When the government pumps trillions of dollars into the economy, they’re not actually printing the money. It enters as digital entries in banks across the country. It’s made the system fast, responsive, and, unfortunately, vulnerable. Now our money is no longer something we hold in our hands, but something that exists on a very susceptible network.
The so-called recovery is only built on debt and printed cash declares our own Byron King. In the long term, the only option for the government to continue financing it's operations is to print too many dollars. Money printing has it's limits, however. It's Byron's opinion that at some point, perhaps very soon, the government will have to turn to more desperate measures. Namely, capital controls. In the following featured essay, Byron outlines 4 probably ways the government will take your cash and one play you can buy through your broker to prepare today. Read on...
Americans expatriate because they want to get out of the country. Corporations expatriate for similar reasons. Clem Chambers explains...
In a 2009 article, the Huffington Post went into considerable detail about the number of people with PhD degrees in economics employed by the Board of Governors of the Federal Reserve System. This is the government’s branch of the Federal Reserve. It is not one of the 12 regional Federal Reserve banks, all of which […]
The U.S. dollar is the dominant global reserve currency. All markets, including stocks, bonds, commodities, and foreign exchange are affected by the value of the dollar.The value of the dollar, in effect, its “price” is determined by interest rates. When the Federal Reserve manipulates interest rates, it is manipulating, and therefore distorting, every market in […]
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance or the get-rich-quick adventurer. They will die poor.– Jesse Livermore, How to Trade in StocksThe trouble with capitalism’s guardians is that they have no […]
John Foust, a Democrat running for the 10th congressional seat in Northern Virginia, is — like Gov. Terry McAuliffe and other state Democrats — gung-ho to expand Medicaid. His wife’s position is, shall we say, a bit more nuanced.Foust has slammed his opponent, Republican Del. Barbara Comstock, for her opposition to expansion. He has spoken […]
The midterm election season is upon us, and it’s a tossup whether the Republicans will win the Senate, or if President Obama, seemingly oblivious as conflict flares up around the world, will, through his continuous campaigning, keep Harry Reid in his majority leader seat.The only thing we know for sure is that sociopaths will be […]
Alexander Hamilton was America’s first Secretary of Treasury under President George Washington. When he first entered office in 1789, America was an agricultural nation of just 4 million still broke from its financially costly victory over the British Empire in the Revolutionary War.The states had accumulated relatively massive debts to finance that war, which mostly […]
A great technology solves a problem that we didn’t know we had. It makes us aware of deprivations we didn’t know existed until we discover the new thing. Once discovered, we can’t go back.People in the 1950s, for example, never missed the smart phone. They were pleased to have a phone at all. But today, […]
Fifty years after the 1929 crash, a group of money managers and investment thinkers put together a collection of essays looking back at that experience. The result was a distillation of some pretty fine investment wisdom. Timely, I think, to review now.One of the contributors was Arthur Zeikel, then with Merrill Lynch. The title of […]
Although the mainstream media have turned its attention away from the wreckage of Obamacare, don’t think for a second that all is well.As the politicos in D.C. focus their attention on the midterm elections in November, now is a great time to study, prepare, and seek out the most affordable, accessible, and highest quality options […]
Turn on the tube and economic ignorance seems to be everywhere. There is constant shilling for more government. Business is demonized. Man is said to be trashing the environment. “Workers and women are oppressed” is the constant mantra.And members of the clueless media nod their heads in unison.Only John Stossel has provided the fresh air […]
In early July 1944, delegates from 44 countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. A three-week summit took place, at which a new system was agreed to regulate the international monetary and financial order after the Second World War.The U.S. was already the world’s commercial powerhouse, having eclipsed the British […]
In the minds of many people around the world, including in the United States, the term “capitalism” carries the idea of unfairness, exploitation, undeserved privilege and power, and immoral profit making. What is often difficult to get people to understand is that this misplaced conception of “capitalism” has nothing to do with real free markets […]
