Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
Will Biden’s Neo-Populist Economic Doctrine Support Gold? - 25th Sep 21
Markets Deflationary Winds Howling - 25th Sep 21
Crude Oil Price Piercing the Sky: Where Will We See the Black Gold by Xmas? - 25th Sep 21
Cryptocurrency policy choices and consequences - 25th Sep 21
The Next Emma Raducanu UK Tennis Star Pleasing the Crowds at Millhouses Park Sheffield - 25th Sep 21
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Coming Economic Apocalypse

Economics / Great Depression II Jun 28, 2009 - 12:00 PM GMT

By: Roy_F_Grieder


Best Financial Markets Analysis ArticleAstonishing to me is the fact that no one seems to understand the ultimate result of the current policies and practices of Washington D.C. and the Federal Reserve Bank, the Fed. I have studied our economic situation for about 3 hours per day  for the last 8 months and conclude we are bankrupt. Think about the facts.

Certainly most of the automobile industry, the airlines, 37 out of 50 states, are bankrupt. The lending industry, Fannie Mae, Freddie Mac are bankrupt. Insurance giant AIG,    bankrupt. The Pension Benefit Guarantee  Corporation, or PBGC, the Federal Deposit Insurance Corporation, or FDIC, Social Security including Medicare and Medicaid are rapidly approaching insolvency.

In 1929 personal and corporate debt had risen to 365% of Gross Domestic Product, or GDP, before the Crash. We are now at 375% of GDP. So all of this excessive credit got us into this mess in the first place, right?. And the government and Fed solution to this mess is to print up an extra trillion dollars or so, give it to the lending industry and yell “Lend!, Lend!”. That should work, right?.

Remember TARP?, the money given to the banks and others  to remove their “Toxic Assets” (sorry too harsh, let’s rename them “Troubled Assets.) Well, the toxins still remain. They exist in the form of Financial Derivatives, Credit Default Swaps, or CDS,  and Collateralized Debt Obligations, or CDO. These financial instruments sound complicated, and they are. They are the inventions of Wall Street wunderkinds, the ones that get paid a couple of millions per year for their “brilliance“. The worldwide market (if you could call it that) or value of CDS is in the neighborhood of 600 trillion dollars, or 10 times the entire Worlds yearly economic output. How  the banks and insurance giants are to clear their balance sheets of these toxins is no mystery . They cannot. Was it wise to take TARP money, 20 billion dollars, give it to General Motors  when their market cap (the value of their common stock) was 985 million?. Will they pay us back?. No. They are bankrupt. The TARP was a fraud from the start, but it has bought the powers that be some time. Time, time for what?

There is a fever pitch rush to consolidate control over us by the government and the Fed. Look what they are doing to the banks, insurance, lending institutions, auto industry, airlines. Let’s now add health care. By the way, let’s appoint czars and  give them power not granted by the Constitution. Why?, what’s the rush? To gain control before we go “out of control”?.

And now 37 out of 50 bankrupt states need to raise fees and taxes, and so does our federal government to pay for “free” healthcare. Raise taxes during a deep recession?, worked great in the early 1930’s, right?. Are these people idiots? Yes they are. Why not have a 2 trillion dollar deficit this year, and run up the national debt to 20 trillion dollars in a few years. Interest  on the debt would only be 1 trillion a year at 5 per cent. Chump change. Government borrowing on such a massive scale will compete for the money in the open market and will make overall interest rates rise . Rates already rose a few weeks ago during a large treasury auction. Watch this carefully, mortgage rates will respond by going up. Think what this will do to the already very ill housing market.

Some “experts” as of late say they see “green shoots”, signs of economic recovery. What they “see” may be self-serving or it could be these people are delusional. The Fed Chief, Treasury Secretary, Congress and the President are lying to us. We are bankrupt and they know it. You can put a bandage on a gangrenous appendage and it looks fine, but if the appendage is not amputated the body will die. A bandage is all that is being applied to this gangrenous economy. Toxic.

So, where are we headed?. I suppose the Fed and the Treasury could just continue to print more money. Right up to the point it becomes worthless. The Weimar Republic of 1930’s Germany tried this. In the end the “money” was used to start a fire in a stove or was used as toilet paper. D.C. is too  smart for this, right? Is there another way out of this mess?.

During my research I floated the following question to 10 people of various economic means. “If you were told you had no more debt but got to keep what you had, but also you had nothing in your bank or 401K or stocks or IRA, just start anew”  9 out of 10 replied “That works for me”. Astounding, but very telling. How these people responded, along with my research, and what is unfolding (actually unraveling) leads me to the following.

We are going to wake up one morning and Matt Lauer will inform us of the following. “I’ve got good news and bad news for you, America. The good news, for most of you, is that there is no more debt. No government debt, personal debt or corporate debt. You get to keep what you have, your house, your cars, your flat screen TVs. You owe nothing. The bad news, for some of you, is that there are no assets. Your bank accounts are empty, all stock is worthless, and there is nothing in your 401K or IRA.”

None of our “leaders” in D.C. will want to take the blame for this, and will need an excuse for this. Most people will understand and even forgive how this happened when Matt goes on to say:

“What I have told you is the direct result of a computer virus that has infected the worldwide financial complex that completely melted  the balance sheets so that no one knows who owes what to whom anymore. This is why we have to start over. Just think of it as  hitting the reset button. Details on the new government monetary system will come out shortly.” Problem solved, all absolved.

When the firestorm arrives, you will be glad you  live in New Hampshire. At least here we may have a chance. During the dark days of the 1930’s peoples faith and morality held society together. Not so today sadly. Talk with your family, friends and neighbors. Come up with a plan. Things are about to become ugly. Very Ugly.

By Roy F. Grieder

Roy F. Grieder is a 58 year old retired airline captain and part time land developer and economic analyst.

© 2009 Copyright Roy F. Grieder - 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.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


05 Jul 09, 18:13

Yes well the idea is to bankrupt the nation and reduce it to a smoldering wasteland of poverty, starvation, riots, marshall law, prison camps, and Stalinesque entertainment for the elite.

But you already knew _that_...

Post Comment

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