Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17
Bitcoin Hits New All-Time High Above $5,000 As Lagarde Concedes Defeat and Jamie Demon Shuts Up - 13th Oct 17
Golden Age for GOLD, Dark Age for the Stock Market - 13th Oct 17
The Struggle for Bolivia Is About to Begin - 13th Oct 17
3 Reasons to Take Your Invoicing Process Mobile - 13th Oct 17
What Happens When Amey Fells All of a Streets Trees (Sheffield Tree Fellings) - Video - 13th Oct 17
Stock Market Charts Show Smart Money And Dumb Money Are Moving In Opposite Directions—Here’s Why - 12th Oct 17
Your Pension Is a Lie: There’s $210 Trillion of Liabilities Our Government Can’t Fulfill - 12th Oct 17
Two Highly Recommended Books from Bob Prechter - 12th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Back to Basics: A Planned Financial Crisis?

Stock-Markets / Credit Crisis 2012 Nov 29, 2012 - 12:05 PM GMT

By: DeviantInvestor

Stock-Markets

Franklin D. Roosevelt, the 32nd president of the United States said, “In politics, nothing happens by accident. If it happens, you can bet it was planned that way.


Facts

  • The US government spends $1 – $2 Trillion more each year than it collects in revenues, using strictly cash accounting. This is not sustainable. But the deficit is actually far worse when accrued liabilities are included – as calculated by Laurence Kotlikoff. Using his numbers, the fiscal gap is approximately $222 Trillion, up about $11 Trillion from last year. The fiscal gap (present value difference between projected future spending and revenue) increased about $11 Trillion in one year because the projected future liabilities dramatically increased compared to projected future revenues. The fiscal dilemma of the US Government is actually far worse than the official budget deficit. Clearly something must drastically change.
  • The US National Debt (official cash accounting) increases about 12% per year (last five years) while the GPD (Gross Domestic Product) is hardly changing, or decreasing, if inflation were properly calculated.
  • Current US government expenses for entitlements (Social Security, Medicare, Medicaid, Military Pensions, etc.) plus current expenses for interest on the National Debt exceed current revenues. The government would still go into debt every year, even if it cut 100% of military expenses and 100% of the remaining US government bureaucracy.
  • The Federal Reserve creates $85,000,000,000 per month of new currency from “thin air” and uses that new digital currency to bail out “Too Big To Fail” (TBTF) banks. The famous “Bernanke Helicopter Drop” is dumping billions into the politically connected banks but little onto “main street” USA. In simple terms, the wealthy are bailed out, the poor are given food stamps and welfare, and the middle class pays via taxes and inflationary confiscation of their savings and pensions.
  • All of the above are signs of financial desperation resulting from unsustainable policies.

I repeat,”In politics, nothing happens by accident. If it happens, you can bet it was planned that way.

Follow this logical thought process.

Washington D.C. and Wall Street are filled with highly intelligent people who know that:

  • Unbacked paper money always declines in value to near zero.
  • The government cannot tax businesses and individuals into wealth and prosperity.
  • The government cannot create wealth, prosperity and employment by printing money – debt monetization – QE4-Ever – Inflate or Die.
  • Deficits DO matter.
  • Massive money printing will NOT help the economy long-term, but it WILL CREATE inflation in consumer prices.
  • We cannot get something for nothing.
  • Unsustainable fiscal policies will eventually collapse or fail.

However, our “leaders” in Washington D.C. and on Wall Street pretend they believe the above nonsense about printing money to create wealth and employment, debt increasing without limit, and fiscally unsustainable policies continuing forever. Why? Perhaps there is an ulterior motive!

Implications

  • Although our supposed leaders are presumably highly intelligent, educated, and knowledgeable, they act largely “brain-dead” as they lead the United States down an unsustainable path that guarantees eventual catastrophic financial destruction. Think lemmings and a cliff. Is there an ulterior motive?
  • Bankers, the military, oil companies, military contractors, large corporations, and other special interests have purchased legislation that benefits them while creating huge government expenditures. In addition to entitlements, the result is out-of-control spending. Was this out-of-control spending caused by normal greed, or was there a larger plan – an ulterior motive?
  • I suspect that the real leaders (political and financial elite) have supported and enabled unsustainable policies and practices knowing that a crisis and collapse of some sort must inevitably occur. Why? “Never waste a crisis!” The next financial crisis, like the crisis of 2008, will transfer a massive amount of wealth from the middle class to the political and financial elite and will consolidate more power under government control. “You can bet it was planned that way.

If another crisis is imminent, then consider what the next several years will do to:

  • Your income, your expenses, and your wealth
  • Consumer prices
  • The total National Debt
  • Size of the federal government

Get back to basics! “If it happens (in politics), you can bet it was planned.” If intelligent people relentlessly pursue obviously unworkable financial policies down an unsustainable path, there must be an ulterior motive. Will you, as a middle-class American (European, Canadian) benefit from the consequences of that ulterior motive? Probably not!

Are you prepared?

Read We Have Been Warned and Something for Nothing.

Counter-party risk could be devastating in the next financial crisis. If “B” owes you money and files for bankruptcy because “A” does not pay “B”, then you have counter-party risk that could be very costly. The value of gold and silver is NOT dependent upon a government or corporation paying a debt or fulfilling their promises. Gold and silver have no counter-party risk and will survive the next crisis.

The prices for gold and silver are dependent upon the total money in circulation (more money means higher gold prices), real (nominal rate minus inflation rate) interest rates (lower rates mean higher gold prices), and confidence or lack of confidence in governments and their fiscal policies. I rate gold and silver as healthy and safe investments and the bonds of various sovereign nations as increasingly risky. Would you rather own gold or government bonds from Greece (Portugal, Spain, Italy, United Kingdom, or United States)? Do you own enough gold and silver that you would feel safe in a financial melt-down?

If not, why not?

GE Christenson
aka Deviant Investor

If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2012 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife