Largest Financial Crisis in History is Looming

Previously unknown to UrbanSurvivalSkills.com is the The National Inflation Association (NIA) which is an organization that states they are dedicated to preparing Americans for hyperinflation and helping Americans not only survive, but prosper in the upcoming hyper-inflationary crisis.

NIA believes the largest financial crisis in history is ahead of us as a direct result of the U.S. government unwilling to accept a much needed recession. We are now at a point where our national debt is impossible to pay off. Due to rising interest payments on our national debt, it is unlikely the U.S. will be able to balance its budget ever again. Foreigners will eventually stop lending the U.S. money and the Federal Reserve will most likely have to print the money to fund our deficit spending out of thin air.

Article and Movie Trailer from the National Inflation Association



Inflation to Make All Americans Billionaires By 2020

One of the Federal Reserve's original stated purposes was to manage the nation's money supply through monetary policy that provides for stable prices without inflation or deflation. Shocking just about the whole world except for NIA members, the Federal Reserve this past week shifted its purpose from being an inflation fighter to now being an inflation advocate. Charles Evans, President of the Federal Reserve Bank of Chicago, is now saying that inflation in the U.S. is too low and the Federal Reserve needs to publicly declare a new goal of having inflation that is much higher than its informal 2% target. William Dudley, President of the New York Federal Reserve, is calling current low levels of U.S. inflation "a problem" because "it means slower nominal income growth".

Dudley believes "slower nominal income growth" is unacceptable because it "means that less of the needed adjustment in household debt-to-income ratios will come from rising incomes. This puts more of the adjustment burden on paying down debt." In other words, he wants to monetize our debts by printing so much money that all Americans are earning enough income to pay back their debts. NIA fears that one of the unintended consequences of such a policy will be an insurmountable currency crisis; this will lead to a U.S. societal collapse with class warfare, millions of Americans starving to death, and a return to a barter based system that will last until we can come up with a new form of workable government based on sound money that is backed by gold and silver.

When our government creates inflation with the goal of generating higher incomes, the real incomes of Americans always decline dramatically. Inflation never creates wealth, but instead mis-allocates resources that would have went towards productive purposes if the free market was allowed to operate. During periods of high inflation, no matter how fast incomes rise nominally, they never keep pace with rising gold prices. (Try to picture Zimbabwean President Robert Mugabe trying to keep pace in a race against Olympic gold medalist Usain Bolt.)

Back in 1970, the median family income in the U.S. was $9,870. During the next decade, the U.S. government created unprecedented amounts of inflation, which led to the median family income rising in 1980 to $21,020 for a gain of 113%. Gold was only $35 per ounce in 1970, but rose to a high in 1980 of $850 per ounce for a gain of 2,329%. One year of income in 1970 would have bought 282 ounces of gold, but one year of income in 1980 would have only bought 25 ounces of gold. Priced in gold, families saw their real incomes decline during the 1970s by 91%.

On July 19th of this year, with everybody in the mainstream media warning Americans about the threat of deflation, NIA predicted that the Federal Reserve was, "quietly getting ready to implement 'The Mother of All Quantitative Easing'". NIA said that, "come this October, Bernanke is likely to shoot up his largest ever dose of quantitative easing." Then on July 28th with gold down to $1,158 per ounce and silver down to $17.63 per ounce, NIA sent out an alert entitled, "Gold and Silver Capitulation is Near" in which we said, "The sentiment on gold and silver has abruptly changed to the negative like nothing we have ever seen before and to us this means the big move to the upside is right around the corner."

NIA called the bottom on gold and silver perfectly. Since July 28th, gold and silver have both risen 34 out of 49 days, with gold rising by 16% and silver rising by 30%. Many people are asking us when precious metals are going to dip. Although gold and silver will make many dips in the years to come, NIA is never going to make an attempt to predict these short-term, temporary dips. It is far too risky and dangerous to sell gold and silver with the hope of buying back on a dip. Those who actively trade gold and silver, usually go long the U.S. dollar while they are waiting for a dip. There will come a time when the U.S. dollar crashes, with gold rising hundreds or even thousands of dollars in a day, and silver potentially doubling or tripling in value in a day. Trust us, you do not want to be on the wrong side of the trade on that day. NIA is focused on the long-term risk of hyperinflation and is not concerned about short-term volatility.

NIA believes that if the Federal Reserve doesn't reverse course immediately, we are on a direct path to all Americans becoming billionaires by the year 2020, if not much sooner. Being a billionaire in dollars won't mean anything. The wealth of Americans later this decade will be calculated based on how much gold and silver they own. We are at the beginning stages of a massive worldwide rush out of the U.S. dollar and into gold and silver.

Gold, at a new all time high of $1,344 per ounce, is still very undervalued. If gold's total bull run from its 2001 low of $256 per ounce equals a percentage gain of 2,329% (just like the 1970s) we will see a gold price of $6,218 per ounce. Silver, at a new 30-year high of $23 per ounce, is still an absolute steal. Just like NIA predicted, the gold/silver ratio has declined in recent months from 70 down to 58, but is still well above the historical average of 16. In our opinion, because silver has been undervalued for so long with artificially high gold/silver ratios, once JP Morgan is forced to cover their naked short position in silver we could see the ratio decline to an artificially low level as low as 8. Therefore, if we see $6,218 per ounce gold, we wouldn't be surprised to also see $777.25 per ounce silver.

