When Will Financial Armageddon Begin?
By Greg Hunter’s USAWatchdog.com
A little more than two years ago, economist John Williams of shadowstats.com predicted a “severe recession” was coming and soon. At the time, I was working as an investigative correspondent for CNN. I interviewed Williams for a story about the coming financial crisis. Most so-called experts, at the time, did not see the financial meltdown coming, let alone that all the banks were in trouble. Williams’ assessment of the economy was spot on in 2008. I don’t see how you can characterize what we have now as anything but a “severe recession.” Accurate information is the first and foremost reason to use someone as a source when you are a journalist. In my experience, what I have gotten from Williams has been stellar. (Click here for the 2008 CNN story featuring Williams and his predictions for the President in 2012.) (Click here for shadowstats.com)
Williams also predicted 2 years ago we would have a “hyperinflationary depression” within 10 years. Then, about a year ago, he revised his prediction and narrowed the window to “five years.” The day before last Friday’s dismal jobs report, Williams said, “. . . the timing of the looming U.S. financial Armageddon is coming into better focus, with increasingly high risk of it breaking within the next six months to a year.”
“Financial Armageddon . . . within the next six months to a year.” I called Williams to see why the odds of calamity have accelerated. He told me on the phone last night, “What is happening now to bring the timing into focus is the economy IS turning down. It is no longer the perspective the economy is going to turn down. That, in turn, will eventually trigger all the problems with the dollar, the debt and the deficit.”
For confirmation the economy is rolling over, look no further than the awful jobs report from the government last Friday. The Bureau of Labor Statistics (BLS) reported July payrolls fell 131,000. To add insult to injury, the June jobs number was revised downward. The economy lost 221,000 jobs which is considerably more than the 125,000 the government reported last month.
You want more confirmation the economy is in the tank? Also, last week, the government revealed a record 40.8 million Americans are now on food stamps. More budget woes can be seen at the state level. Congress just passed an emergency aid package worth $26 billion to save teachers’ jobs around the country. States are facing $200 billion in shortfalls in the coming months. California is one of the worst, with a $19 billion budget hole to fill and a $500 billion in underfunded pensions . Commercial and residential real estate is still losing value, and set to take another plunge.
So, what’s the government doing about the economy? The Fed has set interest rates at near 0% for more than a year and a half. The economy is not taking off. According to a recent article from financial writer Jim Willie, who has a PhD in Statistics, “Never in US history has a recession struck after several extended months of emergency ultra-low interest rates. This will be the first such occurrence. The policy response from the USFed must therefore be limited. They cannot reduce the official interest rate, unless below 0% (which did happen briefly in Japan). The nation stands on the doorstep of hyper-inflation. The only available tool within the USFed tool bag is Printing Pre$$ activity, pure monetization of both USTreasurys and USAgency Mortgage Bonds.” (For the complete Willie article click here.)
How much of a chance is there the Fed will just print money to pay bills? When asked how the Fed was going to stop the slide in the economy on CNBC, St. Louis Fed President James Bullard said, “Quantitative Easing is our best bet.” For us regular folks, QE means printing money out of thin air. I talked about this in a recent post called “Money Printing Is Our Best Bet.”
How fast could things go downhill when real trouble starts? Mallory Factor at Forbes laid it out nicely in an article last week called “Collapse In Internet Time.” Factor writes, “In an age when billions of dollars in securities are traded in nanoseconds, when a 24-hour news cycle seems long, why should national decline be exempt from what the Germans call Zeitgeist, the spirit of the age? The Book of Revelation, speaking allegorically of ancient Rome, states, “Alas! Alas! You great city, you mighty city, Babylon! For in a single hour your judgment has come.” Ancient Rome surely did not expect its sudden fall any more than the Soviet Union did in 1991, or than America does now.” (Click here for the complete Forbes article.)
Ultimately, the immense debt and deficits of the United States will crush the dollar. In his most recent report, Williams says, “The unfolding renewed decline in economic activity now is likely to be one of the proximal triggers for an even greater systemic solvency crisis, one that will pummel the U.S. dollar, threaten the solvency of the U.S. government and set the stage for a hyperinflation in the United States. In turn, such a crisis would exacerbate the intensifying downturn into a hyperinflationary great depression.”
No one knows exactly when the buck will buckle, but it looks like the dollar will take a short walk off a tall building a lot sooner than later.
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About the Author
Greg Hunter
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.
Excellent if disturbing post. it seems that our masters are manipulating everything in hopes of postponing the inevitable. From what you are saying to what others are too, it is apparent that the current stock market is propped up by the FED. If people are taking their 401k money to live on then who is buying stocks? Well is it possible that QE has already come and gone? That the printed money has already been spent keeping the market from going to 3000; it’s a possibility. The difficulty is not what to do it is when to do it. If most of a person’s assets are in cash is it time to buy metal and barter items? When is too soon, too late will be obvious.
Thank you John. I always say, I’d rather be a year early than a day late.
Greg
John, I don’t believe that QE has come and gone. The FED signaled just the other day that they will likely continue pumping as much money into the system as necessary. For now, this is an unpopular political position, but a market crash in the near future will change the minds of many of those who are opposed to more QE right now. A market move perceived to be deflationary is going to initiate a very quick and significant response from the US gov and Federal Reserve. As Marc Faber has repeatedly stated: They will print. Then they will print more.
Though we may not see any sort of inflation right now according to “official” figures, if the stock markets crash, or if states starting requiring federal bailouts, we’ll be really close. Right now, the world is moving to the US dollar for safety, but this will only last until domestic and foreign investors realize the US dollar and the US government’s ability to manage this crisis has failed. After the states go under, the federal government is sure to follow.
Then, all hell will break loose in markets, currencies and the economy.
It won’t be Pretty.
SHTF Mac
“Accurate information is the first and foremost reason to use someone as a source when you are a journalist.” This is why I come here for info. I doubt that many of the lame-stream media pundits care about accuracy. Thanks, Mr. Hunter, for your tireless pursuit of truth!
Thanks Brad for the comment and support.
Greg
Hey Greg,
Timely topic. Your points are right-on. And by rehashing old predictions, you are proving that we must seriously think that your future predictions may come true. It is best to plan for armageddon, even if the odds of it occurring are slim.
Lead, gold, nitrocelulose powder, shoot’n irons, primers, water, water purification equipment, places to hole-up, and of course food, may be good items to stockpile.
markm
MarkM,
Good point Mark. I’d rather have it and not need it, than need it and not have it. Peace bro.
Greg
This article is a complete crock of B.S. I’m so sick of these “doom and gloom” guys like John Williams telling us that the “sky is falling.” Williams and his crew make these types of predictions in order to sell subscriptions to their newsletters. People have been predicting the collapse of the U.S. for decades. Guess what? It has never happened and it never will. Japan is in much worse shape than the U.S. Yet, the Japanese Yen is stronger than ever. The U.S. Dollar will not collapse and the world will not end. The U.S. will survive this recession. We always do. So, please stop with the “doom and gloom” junk.
Stephen,
Your accusations do not have a single fact to back them up. If you want to criticize me, have at it. Saying this article is a “complete crock” and you’re sick of “doom and gloom” are not facts. You look childish and stupid with the way you articulate you dissatisfaction with the post. Thank you for telling us how you feel, but feelings do count as facts. If you do write back, and I hope you do, please tell us what you do for a living.
Greg
HAHA – this must be a Paul Krugman follower. Following right off the cliff. What he says is true in the past, we have survived some pretty scary economic times, but when in history has the debt been such a high percentage of GDP and we have seriously talked of ‘monetizing the debt’. Plus, the American people used to be smart enough to elect people that knew what they were doing, or at least appointed people that did, and thus avoided much devastation. Can that be said of this administration with, what, something like 8% of all the people in the administration having any sort of real world business experience? Community organizer is a pretty thin resume for someone holding the reins at such a crucial time.
