 to 45 million people dependant upon the government now depending upon their wits, what will the ground truth be then?

Reader Questions of Collapse Factors

UrbanSurvivalSkills.com received two e-mail questions and we're going to respond to in a single post.
 
Wayne asked:  "Sovereign Man said that two things – economic deterioration and the increasingly heavy hand of Big Brother– are the essential ingredients in revolution.   When combined, widespread social upheaval is nearly a foregone conclusion.  Then he went on to state that thinking people need to recognize the risks and consequences at stake, and formulate a plan to prepare for them. My ultimate recommendation is to set up a safe haven location outside of your home country– a crash pad in a stable place where you can feel secure in your family’s safety and watch the turmoil on television instead of from your front porch. (p.s. these are almost verbatim).  What do you think of this and is there any relation to the riots you wrote about last week?"

UrbanMan replies:  I have not read Sovereign Man for awhile, but he is dead on the mark.  Excessive government regulation which tends to take freedoms away from people as well as destroy the economy, and the economy tanking making it harder for people to make ends meet will set the stage for riots,....be it food riots, riots against authority,...anything excuse or reason will do to serve as a catalyst for the people's frustrations.   And I think we are seeing the leading edge of riots in this country that have plagued Europe.  It will get worse as this country runs out of money to pay entitlements.  The "entitled" will think they are getting the short end of the stick and these groups are largely in urban densities.   Can anyone say "Detroit"?    

As far as Sovereign Man's recommendation to set up a safe haven outside of your home country?   Where the hell is that going to be?  Costa Rica or some other Central American country where the military rules and gringos have second class rights?   No thanks, I'm sticking to the good ole U.S.  The more of us are prepared, the better off this country and also better the chances of rebuilding something worthwhile.......and preparation be it for natural disasters, economic depression or a total SHTF scenario, are becoming much more mainstream.
 
Anonymous wrote:  "There is an article in the New York Times talking about a severe shortage of drugs especially for infections.  The article also stated that since supplies were so low, people were paying sometimes 20 times, yes 20 times!!!!! the regular price.   This scares the shit out of me as my wife and son are pretty prone to getting infections and going on antibiotics.  Is this something that is going to get better or worse and will it cause a pandemic?

UrbanMan replies:  Yes, I have been keeping on top of this.  A couple friends of mine reported that their hospitals reported they "don't stock" a certain medication,...probably a political correct way of saying "we can't get it".   Viral infections can be spread causing a pandemic in the worst case, and I believe it is harder for bacterial infections to spread.  My base preparations for the increasing chances of sickness and disease is to use good hygiene; be prepared to quarantine any people you take in during a collapse;  and maximum use of nutrition and supplements to build our immune systems as a prophylaxis (preventative measure) to sickness and disease.   My base thinking is that this will not get any better unless the economy rebounds and costs of medical treatment are reduced.