Some people are saying it is just what the doctor ordered. Others are saying that the cure is worse than the disease.The Affordable Care Act? Reengagement in Iraq? Tea Party bullying in the GOP?Not this time. Just as protracted in the corridors of Congress and the White House is the debate over the proposed reform […]
In 2012, money mandarins running the European Union chose stagnation over restructuring. Here’s a consequence of that choice: expectations for a self-sustaining economic recovery keep getting crushed.Two years ago, European Central Bank (ECB) chief Mario Draghi promised to do “whatever it takes” to hold the eurozone together. He bluffed nervous investors into believing in a […]
People jacked up about income inequality can find a new hobby. The 1% are victims of a doomsday machine, and the countdown is ticking. Machine, thy name is “family.”This came to mind as I was reading a preview of Columbia Professor Andrew Ang’s forthcoming, must-read book on Asset Management. Ang is that oxymoron, an exciting […]
It might sound like the latest new product from Apple, but IPAB is actually the newest major legal challenge to Obamacare.Recently, a three-judge panel in the 9th Circuit Court of Appeals in San Francisco heard arguments about the Independent Payment Advisory Board, or IPAB, a 15-member panel created by the Affordable Care Act and empowered […]
Americans have come to believe that the IRS and the income tax are inevitable parts of our lives. After all, most everyone alive today has lived his entire life under federal income taxation.It wasn’t always that way. For some 125 years, the American people lived without having any tax imposed upon their income.The obvious question […]
Here’s a fun fact: Although we all hate the U.S. dollar, as it continues to hemorrhage wealth, its foothold as the world’s reserve currency isn’t going to disappear overnight.A Russian gas deal with China won’t change that — as we’ll highlight below.But before we get to the nitty-gritty, let’s dive into a story that’s right […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
The Keynesian disaster recovery plan has been to lower rates, force people to take more risk in search of yield, and entice others to borrow and spend and, magically, more jobs will be created. If people won’t buy stocks, central banks will.Back in 2011, Ben Bernanke, when asked if QE2 was driving up stock prices, […]
I want to share some insight and give you a front-row seat to America’s next big shale play.Let’s get to it…Over the past 10 years, the U.S. has turned the ship around, quite literally.We’ve gone from a country that was expecting to import massive amounts of oil and gas — to a country that’s sitting […]
Whatever your views on the role of government, one thing is clear: There will be no way to pay for it if the economy doesn’t grow. And I’m not talking by a measly percentage point or two. If we can’t find our way back to 5% annual economic growth or above soon, America’s accumulated federal […]
According to the Bureau of Labor Statistics, consumer prices are rising at a 2.1% annual rate. This suggests to us that the current stock market boom will die with a bang, rather than a whimper.Fed economists say they don’t think inflation rates are rising. They think the most recent reading is a fluke. But why […]
Politicians love raising the minimum wage because they don’t have to ask voters to pay more in taxes. They just dump the costs onto shop owners. But they don’t act like politicians and go into debt to pretend like they have all the money in the world. They face real world situations. And sometimes that means replacing workers with more affordable options...
Our “Crash Alert” flag warns of a crash in U.S. stocks. Readers are advised to proceed with caution.
But since the start of September, the news for stocks has not been bad. If you want to buy stocks, the financial press and Wall Street can give you plenty of reasons to do so.
There is hope, they will tell you, for the Empire of Debt… and its capital structure.
Yes — reporters, analysts and commentators are back at work. They’re finding problems. Risks. Worries. And reasons to be bullish too.
Fracking, for example, will add $1,200 to the average U.S. household income.
“Surging oil and natural gas production brought on by hydraulic fracturing is lifting the U.S. economy by lowering energy costs for consumers and manufacturers, according an industry-funded report.
“In 2012, the energy boom supported 2.1 million jobs, added almost $75 billion in federal and state revenues, contributed $283 billion to the gross domestic product and lifted household income by more than $1,200, according to the report released today from IHS CERA.”
Maybe Bloomberg is right. Maybe fracking will give the American Empire of Debt a new lease on life… much like how Imperial Rome limped on 200 years after the Crisis of the Third Century.
Fracking will reduce the trade deficit, goes the logic… turn the U.S. into an even greater manufacturer… and beef up household incomes.