Stephen,
Actually, your comment is echoed in Revelation 18:
7How much she hath glorified herself, and lived deliciously, so much torment and sorrow give her: for she saith in her heart, I sit a queen, and am no widow, and shall see no sorrow.
8Therefore shall her plagues come in one day, death, and mourning, and famine; and she shall be utterly burned with fire: for strong is the Lord God who judgeth her.
9And the kings of the earth, who have committed fornication and lived deliciously with her, shall bewail her, and lament for her, when they shall see the smoke of her burning,…
Americans may think that America will see no sorrow, but God’s Word is true.
Tammy
This reply is to Stephen above. I’m sure the people in Russia believed the very same thing before their collapse. Probably the people in Rome too. Nobody can say for sure if the currency is going to collapse but it’s definitely a possibility. Look at Argentina as a perfect example. No matter how strong a country is, they can and always eventually get brought back down.
Stephen, the arrogance in your post is disturbing. If you are going to come to a battle of wits unarmed you will look foolish.
Stephen Clifton
don’t cry for argentina, gdp growth above 7%, pensioners saved, military downsized, boom crops forecast, bad debt redeemed, consumer confidence strong.
Hi Steve,
I’m into basic math. May be that you consider 1 + 1 = 2 a crock but 1 + 1 = 2, even in China. If the Federal Budget is 3.5 Trillion, Federal Receipts are 2 Trillion, how long would it take you to pay off the Federal Debt of 14 Trillion?
Can you do that math, Steve? The Chinese have. It’s NEVER.
Do you understand a system being stressed beyond its limits and failing?
Stephen,
While we have survived recessions (and depressions) in the past, it’s never been this bad.. In previous crisis of this magnitude, we were the creditors, not the debtors… Our outstanding debt obligations over the next 30 years are north of $130 Trillion… those are the official numbers.. I’ve read some reports that indicate over $175 Trillion…
How, exactly, do we pay for this?
Even if you were to seize the assets of every American right now, today, you would still be short of paying off our long-term obligations.
and our debt is not getting any smaller.
How, exactly, is the US dollar going to survive in the longer-term, say 5 – 10 years? In my previous comment above I mentioned that the policies of the current government and Fed are to print more money until this crisis is resolved… If the stock market crashes, home prices continue to destabilize, people lose jobs, and riots hit the streets, you can be that the solution is going to be to print. Right now, deflation looks to be winning the battle, but make no mistake, student of the Great Depression Ben Bernanke will do whatever it takes to induce inflation. This is the game plan. Like George Soros said in his book ‘The Crash of 2008 and What it Means,’ “We must first induce the opposite.” In this case, the opposite of deflation… this means printing, QEing, swapping and doing whatever it takes to offset the collapse…
BTW, this is not a recession…. We are in the opening phases of a DEPRESSION.
Expect debt-based assets to completely collapse over the next 10 years…. Home prices especially.
We were supposed to be out of this recession, according to the experts at the Fed and Treasury, as of this summer….
Yet in June 2010, after the stimulus home tax credit expired, we recorded the second lowest new home sales number on record since records were kept in 1963. The worst new home sales number on record? Yeah, that was recorded in the prior month.
Also, the job market, despite the “crock of B.S.” you hear from mainstream reports, is a complete disaster… The only reason our unemployment rate is under 10% right now is because the BLS has removed those who have fallen of the unemployment rolls from the workforce…
In reality, according John Williams, the actual unemployment figure is upwards of 22%. 1 in 5 people.
These are NOT recovery numbers, regardless of how bad you want to believe we are out of this recession (depression).
While the world may not end, and the US may not break up into 6 parts as some doomsayers have predicted, this is going to be no cakewalk. Millions will be homeless and without food. Heck, the food banks can’t even keep their shelves stocked because private donations have collapsed.
Did you not see the 30,000 people in Georgia yesterday fighting for Section 8 housing apps?
As Greg said, thanks for telling us how you feel. But facts are facts. You can close your eyes, stick your head in the sand and pretend like it doesn’t exist, but that will not change reality.
SHTF Mac
There is a ‘feud’ of sorts going on with regard to inflation vs. deflation (in case no one had already noticed.)
I like Mr. Williams take, not necessarily because he’s on the side of ‘inflation’ vs. a deflationary outcome, but because he understands that it is wrong-headed government action that plays the wild-card in these situations, where otherwise natural economic tendencies would take their course. That course, of course being Deflation.
Because the economy is not ‘free’ by any reasonable measure, due to excessive government interference, it has therefore become a ‘Political Economy’ – subject to the whims, desires, intimidations, predilections, threats and overall Demands for increasing largesse by the electorate, and as such is unable to cleanse itself of the excesses that brought on the situation in the first place.
It is for these reasons that Mr. Williams’ predictions have higher likelihood of taking place – and taking many well intentioned, highly educated, and otherwise ‘smart’ economists and $money managers by surprise.
It truly is a market that is driven almost completely by Perception and Confidence – paper thin. M.O.P.E., as Jim Sinlcair frequently uses to describe the confidence game known as our government, is the appropriate moniker and guidepost to use in order to see where we are going.
Mr. Williams (and Jim Sinclair) are treasures.
Good points C.C.
Greg
I’ve been saying for quite some time that as long as people and politicians don’t understand the difference between The Deficit as a mentality that government can just keepspending and the FED can just keep printing, and the deficit as the actual budgetary shortfall we were headed for a cliff. I sometimes think we have already steped off, and like Wylie Coyote just haven’t looked down yet.
Davis,
Great insight and comment!
Greg
That same Wylie Coyote image has been on my mind daily as I’ve read on this topic, for some months now. There’s also an element of “Charlie Brown” with Lucy and the Football in all this…
If only our leaders had been exposed to the correct cartoon media in their formative years, this tragedy might have been prevented.
You are very funny Dan.
Greg
We are warned of approaching hurricanes,tornados,earthquake potential, all weather conditions. Why is it there is no federal agency charged to warn us of the very thing that can make live meaningless, the value and sanctity of our lifes work and savings and the effects on families?
Other:
People are finally saving. So what they are saving will turn to dust?
They spend when rates are high and save when rates are low? We are a well trained lot.
Dave,
That is a really good way to look at this. Thank you.
Greg
I don’t think people are saving so much as they are actually eliminating debt. Elimination either by paying it down or by filing bankruptcy is distorting the “savings rate”. I really don’t think avg. people are actually saving much of anything at all.
Jon,
Good point. I did not think of it that way but I think you are right. Thank you.
Greg
Dear Mr. Hunter:
To Stephen the naysayer. All fiat based economies throughout history have collapsed, usually in hyperinflation. No exceptions, not one. Stephen has his head buried deeply in the sand, but his rear is sticking up with a big red bulls eye painted on it.
The day we went off gold and began printing “money” was the day we began the march to our economic destruction.
Keep up the good work Greg.
Jim Hollingsworth
Mr Hunter —
Thank you for this article, I have been listening to John Williams and Eric Sportt(?), they have done great interviews on King World.
I am a registered Independent, a very strong fiscal conservative, and a small business owner, you have outlined what many of my collegues have been feeling. All these new entitelments, all these new regulations… “Boot on BP’s neck”? more like “boot on small businesses’s neck”
They could have cut taxes, no new extensions of unemployment, no new fed programs…. all this will now give us is a high enployment for years and years…. does DC not realise why Europe has been plagued by a high unemployment for decades? they made busniesses promise and regualte them so much.
And to alleviate this downturn, they will just print and print, destroying the US dollar.
Dear Wish this was on MSM,
At this point folks should really think only about protecting themselves. Think, make it to the other side of this mess so we can rebuild the country. Thank you for your support.
Greg
We’re trying this in NJ http://www.transitionbergen.org as a way to prepare and address not only the economy but the impact it will have on energy and food availability,plus we feel climate change also will contribute to incredible costs and food shortages.
Deborah,
Even if there is no great calamity (and there is a good chance there will be) I don’t see you you can lose on thei. At the very least there is going to be some very big inflation. Good work! Thank you for sharing.
Greg
Greg:
I recently discovered the much sought after book, Dying Of Money by Jens O Parsson, is available as a free PDF download (Google: Dying of Money PDF).
The parallels between the German economy of the early 1920s and America’s economy today are frightening.
You could write several columns pointing out these similarities.
Food for thought?
Thank you Mike S.
Greg
The American consumer is the economy. They see the government bailing out this one and that one and have given their efforts a vote of no confidence. The consumer is spending less and saving a bit more. The Fed is on their hampster wheel running in circles going no where.
Jan,
Nice short summary. Thank you.
Greg
Thanks for the great info. One quick point I would add is that while gold and silver have a tendency to react inversely to currencies, when gold goes parabolic, it will be SOLELY because of a complete loss of confidence in currencies and the financial system.
Certain hard assets will be the last men (and women!) standing regardless of various exchange rates.
Chris in Manteca.
Good point. I hope people are listening. Thank you.
Greg
Greg;
You’ve come a long was since News2! This was an informative article; despite it’s dire message. It truly is better to have a heads-up and get as prepared as you can. “C.C” said it well also.
There are too many of us who are keeping our head in the sand and don’t want to know how things really work let alone try to do something about our own finances. I think the government is right at being a “lost cause”.
Jeff,
The government can be repaired but not until after it hits bottom. This is going to be a painful process but I hope it will make America stronger. Thank you!
Greg
The future looks pretty bleak….we should all savor the present and seize the moment because right now is all we have….. don’t take your present liberties for granted….the things that are coming are biblical……thank God there are people like Greg getting information out so at least we can prepare ourselves the best we can…..start trusting God He will be our only true hope….good luck.
Kenny G
Good luck to you my friend!
Greg
You know, I have sent e-mails out to all my loving family for years, it is so clear as to the direction we are headed imo.
None of them pay attention. Not one has protected them selves. Doom and Gloom, is the way they look on me. I have pretty much given up.
God in heaven what will it take, or is it not even possible for people to heed a warning anymore. We as a society are prime for a hard fall imo.
March to your own drum, and pay no attention to anyone else. United we stand? not anymore. This mentality will make things many times worst and nearly impossible to turn around.
Imagine, the world reserve currency going the way of the Argentina currency, it will be world wide.
JMT (just my thoughts)
Chuck,
Thanks for sharing your thoughts here.
Greg
If too many people become unemployed….we will have revolution.
The Fed is keenly aware that if unemployment goes beyond 25%….
say to 40 or 45%….there will be mass riots….and there are plenty
of guns available to start the revolution.
With a diminished police presence….the day of the Wild West Vigilante
will return….gangs like the Crypts and Blood will reign happily
Robert,
Scary, but it could happen.
Greg
I have a sneaking suspicion that someone in the previous administration is operating under the alias “Stephen”… the I.Q is an exact match… “henny penny”……..
Stephen’s retorts are consistent with someone who does not wish to see his way of life disappear, and his Panglossian view that he lives in the “best of all possible worlds.” It has been like that in the past when America bestrode the world, but great changes are taking place, and when one is part of them, living through them, it’s so often difficult to see objectively. He is understandably angry as he senses something is very wrong, but like the proverbial ostrich does not wish to face the truth, as it is with millions of others. Government and media are aware of this weakness and exploit it in order (so they believe) to keep the ship afloat a while longer, and knowing what the real situation is try to hide it from the masses, whether for the sake of the people, for their own sakes, or the sake of their masters, one is not quite sure.
Peter,
Well said. This cpould apply to millions of people. Thank you.
Greg
A lot of things have to happen before this scenario unfolds like:
+ USD has to loose its reserve currency status
+ States have to be drowning with debt to the point of bailouts.
+ someone has to take a stand and say no more (we won’t lend you any more $)
+ debt servicing has to take a BIG chunk of state and federal % of the budget.
You can print the difference for a LONG time and since no one is calling our bluff then inflation won’t spike.
I think that all these thing will come to fruition around 2015/2016.
That’s my prediction.
We still have some time to buy this super cheap silver.
I don’t believe we will get hyperinflation but more of high inflation.
GROM
• A lot of things have to happen before this scenario unfolds like:
+ USD has to loose its reserve currency status >> Happening now.
+ States have to be drowning with debt to the point of bailouts. √
+ someone has to take a stand and say no more (we won’t lend you any more $) Happening Now. CHINA AND ALL OTHER NATIONS HAVE CUT PURCHASES
+ debt servicing has to take a BIG chunk of state and federal % of the budget. √
You can print the difference for a LONG time and since no one is calling our bluff then inflation won’t spike. :Do you really think that the rest of the world doesn’t know a ponzi scheme when they see one? Why do you think ALL Central banks are buying gold
We still have some time to buy this super cheap silver. >>>No man know the timing on this. This thing is going to happen quickly when it starts to unfold.
Greg,
The rise of the Tea Party movement has finally force the average American to confront this reality: our current income tax system hugely contributed to the current economic mess.
When it costs over US$300 BILLION per year to comply with income tax laws and American citizens and businesses used income tax loopholes to “offshore” possibly as much as US$14 TRILLION in liquid assets to financial institutions outside the USA, no wonder why we have serious economic issues.
It’s time to at least switch to the very simple flat rate tax plan Steve Forbes proposed, which would cut tax compliance costs to a small fraction of what we spend now and encourage Americans to keep their savings and capital investments in the USA, which would mean out banks will be overflowing with real liquidity again and millions of offshored jobs return to the USA under better tax circumstances.
RaymondC,
Good point, thank you.
Greg
Bring it on!
The U.S. needs major humbling, wrath of God.
I see this coming and say it’s coming but I’m not rooting for it to happen. You don’t sound American and when the US goes down, there will not be anywhere in the world that is not effected
George,
The only thing one can do is prepare and vote the bums out.
Thank you
Greg
i have been preaching to the choir for years about about this reckless
abandament of fiscal responsibility we outsourced america and we are now paying the price for it. We have turned into a nation of consumers
and the reason bernake’s models of the last depression are not working ,is that we don’t have all the manufacturing that we had during WWII. To bring us out of the depression we must ramp up consumption,to rescue the economy and the only way to do that is by bringing back manufacturing, back to usa so the one trillion dollar question is ? how do you get people back to work without any jobs returning back to america
David,
Save yourself. That’s the best path now.
Greg
greg,
my question to you is, after all of your research, do you think this economic collapse is inevitable? personally i do and i have seen it coming for many years. my advice is to teach our children the truth and the right way to go about things in hope that some day they will succeed where we have failed.
AJ,
We cannot avoid what is coming. Thank you.
Greg
Greets–Heard you on .coasttocoastam. last night.., and so I got onto the eBay site and purchased a roll of ‘buy it now’ pre-64 U.S. 90% silver quarters, mostly because your informative research put a fire under my feet to do so. Thanks for the reminder to remain focused on the reality of the plunge. Btw: I noticed that the offerings for us ‘little-people’ are meager compared to years past, i.e., many rolls available.., but last night only ONE! Seems that is not the only comodity drying up either.., if you catch my drift. I sure hope you get on ‘coast’ more often in order to keep us abreast of the weather.., as I for one mostly get my current affairs, and comprehensions of what’s happening from deadicated people/experts like you. Thanks Mr. Greg Hunter, and ‘ya all.., “Keep the Faith”!
