Very aware that this is an international blog, I hate to air my country’s dirty laundry for all to see, but the light at the end of the tunnel is an oncoming train. Yes, property values have leveled off and stock market numbers are showing positive signs, but why? The United States is not exporting more and industrial creation is about the same or actually a little below average; in fact, most of our country’s new industry is from overseas companies that we wave tax fees so that they’ll come. So what is the answer? Borrowing. I’m not currently in the woods building a societal-breakdown bunker, wearing a tinfoil hat, or stockpiling candles. But here are some very sobering facts:
- According to the U.S Census Bureau, 49% of all U.S. citizens collect some form of monetary benefit from the government . . . this does NOT include illegal immigrants who receive benefits.
- 50 years ago, 1 out of 50 Americans were receiving Medicaid. Now, more than 70 million are receiving those benefits and Obamacare is projected to add 16 million more.
- Going farther back, 70 years ago, there were 45 workers for every retiree on Social Security. Today, there are 2.5 workers for every recipient.
- The U.S. Census Bureau reports, in 2014, that more than 50% of all Americans bring home less than $30,000 a year in wages.
- The rate of home ownership has declined for the 7th year in a row, the lowest in 20 years.
- In the past six years, more U.S. businesses have closed than have opened. This has never happened in U.S. history prior to 2008.
JPMorgan Chase’s CEO Jamie Dimon just sent out a 39-page letter on April 8th, 2015 to shareholders and wrote in part, “Recent activity in the Treasury markets and the currency markets is a warning shot across the bow. Treasury markets were quite turbulent in the spring and summer of 2013, when the Fed hinted that it soon would slow its asset purchases. Then on one day, October 15, 2014, Treasury securities moved 40 basis points, statistically 7 to 8 standard deviations – an unprecedented move – an event that is supposed to happen only once in every 3 billion years or so (the Treasury market has only been around for 200 years or so – of course, this should make you question statistics to begin with). Some currencies recently have had similar large moves. Importantly, Treasuries and major country currencies are considered the most standardized and liquid financial instruments in the world. Today, some banks are starting to charge customers for deposits, a reflection on the insane effects of negative interest rates.
The United States jumped away from the Gold Standard decades ago, so the idea of monetary value of a dollar is based on faith; this so that government could print money out of thin air without backing. The trillions in newly printed money has and is causing a catastrophic devaluing of the dollar. Since 2003, the value of the dollar has plummeted as much as 20%. Even recently, it was reported that Warren Buffett suddenly moved more than 70% of his government-backed investments into foreign currency. He just woke up one morning and felt like doing that? I don’t think so.
To put this in a little bit of a perspective of how bad the debt and dollar situation is, in 1974 the United States was $484 billion in debt; that means it took 200 years to get into that much debt. Since 1974, a mere 20 years later, we have amassed $16 trillion in debt. How come? Off the gold standard and printing at will. We have come to the point where we are borrowing $10 million for every minute of the day. Don’t live in the United States? Doesn’t affect you? Just think. The U.S. makes up more than a third of ALL the debt on the entire planet! Europe was and is still freaking out about Greece’s problems. David Walker, the U.S. comptroller until 2008 said the debt number is more like $70 trillion because the United States does not (for whatever reason) figure in Social Security, Medicare, employee pensions, and other governmental liabilities to which the government is already committed.
This post is not to panic anyone. It is always better to be prepared than scared. Don’t listen to anyone who sets a date of a financial collapse. There is absolutely no way to predict an event like that. It could happen in 10 days or 10 months from now. Keep your head up. Look at the market and what the “big money” guys are doing with their investments. There are several options to consider when preparing for when this will happen . . . there is no IF. Research those options and find out what is best for you and your family. No set of things is the right thing for everyone. What would you do tomorrow if everything in your account was frozen
“All truth passes through three stages:
First, it is ridiculed.
Second, it is violently opposed.
Third, it is accepted as being self-evident.”
— Arthur Schopenhauer