But we wouldn’t rush out to spend that money, if we were you…
It would be nice if the U.S. were entering a new golden age… like the time between the end of World War II and the end of the 20th century. But that brought the seeds of its own destruction, remember.
The first part of that boom was genuine — with rising wages and improving standards of living. The second part — in the 1980s and 1990s — was largely fraudulent, funded almost entirely with borrowed money.
People spent more… they lived better… but they went further into debt. Now they are faced with years of debt reduction and lower living standards.
The Age of Granite Countertops
So far, the 21st century has been no golden age either. It is more like an Age of Granite Countertops. It is an age where appearances count for more than reality.
First, most Americans who are improving their standards of living are doing so by spending money they don’t have on things they don’t need. They buy bigger houses and fancier cars.
Second, when the credit bubble pops the feds try to engineer a “recovery” by unleashing even more cheap credit.
The things that really matter — savings, investment, peace and prosperity — haven’t happened.
The things that have happened have been big disasters — pointless wars and jackass economic policies that encouraged spending and zombieism.
One of those policies is in the news again: student loans. It is another corrupt government program bearing another bitter fruit. From Reuters on what we don’t know about the $1.2 trillion student loan problem:
“$1.2 trillion — the estimated amount in outstanding student debt.
“$260 billion — what that amount was in 2004.
“37 million — Americans with student loan debt outstanding, according to estimates from the New York Fed.
“$28,000 — The typical 2012 college graduate’s debt load upon Graduation Day, according to Hamilton Place Strategies.
“$9,000 — That debt load in 1993.
“$810 billion and $670 billion – The total outstanding auto and credit card debt held by Americans, respectively, putting student debt into a clear lead.
“The default rates:
“13.4% — the national default rate for borrowers whose loans entered repayment from fall 2009 to fall 2010. (This is the first year for which the government has released three-year default data.)
“22.7% — defaults in the first three years for graduates from for-profit colleges. ‘For-profit institutions had the highest average three-year default rates at 22.7%, with public institutions following at 11% and private non-profit institutions at 7.5%,’ according to the Department of Education.
“Nearly 47% of all defaults were from for-profit colleges, the Institute for College Access & Success said, even though those institutions have just a 13% share of college enrollment.
“7 million — Number of student loan borrowers in default, out of an estimated 37 million total. That includes public and private loans, according to the CFPB.”
Everyone Wants to Be an Insider
Student loans are only a small part of a big tableau. But everywhere you look the scene is the same. The insiders are taking more and more wealth from the outsiders.
Everyone wants to be an insider. And in a democracy especially, over time, more and more people find ways to game the system and join the insiders.
Finally, everyone seems to have an angle.
And soon civilization is on the road to decline and ruin. This happens when there are more parasites than producers… and more voters with their hands in the cookie jar than there are people making cookies!
Thanks to Richard Russell at Dow Theory Letters, we can pass along this picture of a zombified America. From The Week:
“In America, 7 out of 10 people are on the dole, said Michael Tanner. That’s the percentage of people who receive more in government benefits than they pay in taxes, according to a new Tax Foundation study.
“Some of these beneficiaries of Uncle Sam’s largesse are the poor; another new study, by the Cato Foundation, found that families collecting various welfare benefits, including food stamps, ‘temporary’ cash assistance, and Medicaid, could bring in the equivalent of $35,000 a year — more than someone would earn in a $20-an-hour job.
“But it’s not just the poor who feed at the trough of our vast welfare state. Most seniors get far more from Social Security and Medicare than they contribute in payroll taxes.
“Giant corporations get $100 billion in direct payments and subsidies from the government, in the form of farm and ‘green’ energy subsidies, and Export-Import bank loan guarantees. The military squanders billions on weapons systems it doesn’t need, to fund jobs in key lawmakers’ districts.”
Yes, dear reader. A little democracy — restrained, say, by a Bill of Rights and a Constitution — may be a good thing. But sooner or later, the zombies take over.
Then it is best understood by the old definition. Democracy: a political system in which two wolves and one sheep vote on what to have for dinner.
Hark… is that the dinner bell we hear?
– Bill Bonner
Article originally appeared here.