Thank you Mike.
Greg
A good job right now is a auto mechanic because people are holding on to there cars longer. I would be careful about the health industry jobs. We didn’t have all this health cost in tell it became a industry it’s not needed at the price they want. When Warren Buffet became a railroad man, he was saying, what was big in the pass will be need in the future. Look to the pass for a lasting job don’t believe the education industry for what will be needed.
Thank you Bob for the comment.
Greg
The government warns of things like looming food shortages, then pushes a law that would effectively criminalize growing food in your own backyard, or sharing it with your neighbors. Then you have the provisions of The Patriot Act that criminalize “hoarding” of food.
The people scramble to put what little money they have left in safe havens and the government proposes taxing investment. Gold? There’s a plan to “crackdown” on commercial gold buyers, that began with out-of-the-blue attacks on Goldline, as if we need protection from choosing how best to liquidate our precious metals. I can see that initiative spread to other dealers, effectively banning precious metals in private hands by making it tough to convert. If you can’t legally convert it to needful things, you might as well have lead in your safe. Oh, wait a minute, the EPA has plans to outlaw lead for reloading standard ammunition, so even that will be heavily regulated.
The government warns of looming shortages on pharmaceuticals (yesterday I was told by my pharmacist that my high blood pressure meds were in short supply and she would try to get 1 month’s worth). The government’s “cure”? Why, they propose to implement the UN’s initiative to outlaw the growing of curative herbs in home gardens and the ability to purchase homeopathic herbal remedies.
I first heard about Greg last night on Coast To Coast AM and went promptly to this site this morning. It’s bookmarked on my computer for a daily morning read along with Mish Shedlock’s site.
Thanks for the timely information. These days, that’s a commodity in short supply!
Victor,
Very good point.
Greg
“Rome surely did not expect its sudden fall”?
If you call 400 years sudden.
Robert,
You make a good point but at some point it fell. We live in the high speed internet age, and the time it takes to get really bad will be faster than most can imagin. Thank you for the comment and history lesson.
Greg
People have warned the American public for decades this day was coming they were called nutjobs. Even today the sheeple with the foresight of 30 second sound bite have no clue what is coming. In end they will be rioting in the streets and asking themselves how did this happen? It happens because Americans are lazy and didn’t straighten out the corruption years ago. Now we all are going to pay a very heavy price for apathy.
Thank you Bruce for the comment.
Greg
I also think that our country will be facing a very tough time. However, I have been constantly debating which path is the best to protect myself financially. With a fiat currency, the true question of asset growth and wealth protection always reverts back to the debate between inflation vs. deflation. That is the real question and has the greatest impact on wealth. I was at first an “inflationist”. I thought printing money and the history of the value of our currency suggested a devaluing of our currency. However, recently I have been leaning more towards deflation. With the example of Japan, credit tightening, and home values falling (largest wealth asset of avg American), and demographics, it looks more like deflation is a higher probability with an outcome of possible inflation at the end. Japan is a great example of deflation (housing bust with huge government spending).
Let me know what you think!
Dan
Dan,
It is both inflation and deflation at the same time. Isn’t that what we have now. Deflation in employmentand housing. Home prices will surely will go down more when historically low rates rise. Inflation in most everything else. There is no way the dollar will retain its buying power when this much money is printed. Remember, even in the Great Depression the dollar was backed by gold. Yes, FDR revalued the price to $35.00 per ounce from $20.67 but it was still backed by gold. Not the case now. Why else can the government print so much money? Nothing is stopping them!!
Greg
Hi Greg,
Your thinking is that our government is as stupid as Wiemar Germany however they may have another trick up its sleeve: It could stop printing money and default on its dollar-denominated debt. Since a large portion of our bank deposits are kept in US Treasuries, debt default would be massively deflationary. You’d still have your money in the bank, but you’d only be allowed to withdraw tiny amounts. Gold coins wouldn’t be worthless, but they’d be worth less if everyone were desperately looking for dollars.
Russia did exactly this in 1998, and the ruble’s value nearly tripled in minutes. People who’d sold all their rubles for dollars suddenly had to buy them back at much higher prices to pay for rent, food, and taxes.
I tend to agree with your overall view however am convinced that Uncle Ben, Turbotax Timmy et al, are way, way ahead on our thinking and when push comes to shove may pull the rug out on everybody. Enjoy your column.
Zippy,
The ruble is not a reserve currency and there is no way the government is going to stop printing money. Just the opposite. It was announced by the Fed this past week that “Quantitative Easing” (money printing) is approved for a second round. That is a fact but I appreciate your comment!!
Greg
The Wrath of God now.
You hit a nerve with this one Greg!
C
Claybird,
I just hope I can stay on the good side of God because we are all going to really need him. Thank you for the comment and it is nice to hear from you.
Greg
I have been a follower of Williams, Willie, Shedlock, Schiff and a cast of others dating back to the late 90s in some cases. If you really want to talk to the real genius, the godfather of credit analysis–the guy who not only called it right but wrote about it incessantly and coherently–you want to speak with Doug Noland of Federated Investors. If you want his contact information, I will pass it along . . .
David,
All the people you mentioned are big thinkers and I have read and admired their work. I have already sent you an email thank you for contacting me.
Greg
In regards to Chuck’s comments:
I couldn’t agree more. I try to educate my friends and family on the need to be prepared and they all think I’m just a paranoid conspiracy nut, albeit one whose company and friendship they enjoy. I’ve practically stopped trying but these people we love are going to be a drag on us when TSHTF. They will come crawling to us preppers for help when there is nothing else left to do. And I will help them but will have to bite my tongue in half not to say “I told you so. . .”
Mr.Hunter,
Great information! As a C2C am listerner for a decade now.The problem is that people still hold to their liberal or conservative corners. It doesn’t matter anymore, because when this economy is truly finished, it will not matter.One’s lofty political beliefs and ideals will be the least of anyone’s worries. What’s so complicated for our government to understand about money? Here’s how I learned about money in my first economics class in ninth grade.
No job= No income
No income = No taxes paid
No taxes paid = Less government revenue
Less government revenue = Less money for government infrastructure,programs (state and local)
Less money for government = higher taxes for the wealthiest and those who have businesses or whoever they choose to tax
Higher taxes= less hiring,mass layoffs,less growth,foreclosures,and more corrupt practices to hide or save money.
Poor business growth = no jobs
No jobs = no money
Back to the same problem! I wish more people and the government could see it this simply. Doesn’t matter. The Fed will continue to print more money. More heroin for the addict to keep them from getting dope sick. We are money sick and the Fed is printing more to keep the economic sickness going.
You don’t have to have a degree from Harvard or Yale to figure this out. This is what I learned in Economics I, O.W. Holmes High School, San Antonio,TX way back in Fall 1991.We were by no means the brightest bunch, but at least we were taught the basics. If only we could go back in time knowing what we know now.Keep up the great reporting and hope to hear you on C2C AM again.
Christine,
You were agood student! Thank you for the great comment.
Greg
EXCELLENT WORK……BIG GUY !!!!! GOD BLESS MATT SIMMONS…..HE WAS VERY SADLY REMOVED BY THE
BIG BOYS THAT YOU NEVER SEE ON TV ( HEART ATTACK DROWNED IN HOT TUB…..LIKE I’M STUPID ENOUGH
TO BELIEVE THIS STUFF )
A VERY SAD……CHRIS
Chris,
Thank you for the comment and support.