Dudley's solution to our current economic crisis is to "find ways to increase the amount of stimulus we currently provide via our balance sheet." This is pure insanity. Bush's $200 billion stimulus sent oil prices to $147 per barrel, Obama's $800 billion stimulus prevented massive price deflation (that would have made cost of living in America a lot more affordable) during a period of rapidly rising unemployment, and now the Federal Reserve believes even greater stimulus will fix our economy. Dudley is calling for the Federal Reserve to purchase $500 billion in bonds, but the Federal Reserve's real quantitative easing will be much greater. Dudley doesn't want to steal the show from Bernanke. He must allow Bernanke to be the one who first suggests the "genius" idea of having quantitative easing of $1 trillion or more.

The truth is, the exact amount of the Federal Reserve's short-term purchases is absolutely meaningless. Keep your eyes on the big picture and remember that if the Federal Reserve's treasury purchases aren't enough to create massive price inflation in the short-term, they will continue to unleash even larger doses of quantitative easing. Our gut feeling is that we are practically at the point where the U.S. economy is about to overdose on any further quantitative easing. A "Meltup" is currently taking place, exactly like NIA predicted in our documentary 'Meltup' that was released on May 13th (it has now been viewed by over 808,000 people).

We may be forced to soon change our hyperinflation forecast from the years 2014-2015 to as soon as the year 2012. NIA has long been predicting ever since its first documentary 'Hyperinflation Nation' that besides gold and silver, we would see inflation most in agricultural commodities. During the month of September alone we saw huge gains in agricultural commodities like soybeans +9.5%, rice +10%, corn +12%, orange juice +13%, cotton +17.5%, and sugar +19.3%.

All countries are now in a war with each other to have the weakest currency, with the false belief that having a strong currency destroys their export markets. When history looks back to the time period we are currently in, our world leaders (especially our elected representatives in Washington) will be considered the most incompetent and corrupt in world history. NIA's new documentary being released later this month will expose the U.S. societal collapse from a perspective that has never been addressed before by anybody in the media. NIA's co-founders are currently on their way to Kingston, NY, to interview Gerald Celente, the most accurate trends forecaster of all time. His interview in 'Meltup' was widely considered to be the most insightful and eye-opening economic interview to ever be a part of any documentary and his interview in our new documentary promises to be even better.

Urban Survival Planning - Financial Indicators: The Debt Crisis

UrbanSurvivalSkills.com, since our inception, has been counseling on Survival Planners having a list of indicators that would precede and foretell the coming collapse. The idea is this list is self developed; based on factors and indicators you think are important to identify the near term coming collapse; and, should consider all factors – social, economic - financial and political.

UrbanMan uses a lot of financial sources, probably none more credible that Leeds who we have hyperlinked to this site just below the title.

Sandy Leeds, CFA is a Senior Lecturer at The University of Texas at Austin . He teaches graduate level classes in the MBA program and also serves as President of The MBA Investment Fund, L.L.C. Prior to teaching, he had careers as a lawyer and a money manager. He did his undergraduate work at The University of Alabama and also has a law degree from The University of Virginia and an MBA from the University of Texas . At UT, he has received many teaching awards, including Outstanding Professor in the MBA Program. He is married and has three children.

Leeds’ latest article, go to here: http://leedsonfinance.com/2010/09/21/ideas-about-a-debt-crisis/

Talks about the debt crisis and why you should be worried,…and if you are worried you should be preparing maybe just alittle more.

This is Leeds’ article in his words:

Here are a few quick points why you should be worried about the US :

1. By 2040, the US ’ debt-to-GDP ratio will be 425% (according to the BIS). This estimate is worse than the estimates for Portugal , Italy , Ireland and Greece.

2. We can only print money to solve the problem if we don’t mind inflation.

3. Even if you adjust for the effects of the economic cycle and you exclude interest payments, the US has a -7.3% structural budget deficit.

4. If the US wanted to reduce our debt-to-GDP to 60% by 2030, we would need to have a fiscal adjustment (lower spending or higher taxes) of 8.8% of GDP. While that might sound like a small number, realize that our tax revenue is approximately 18% of GDP.

Factors That Cause a Debt Crisis

1. Excessively large debt (pretty obvious).

2. Excessive dependence on foreign capital (which may flee).

3. Economic weakness (the debt-to GDP ratio grows if GDP is stagnant).

4. Political weakness (excessive spending and insufficient taxation).

5. Irrational exuberance (b/c investors don’t learn about the risks of debt from the past).

In the US , we could argue that we’re five-for-five (on these factors).

Six Ways Out of a Debt Crisis

1. Higher GDP growth.

2. Lower interest rates (to reduce impact of excess debt).

3. Bailout – capital from abroad.

4. Raising taxes / cutting spending.

5. Inflation (printing money).

6. Default.

Here’s a quick summary of these six exit strategies. The US is too mature for high growth. Eventually, risk premiums make low rates impossible. We’re too large to be bailed out. We don’t have the political will to cut spending or raise taxes. We’re unlikely to default (b/c we can print money). So, high inflation seems likely.

Key Lessons From History

1. Governments do not cut spending or entitlements. Similarly, they do not reduce taxes to stimulate growth. They do not tax consumption to stimulate savings. They do not grow their way out of the problem (without defaulting or depreciating).

2. Governments encourage central banks and commercial banks to load up on government debt. They often discourage foreign investment so that investors are left with little choice but buying domestic debt. They tend to default on commitments to weaker creditor groups. They condemn bond investors to negative real returns (through inflation).

3. Not all debt crises are the same. We have issued much short-term debt – so rates may rise ahead of inflation. We could have high rates in a deflationary period! This may mean that inflating our way out of the problem won’t work and we would have to default.

See…short and sweet. I didn’t clutter this report with any reason to be optimistic.

end of Leed's article.

In our view, this makes more certain and hastens the growing gap between the haves and the have nots, which is another way of declaring the extinction of the American middle Class. What happens when there are 30 million, 60 million or 50 million have nots who cannot afford to live?