Greg
Why not abolish the Federal Reserve Act of 1913 just as what JFK tried to do. If we eliminate the Federal Reserve it should eliminate all income tax that goes to pay for the interest that the Reserve charges. Our employees (the politicians) should be listening more to us than the special interest groups and lobbyists. Greed within the government is what led us into this mess!
Mark,
I keep saying, at this point you cna only protect yourself. Thank you for writing.
Greg
Greg,
I heard you on Coast to Coast last night and found the program to be informative. I believe I heard you mention a double dip in real estate is coming, any suggestions as to what a person should do with their home(within six years of paying off), would it be wise to sell and protect the equity? I’ve heard Karl Denninger(Market Ticker) and Nicole Foss(Automatic Earth) say real estate is going to dramatically lose value. Not sure what to do with the inflation/deflation argument.
Robert,
A house is a very important asset to have because you can live in it. I would be very careful about selling and investing the money, especially if you are 6 years from paying it off. If you were going to sell, you should have done it by now. That said, don’t expect it to be worth more than it is now. But, as I said, you can live in it and your payments are now mostly principal. If you do decide to sell, then get it done ASAP. I hope this helps.
Greg
I would like to reply to Jan’s excellent comment …… the wheel may be spinning but the HAMSTER IS DEAD!
So what are we to do in the midst of the coming armageddon?
Cindy,
I wrote a post called “Get Out Of Debt, Stay Out of Debt!” It is about protecting youself and investments. Here is the link: https://usawatchdog.com/get-out-of-debt-stay-out-of-debt/ You cannot protect youself and family if you are deep in debt. If you don’t want to take big steps, then take little steps. Buy some extra canned food next time you are in the store. Buy some junk silver. That is any dime quarter or half dollar made on or before 1964. A $1.50 in change is about an ounce. (15 dimes, 6 quarters, 3 half dollars) I hope this helps you. Thank you for the question.
It is unfortunate to see that someone has quoted the Bible to support this very fine, well supported writing. In the same book of Revelations it also talks about the beast (the governments) and the false prophet (the institution of religions) have always had a very integral and cozy relationship. This event is not going to be an end of the world event-rather a new beginning. We have fooled the world for several decades and have enjoyed a very comfortable and easy life as the result. Yes, the poor and the uninformed will suffer a lot; but some times that’s what it takes to wake up to the reality that neither the beast nor the false prophet can guide you to a better place.
Mahdee,
I hope you are right about the new beginning but birth is painful. Thank you.
Greg
August 25th.
John,
Why this date?
Greg
what you say is frightening, and I wonder who in government knows best how to help the situation. Off shoring is a culprit, but so too is the money we spend on those ‘wars’ we are in. Maybe the best solution is to pray for our country. You didn’t mention the new world order, or the federal reserve. Income tax should be overhauled, but who will pay the trillions in debt?
JP,
Who will pay? Good question, thank you.
Greg
Another good article. I am writing few observations and few questions as part of my comments. The only lament I have is that several issues are raised and many complaints made without any solutions being provided. This is not the America that I know.
Before I begin, I am a Canadian with interests in USA. A strong economic USA is good for Canada and its entrepreneurs.
The general trend since the early 1970’s is the increased nexus between the corporate interests and the political establishments. The corporate interests are in generating revenues and maximizing profits. The government exists to represent people’s best interests. The nexus needs to be balanced for benefits across disparate entities. Any imbalances can lead to massive corruption and bad legislation. Does this imbalance exist? Some examples: the repeal of Glass-Steagall Act of 1933, the failure to regulate derivatives. Make your own opinion.
I always was of the opinion that Americans were optimistic though a bit paranoid and maybe ignorant. Watching some of the clips in the video, http://www.youtube.com/watch?v=2I0QN-FYkpw
, makes me wonder if Americans are maybe stupid (given that Americans spend most of their time in front of TV). No savings at all in any family! Spend, spend, and spend all your earnings away!! Not exercising balance may cost many families their freedom ultimately. Grassroots appear to be ignorant spendthrifts. This plays into the nexus spoken in my earlier paragraph. As the issues are not being questioned and the few critics silenced (or being mere spectators), the only way to go is down.
Americans were known for innovation. Note that emphasis is on the word, were! Innovation is merely profitable invention or discovery. A business is born because of innovation (famous example is Edison and GE). This is also how businesses become and stay sustainable. A sustaining business supports a progressive community. Community needs to be governed to aid this sustenance by maintaining credit and cash flow. This sustenance is extremely important to entrepreneurs and local mom-and-pop stores. It is mostly the entrepreneurs who rise to innovate and the big business buy out these innovations in order to sustain. This generates local economy that stimulates outward growth. This enables communities (and entire country) to progress (by so called domino effect and risk sharing). The 2007 stimulus till date has failed to generate the economy as the credit for entrepreneurs has dried up. Has anyone raised this issue in the mainstream media? None till date except a few in the alternative media.
There are several other observations but in the interests of keeping my comments brief, I am closing with a few questions:
1. Are the elite and the political establishment really above the law? Why has there been no arrests or charges brought against the perpetrators of the financial meltdown?
2. Why is the credit flow restricted to established companies? What has happened to the so called American Innovation? Why are the startup’s and entrepreneurs, Mom-&-Pop stores and small scale (local) industries having difficulty getting credit? Why has the venture community dried up?
3. Why is there no grassroots movement to get freedom back or even question the motives of the elected representatives (republicans and democrats alike)? Its important to note that Freedom comes with responsibility and accountability. Unfortunate that these two traits are being lost in today’s world (circles back to the first question).
I am probably harsh in my comments, and its also possible the comments may not be very focused. My only hope, it is not too late for America.
Thank you Raj.
Greg
Greg,
Great job on C2C and great article too! I’d be proud to see this site reach 0.01 on a daily basis and beyond…. I continue to plant the seeds of truth and link to usawatchdog.com. We’ll get there…we’ll get there.
“Our citizens may be deceived for awhile, and have been deceived; but as long as the presses can be protected, we may trust to them for light.” – Thomas Jefferson
“In those wretched countries where a man cannot call his tongue his own, he can scarce call anything his own. Whoever would overthrow the liberty of a nation must begin by subduing the freeness of speech” – Benjamin Franklin
“It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people’s minds.” – Samuel Adams
Good quotes Kevin. Thank you.
For what it’s worth;I work in manufacturing[dying breed?] and as of late I cannot tell you guys how many suffocating rules and forms we need to to comply with in order to make anything.At times it seems we are more focused on all the form filling than the quality of the product.
Anything done in the way of innovation is crushed by the volumes of paperwork needed to effect that change no matter how simple and helpful that innovation might be.
I just came up with an idea to allow almost everyone to easily monitor a key aspect of a group of parts and have for the last 4 months been on a treadmill of documents needed to make it happen.
I should have kept my mouth shut.It doesn’t bode well for the future.
Dave,
Thank you for real info from the front lines of the real world!!!! Thank you.
Greg
Mr. Hunter,
Missed your interview on Coast to Coast, was wondering if perhaps you might be linking to it on your website?
Thanks.
Wish tis was on MSM,
Sorry CtoC AM does not allow free links. You have to pay a small fee and you may listen on the CtoC site. It is not much and worth it. Thank you.
Greg
Greetings,
With regards to the Deflation vs. Hyperinflation crowd, I would suggest that the answer lies with the scenario that causes the most damage to the economy and the people that toil within that economy.
Take a look at the crisis that occurred between the two world wars. It affected different nations in a manner that most hurt that particular nation. Germany, a nation where people tended to have money in the bank and little debt watched as hyperinflation destroyed their savings. Not only that, but the money they did earn became worthless about as fast as they could earn it.
Here in the United States, we had a Deflationary Depression. Credit fell, prices fell and there was not enough money for everyone to pay off all the debts that we Americans love to have. It was the worst thing that could happen.
Now, which scenario would hurt us more today? Hyperinflation? OK, I would love some hyperinflation. I could pay off my school loans, my car, credit card bills and home with money that I earn in one day. After all, the Germans even had a 50 Billion Reich Marks postage stamp – I’m sure we can top that!
How about Deflation? Ooooh, that hurts a lot. If there isn’t enough money to service the mountains of debt then everything and everyone defaults, prices fall, unemployment stays high.
Deflation is what would hurt us the most and it will probably be what we get.
Just my .02
Nick,
We are having and will have both at the same time. Mark my words the dollar will be devalued. Thank you for your comment and remmember good men can disagree and still be good men. Thank you for weighing in.
Greg
Get Better Prepared with greater assets & income, while helping the country & doing a civic duty – paying as little taxes as possible – limiting our cancerous government as best as possible – SAVE ALL YOUR INCOME TAXES: tnns.org/credit
Walt,
Good ideas.
Greg
Thanks for the article. I’m feeling glad that you are focused on inflation rather than the alternative. We need you doing this to help buy us a bit more time. Williams is also doing a great service.
For your next article, I suggest you focus on individual strategies for dealing with what is coming in the economy. I would like to point out, in particular, the various proposals for improving the monetary system.
Anon,
Good sugestion.
Greg
I live in India now and had been living in US for 14 years. I came to US in 96. I am an IT guy, back in 1996 my salary was 3 lac per year in India, that means almost US$ 8000K. With that money I could afford to have a personal car driver, a cook and servant. The day I landed in US my salry was 10 times that I was making in India for the same job. I definitely did not deserve to get paid 10 times. Then with in few months I could buy a house for 300K in San Jose just by showing my visa and salary slip. The house that I was bought could be built in India with 50K. I was wondering whats was going on, reason is commodity price to build a house is same in India as well in US. Just by having a visa I could afford to have all luxury things in life. Everyhing was booming. I bought a honda accord car for 17K. That was the only thing that was dam cheap in US. In India I would need to pay atleast 50K to get that car. Only Car and electronic items were cheap and when I look at hosing I know one day its going to blow up and I sold my property in 2005 and moved to an apartment. I made 100% profit on thart house. People were crazy to buy a house with un-imaginable price back in 2006. All the IT guys in San Jose area do not deserve to get paid 100k. For what? They could be paid maximum 50K only and they are not even worth to get paid 50K( Including me). People come to office, spend time in chat, play games and go home. The productive work would be for maximum 2 hours.
The hard working guys at auto shop and manual workets were paid less and I see every one working in IT and make 100K salaries. That was crazy! I have asked couple of kids, have they ever been to farm land? have they ever been to a manufacturing plant? Have they ever seen any one who produce something and make money? The answer was big NO. All they knew was only internet, ipod, cell phone, gaming, facebook, youtube and all these kind of crap.
My intension is not to hurt any one reading this blog, but most of the jobs in IT does not deserve to paid 100K. Mark the salary limit as 50-60K. When they outsource the jobs to China, Indonasia and India mark the sary limit to the onsite consultant to 35K. For an off shore resource mark the limit as 18K. In that way you can protect the IT jobs in US. Other wise with in 5 years all IT jobs will be wipped out from US and they will be gone.
All the detroits jobs are now in a city called Chennai in India. Its a new Detriot.
http://online.wsj.com/article/SB10001424052748704111704575354853980451636.html?KEYWORDS=chennai+new+detroit
If America can not lead the world, then who would take the steps. Back in 90s a person like me from China and India like to come to US means the only option is to do post graduate course in US. There were many research jobs in US. But after 1990, I do not see any new invension and american corporates outsource service jobs to India and out source all the manufacturing jobs to China. There was no invesntion except ponzy financial products like derivatives(CDS, ETF). America has to pump money in RESEARCH areas specially in ENERGY and come up with a new economy and put the world in a new track. If US goes UP, world goes UP. If US goes down world goes down.
I am sorry in any way if I hurt some one!
Paul,
You are free to speak your mind here!
Greg
Im agree with Bob. Outo mechanic,We can use this horrible situation.
You wrore:what’s the government doing about the economy? im my point of view they just thinking and thinking and . . .
The Automatic Earth has an interesting take on the John Williams’ article you refer to here: http://theautomaticearth.blogspot.com/2010/08/august-8-2010-stoneleigh-takes-on-john.html
Interesting reading – not so much in disagreement about the end results, but about the mechanisms involved.
Sarah,
I read the article and I think they are wrong and right at the same time. We do have deflation in real estate and jobs, but there is no way the dollar gets out of this without serious devaluation. The Fed just announced another round of QE. Thank you for the comment and links. I think The Automatic Earth is a very good site. I just do not agree with them on this point. Thank you.
Greg
Debate? Point counter point? Discussion? That Time is almost done.
Rev 6….”a measure of wheat for a penny, and three measures of barley for a penny, and spare ye not the oil and the wine.”
Remember.
NAFTA, GATT, fiat, funny, PROSPERITY FOR ALL…
Hahahahahahahahahahah, Burn the Bankers…Kill the Rich and BBQ ’em, Burn it down, start over..
Just wait….
hahahahahahahahahahahaha
(obviously going mad.)
99er
That’s pretty much what I have been saying for a couple of years, at least.
We need some catastrophic event to purge all the bad and allow starting fresh, all equal in the face of disaster. When we have to help each other and respect each other as human beings.
Extreme, but the idea might have some truth to it.
Another not yet going crazy 99er
Ballste,
Hang in there 99er.
Greg
Mr Ben S. Bernanke, uh sorry Timmy Geitner….Uh Sorry Stephan…. Yea Stephan
Awaiting with anxious anticipation with regards to a rebuttal to Gregs challenge?
Hello, “Knock, Knock” anyone home? Stephan…candy gram…..
If the comment that “All fiat based economies throughout history have collapsed, usually in hyperinflation” and removing quantative easing would cause deflation then the fed has the tools to prevent a monetary collapse by a removal of QE.
The political flip side is that the deflationary impact would be higher job losses and less voters, so is the main real driver political influence to retain voters.
The potential for a currency collapse could cascade very quickly, although it would more likely happen over a few days. The initial visible phase should be a flight from stocks with sequential >500 point day falls as the dollar falls. The removal of QE measures would have to wait for an initial fall to make stocks very under valued to foreign investors as the removal of QE will take additional money out of the market.
This should not cause the dollar to collapse but a step correction.
The real question maybe can Japan sustain a step correction in the dollar without collapsing ?
McKarl,
Good stuff man!
Greg
1) The recent “bailouts” have now, according to Reuters on July 21, cost us a whooping 3.7 TRILLION (and climbing). How sick! Giving Trillions to foreign and domestic corporations and banks, many who were responsible for the meltdown in the first place. Congress gave this money away in spite of the fact that they lacked the Constitutional authority to do so, all the while ignoring the demands and welfare of almost 100% of the people.
2) A 13.0 Trillion dollar National Debt (and climbing). In only his first 18 months in office, President Obama has added to the debt a staggering 3.6 TRILLION dollars; a new record!
3) Over 2 Trillion dollars missing (and unaccounted for) from the Pentagon over the last 20 years.
4) The 60+ Trillion in liabilities and unfunded commitments, from Medicare, to Social Security, to public debt on pensions, that David Walker, the U.S. comptroller general and head of the Government Accountability Office, says “will grow by $2 trillion to $3 trillion every year and burden our children and their children after them… and that within the next five years, if nothing is done”, will bring us “a serious economic catastrophe”.
5) And lastly, a 2.2 Trillion Dollar Budget Deficit for fiscal year 2009, a 1.6 Trillion Dollar Budget Deficit for fiscal year 2010, and “trillion-dollar deficits” that will be a reality for years to come. Where is the anger of the American people? This is a staggering amount of money!
Do any one realize just how much 1 Trillion dollars is? Well, if you put 1 Million dollars a day in a piggy bank, every day for 2,000 Years (year 10 thru 2010), you would ONLY have 730,000,000,000. (That’s 730 BILLION dollars). A Million dollars a day for 2,000 Years, and you don’t even have 3/4 of a Trillion dollars. In fact, to reach the 13 Trillion dollar National Debt, you would have to spend 1 Million dollars a day, every day, for over 35,000 Years (That’s 35 THOUSAND YEARS).
Very good stuff Steve.
Greg
On a practical note, look into a REAL GOODS INVESTMENT STRATEGY if you haven’t already. Gold funds are electronic. Gold in the hand is real. Have a supply of food, medicine, batteries, etc., for several months (if not years) for you and your family. A good source of info for this is “The Alpha Strategy” and Gary North’s “Government by Emergency.” Silver Bear Cafe online has a good account of the Argentinian currency collapse and recommendations from a survivor. Good night, and good luck!
Dan, John and Jerell,
Thank you all for weighing in.
Greg
While Mel’s been gone for thirty years and I’m not sure that his book has been updated, its still good advice MEL TAPPAN’s Survival Guns
Thank You JJ for the reading material.
Greg
Great summary! The regular media channels are always stating how no one could see this, or that financial trouble, but then again they don’t promote or listen to the real experts.
Ah boy…nothing like reality to hit you in the head.
Question: What happens to the rest of the world during “our time in the barrel”? Someone once said that we may be a midget but we’re the tallest midget in the room. China, and much of Asia, is highly dependent on our consumer society and it’s an old axiom that “when America sneezes Europe catches a cold.”
I have to wonder what other dynamics play out on a global scale?
Thanks for this update Greg. Been following your blog for a while now, you summarize a lot of what I have thinking and reading from other financial blogs. It appears the first 2 weeks in August are a watershed, Martin Armstrong just came out with another forecast and it doesn’t look good at all, basically saying the same thing this will devolve into a sovereign bond crisis and then a currency crisis (I suppose they are one and the same).
No country in it’s history has ever paid off their national debt. It makes me think that no one with real capital (old money/aggregated wealth) invests in sovereign debt other than for immediate leverage politically or monetarily, they certainly don’t do it for a long term investment. I suppose banks do it for their asset columns on their books.
Keep up the good work, and God help us all.
Common Tater,
Thanks foor the info.
Greg
I remember during the Clinton administration we were close to paying off the debt. Clinton reversed course and started running big deficits, and the only real excuse given was the truth: it would help the bond market!
David,
We are in the debt end-game. It is not going to end well for any of us. Thank you for the comment.
Greg
Greg, thank you. Stumbled across your site and appreciate your efforts. It takes courage to stand up and speak the truth in the face of the typhoon of lies/disinformation that are daily vomited upon us proles, lies about every possible subject. We can believe NOTHING that is said by the phony parasites strutting about NY & DC—all efforts to focus attention on what is really happening are divinely blessed IMO.
Also fully agree with your consistent advice here to individuals to save themselves, that we are past the point of no return as a people. As the one fellow said in Apocalypse Now, “Somewhere out there the beast, and he hungry tonight.” All who are unprepared will be devoured by brutalizing conditions that are beyond their control. Even those who are FULLY prepared will only survive by the grace of God Almighty. The unprepared have no chance—the prepared have a fighting chance only.
The Stephen who scoffed at your words is a drooling buffoon, which will be its own reward. Ignorance and arrogance seem to go hand in hand so often. Let him enjoy the paper FRNs in his 401k, retirement acct., stock portfolio, etc. When he is starving, let him crawl to DC on his knees, kiss the feet of his satanic masters, and beg for help.
John Williams is a very, very valuable voice out there. His work should be followed by anyone who can read.
Also saw that someone mentioned Jim Sinclair. JS should be praised to the skies for his completely altruistic work. The man is a billionaire senior citizen who at his own expense runs his MineSet website with a view to saving as many as possible, while posting and commenting on pertinent news items daily. He actually routinely takes calls, faxes, etc. at his own home from people he never heard of, then tries to help them sort out their $$$ issues.
And yes, the inflation/deflation debate is the biggie right now. Mark me down firmly as an inflationista who thinks this whole debate is about to be settled in that direction.
Thank you Greg S.
Greg
I am a US resident with Thai citizenship. I have been seriously thinking of late to move to Thailand. Of course, I am to take my partner and the family with me if they agree to go. I am looking at how things are heading in the USA, it’s not pretty. True that Thailand’s politic is a mess but it has been the norm there. It doesn’t bother me a bit. Now reports show that the export grows 20% this year, tax collection is 20% higher than expected eventhough the country went through many political bumps lately. GDP is on track for 5% to 7% area. It has foreign reserve of $100 billion while public debt is around $85 billion. It runs a deficit of around 5% of tax collected. Unemployment is under 2%.
From the way I see it, I don’t see why it’s bond rating is much lower than that of USA. Also I don’t see why anyone who can move there (including myself) move already?
On the side note, the ex priminister, Thaksin Shinawatta, got Thailand out of the economic crisis started in mid 1990’s. He paid off IMF 10 years plus before the schedule. Unfortunately he was coup out. I guess the Western Bankers don’t like seeing that.
Han,
Good info. Thank you.
Greg
I would imagine and hope that as hyperinflation takes hold, (as the rising prices are obvious, and exponential in nature), that the powers that be reverse the process. Instead deflating the money supply, finally realiizing that a deflationary depression is a better alternative to the total collapse of our currency.
Thanks Pete.
Greg
I’m old enough to remember when we could buy a Volkswagon for just under 2 grand in the U S and just over 2 in Can. Then the Cheap Japanese cars started to flood the market. Guess who was buying these cheap cars.
Union people! that’s who. GM, Ford and Chrysler workers making the big bucks. AFL and CIO union people as well.
We cut our own throats back in the 60’s and 70’s.
Now we blame the big auto makers here for not keeping up.
We the people are to blame only now we’re looking for someone else to blame.
It’s over folks. Pray for your children and grand children.
What can an average person do to protect themselves? We are retired and have all of our $$ tied up in investments in 401Ks. We worked hard our whole life and saved. Is there any way to protect our life savings from becoming worthless?
I am furious that my tax dollars are being spent to protect California school teachers (and every other state). Since when do we guarantee prolifigate spenders such as CA that we will bail them out. Each state should be supported by the citizens of that state. We are becoming a giant commune and, as someone who grew up in the sixties, they do not work. Our country is is ruin……
Judy,
You must have some gold and silver coins in your direct control. Do not wait.
Greg
Greg, having paid heed to your last prognostication based on the data points you provided, I liquidated my portfolio to cash in December of 2007 and avoided the devastation to my 401K portfolio so many of my colleagues endured. With these new data points, it is equally important to craft a strategy to weather this storm. Many thanks for your insight.
Howard,
Good news!!! Thank you for sharing it with us.
Greg
Very good article. I remember that interview with John Williams two years ago. But I beg to differ on the hyperinflation projection, and here’s why: The “new” money created by the Fed out of nothing would normally cause terrible inflation IF it were out amongst the economy and purchasing goods and services. But it’s not. It has gone to big banks, brokerage firms and the offshore banking cartel. They all mostly park it back at the Fed and let it draw more interest than the nearly nil rate they got it for. Or, they park it in bonds or T’s. In other words, they’re hoarding cash. I think for this reason we’re in for more of a permanent slog of a deflationary depression, like Japan – only worse. No matter who’s right, though, we’re equally screwed.
Ann,
We will have deflation but inflation as well. I just feel Williams is correct. Tha dollare is toast. It will be devalued by the printing press. I appreciate your point of view. Thank you.
Greg
Planned economic collapse of the world economy to usher in the one world government and eventually the man of sin. Prophecy being fulfilled before the coming of the Son of Man. Nothing will deter it, be prepared…
Jeff,
I am fighting to get to the other sided of this mess. There will be better times in the distant future. I am going to try to help as many as I can get there. Thank you.
Greg
I think it we could have a hyperinflationary depression within 10 years, however, I think there will be a massive DEFLATIONARY depression first. First, look at bond yields, they are undeniably pricing in MASSIVE deflation on a scale we have never seen before, additionally, look at the markets in general, stocks, commodities, real-estate, all these markets have topped either some time in 2005-2008 and are all heading lower, with possibly the exception of gold (which can be a hedge for both deflation and inflation). I think it obvious we have horrible situation on our hands, and it has all been caused by excessive debt. The debt it too big for the FED to monetize. Readers of this article would be wise to study the concept of “debt-deflation” or read conquer the crash by Robert Prechter. I agree though that there is a good chance of hyper inflation to happen after massive deflation and after the debt has been liquidated. We shall see…
Phil,
Good point man.
Greg
Enjoyed reading your article and I look forward to hearing your interview on Coast to Coast later today.
Something definitely hangs in the balance and the global see-saw ride is about to break. (and when it does everyone falls down)
Hope for the best but be prepared for the worst is a rule I live by…….but unbeknownst to most we are running out of “best”.
Those of us who are prepared and on the short side should weather the storm well.
Keep up the great work.
Barry,
Sounds like you have been working on getting prepared for awhile. Good work man!
Greg
Greg, I hear everyone say get ready for the bad times, HOW, I have no job, my son graduated college last year, no job, barely enough to get by, wife works hard but, her boss is super wealthy and thinks things are great and republicans an democrats are one and the same! I cannot afford a gun and def not gold!! Too hot for the garden right now. So we are doomed, and many more of us then you rich folks. See my point is what is the answer? Our vote means nothing, congress is for themselves and big business, food fuel going up! Hell man if what you say and my research shows we are royally screwed. Love your site!
Ozzi,
If you can’t prepare big then think small. Buy some extra dry and canned food everytime you go grocery shopping. Try to find some junk silver–that means 1964 or earlier dimes, quarters and half dollars. A $1.50 in change equals about an ounce. (15 dimes,6 quarters, 3 half dollars) Take little steps but do not sit and do nothing. Hang in there and thank you for your support and comment!!
Greg
What I think is going to happen:
Scitzo-Flation
http://www.scribd.com/doc/33289154/M-A-O-U-S-scitzoflation
Scitzo-Flation part II
http://www.scribd.com/doc/35556095/M-A-O-U-S-The-Scorpio-Syndrome-Scitzo-flation-part-II
Mike,
Never heard of it but I’ll check it out. Thank you.
Greg
I stumbled across this site while searching for criticism of a Nicole Foss lecture on the same topic (couldn’t find much). A bunch of us have banded together to figure out how to weather this upcoming storm, but we need information. I’m really glad I found this column, because information is sorely lacking, and you won’t find much of this being reported on mainstream financial programs. Thank you.
Deborah,
I am the one that should thank you for the kind words and support.
Greg
Too big to fail.
Too big to jail.
But not to big to hang for TREASON.
I keep hearing the same tune: buy gold because the dollar will be worth very little, soon. So? You can’t eat gold! And one wouldn’t want to sell it for dollars if the dollar is worth nothing.
Others say that gold and silver will be the new barter system in place of dollars. There is no indication that this will happen in the future. One certainly cannot buy food with gold, right now. If it will be possible in the future, what about those who have no gold or silver? I suspect that those who have purchased enough gold and silver to live off of will be a small minority of the populace.
Help me out with this issue, please. Virginia
Virginia,
Gold and silver have been both a store of wealth and money for 5,000 years. I do not know how the continued financial calamity we are in will unfold, but I do know the dollar will have considerably less buying power in the future. You can’t eat gold but you cannot eat dollars either but I ask you wouldn’t you be better off with a currency that cannot be inflated away by a central bank? There are many dollar, gold and inflation posts on this site that will give you more information. Virginia I cannot stress enough that what we are at the beginning of a great change unlike the world has ever seen. Please do not worry about the people who do not have silver and gold, just make sure you are not one of them. I am sure there are plenty of nice people (who read this site) that will weigh in with their views and also give you some guidance. You simply cannot face the coming storm we face with only paper dollars. It would be like wearing a paper rain coat in a downpour. Thank you for your comment. I hope you find the answer you need soon. Time is getting short.
Greg
Greg,
As a Prepper, to run across a CNN reporter discussing this gives me great hope of the population in whole are starting to awaken to the reality of the matrix. The real answer is there is no such thing as being COMPLETLY prepared for hard times. What can be done are the essentials and to conservatively approach persons of like mind. (They are out there) As a group there is strength, with a group you do not have to focus on All things. It is like the beginning of society in reverse. With a core group of friends and family the first thing to be done in hard times is to start to build it back up.
Thank you Train, Jeff and Daniel for the comments.
Greg
Thanks, Greg. I suspect that none of us really knows what the future will bring, in detail. How food will be procured, how taxes will be paid, how insurance and health care will work or if many of our institutions will survive intact. I do believe that you are right in suggesting that, soon, much will be different. Again, you are correct that preparation is vital. Thanks you for your insight. It is very helpful. Virginia
The inflation rate that the GOV’T USES IS BASED UPON THE AVERAGE INCOME OF $50,000 A YEAR. WHEN IT SAYS WE HAD 1.5% INFLATION LAST MONTH OR LAST YEAR, IT IS BASED UPON AN AVERAGE OF ITEMS BOUGHT. WHICH MEANS IF BREAD, EGGS, MEAT, ELECTRICITY,& shoes, AND FUEL FOR YOUR CAR, GOES UP 10% IT IS OFFSET BY NON-ESSENTIALS THAT PEOPLE DO NOT HAVE TO HAVE SUCH AS NEW LAPTOPS, AIR CONDITIONERS, NEW CARS, NEW TRUCKS, NEW FURNITURE, MATRESSES, EATING OUT AT RESTAURANTS, ETC. SO ONE OFFSETS THE OTHERS AND THE GOV’T SAYS WE HAVE NO INFLATION, THEN look at the facts of 1.5% inflation on a person who does not make $50,000 a year, SUPPOSE YOU ONLY MAKE HALF THAT AMOUNT OR LESS? THAT MEANS YOU ARE EXPERIENCING MORE LIKE 3% OR MORE BECAUSE PRICE INCREASES DO NOT CARE HOW MUCH YOU MAKE FOR INCOME. THEY ARE JUST THERE. for example………do you think that AN INVESTMENT BANKER WHO MAKES A MILLION DOLLARS A YEAR CONSIDERS INFLATION A THREAT TO HIS PERSONAL LIFESTYLE? ? DO YOU SERIOUSLY THINK A MILLIONAIR WORRIES ABOUT $10 A GALLON GASOLINE FOR HIS FARARI OR PORSHE? DO YOU?
John Becker and Mufaso,
Both of you guys have sound thinking and good comments.
Greg
Thanks for a really interesting read, learn quite a few tips here, trying hard to improve my credit , i did a consumer proposal 7 years ago and just now i am starting to rebuild my credit slowly but surely and trying to avoid that credit card trap.
Debt growth is just another bubble waiting to POP. We simply don’t have the jobs to support this trend. The stock market will decline to an adjusted 5800…..Get ready….Love you anyway : )
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