Michael Snyder
The Economic Collapse
Sept 5, 2012
Most people just assume that since things have always been a certain
way that they will always be that way in the future. Most people just
have blind faith that the people running our government and our
financial system know exactly what they are doing and that they are
doing their best to take care of us.
In fact, once upon a time I was fully convinced of that. When I was a
kid I quickly realized that my elementary school teachers really didn’t
have the answers, but I had total faith that those running society at
the highest levels were “experts” that were looking out for our best
interests. As time went on I kept progressing in my education, and by
the time I was finished with law school I came to understand that none
of our “experts” really know what they are doing, and they are
definitely not looking out for our best interests. The blind are
leading the blind and we all need to finally admit that the emperor is
not wearing any clothes. Unfortunately, most Americans will repeat the
mantra of “if that was true I would have heard about it on the news”
until it is way too late. Most people are waiting for the “authorities”
to tell them what to do instead of thinking for themselves. Sadly,
time is rapidly running out and a lot of people are going to end up
getting totally blindsided by what is coming.
The man in charge of our financial system, Federal Reserve Chairman
Ben Bernanke, is not going to save our economy. He didn’t see the last
financial crisis coming, and even after things started falling apart he
continued to insist that housing prices would not go down and that we
would not have a recession.
Well, it turned out that we had the worst housing crash and the worst recession since the Great Depression of the 1930s.
But still millions of Americans are trusting him to save us this time around.
It isn’t going to happen.
The truth is that the design of
the Federal Reserve system itself is
fundamentally flawed.
The biggest reason why the U.S. government is 16 trillion dollars in
debt is because the system is designed to create gigantic amounts of
government debt.
Yes, without a doubt the vast majority of our politicians are corrupt
and/or incompetent, but even if we replaced every single one of them
our economic problems would still persist until the underlying
structural problems were addressed.
Most Americans are pinning their hopes for an economic turnaround on
the upcoming election, but the truth is that neither Obama or Romney has
a plan that will fix things. That statement is going to upset a lot of
people on both sides of the political spectrum, but it is true.
Over the past 40 years the total amount of all debt in the United
States has gone from less than 2 trillion dollars to almost 55 trillion
dollars. This bubble is going to burst no matter which political party
is in power.
Obama and the Democrats have tried to kick the can down the road and extend the party by spending
5.3 trillion borrowed dollars over the past 4 years, but by doing so they have made our long-term problems far worse.
The next wave of the economic crisis is
fast approaching and people need to get prepared.
So what do I mean by that?
Well, “preparation” is going to look different for each family, but there are some general principles
that apply to almost everyone.
For example, during an economic collapse hard assets are preferable to paper assets.
Also, during an economic collapse necessities become much more important and luxuries become much less important.
For many more tips, please see
this article.
For the moment, I want to focus on some of the really bad things that
could happen to you if you choose not to prepare for the coming
economic collapse….
You Could Find Yourself On The Wrong End Of A Banking Crisis
During a major financial crisis the banking world can change very rapidly.
You could wake up one day and discover that the bank holding all of your money has failed.
You could wake up one day and discover that because Ben Bernanke has
printed trillions upon trillions of new dollars to “fix” the financial
system your life savings have been devalued by 50 percent.
You could wake up one day and discover that your bank account has
been converted over to a new currency that is worth far less than the
one you thought you were holding.
Such a scenario may sound unthinkable in the United States (at least
for now), but this is the kind of thing that millions of Europeans are
extremely worried about right now.
Just check out what is happening
in Spain….
After working six years as a senior executive for a
multinational payroll-processing company in Barcelona, Spain, Mr.
Vildosola is cutting his professional and financial ties with his
troubled homeland. He has moved his family to a village near Cambridge,
England, where he will take the reins at a small software company, and
he has transferred his savings from Spanish banks to British banks.
“The macro situation in Spain is getting worse and worse,” Mr.
Vildosola, 38, said last week just hours before boarding a plane to
London with his wife and two small children. “There is just too much
risk. Spain is going to be next after Greece, and I just don’t want to
end up holding devalued pesetas.”
During the month of July alone, 94 billion dollars was pulled out of the Spanish banking system.
So that means that the equivalent of
7 percent of Spain’s GDP was withdrawn from Spanish banks during July.
That is a full-blown bank run, and Spain’s problems are just getting started.
Eventually these kinds of problems will show up in the United States as well.
You Could End Up Losing All Of Your Investments
But at least U.S. bank accounts are federally insured (for whatever that is worth).
When it comes to investments, you better be very sure that the firms you have your money with are not going to collapse on you.
For example, many of you have already heard about how Gerald Celente
had losses in the six figure range when MF Global went bankrupt. He has
been warning about the coming economic collapse for years and he still
got victimized. The following is what he
told one interviewer about what he learned from this incident….
“What’s the take away from this? It’s to make sure you have
every penny in your pocket. Because just like MF (Global), screwed
everybody else. Your also gonna get the shaft, I don’t care who it is.
What’s gonna happen when you get a message from your brokerage, from
Fidelity or somebody… yeah infidelity. Or how about Raymond James, I
don’t care who they are! You have ETFs? Oh, there’s a little error
over here, we don’t have your money. We don’t have your positions.“
“I went to a meeting… and the speaker said ETFs of GLD are
supposed to be held by HSBC in a vault in Hong Kong or England some
place, and HSBC, this guy said, is the biggest shorter of gold. Well
you figure it out! They are the ones that are holding it and they’re
shorting it? So the takeaway is to make sure you have every penny in
your possession.“
If the funds that you are relying on for your financial future are
being held by a brokerage or by an insurance company the truth is that
you could potentially lose every single penny during the coming
collapse.
The financial institution that you are depending on could suddenly go “poof” and your money could be gone just like that.
Recent legal rulings have made brokerage accounts much more vulnerable. Jim Willie explained why this is true
in a recent article….
The critical jump might occur in account
thefts from futures brokerage to stock brokerage, which began in
November 2011 with MFGlobal, then appeared in July with Peregrine
Financial Group (PFG-Best). All private accounts from MFG and
PFG have been pilfered, with a blessing of the theft by the courts, seen
in the Sentinel Mgmt Group ruling. The federal Appellate court’s August
ruling (CLICK HERE)
sets precedent for future private segregated account thefts, which were
once considered sacred and untouchable. No more in the United States,
not in the unfolding of criminality that stretches from USGovt offices
to top corporate offices, with blessings sprinkled by the courts. The
jump would be a major extension of the Fascist Business Model that
nobody talks about. The major financial firms can rely upon this
appellate court ruling as precedent, so as to protect their legal right
to re-hypothecate client funds in their high risk leveraged positions
and loans. It sure would be nice to use my neighbor’s house and car to
firm up my casino weekends. Stay tuned to the ongoing Morgan Stanley
implosion, which could force the vanishing act of 50 to 100 thousand
private stock accounts. The firm is the largest stock brokerage firm in
the land. The dreadful impact will be nasty and might awaken the US
masses. MFGlobal and PFG-Best surely did not.
Your financial advisers will swear up and down that your investments are safe.
But look at what happened to the clients of MF Global and PFG-Best.
Their investments disappeared like dust in the wind.
This isn’t meant to scare you. It is just important that you understand that the landscape has totally changed.
You Could Lose Your House
During the last recession, millions of Americans lost their homes.
Some of them had poured hundreds of thousands of dollars into their homes and they lost it all.
Why did this happen?
Well, the number one reason is because so many American families are
living on the edge. They purchased homes that they could not afford and
they just kept living paycheck to paycheck as if nothing bad would ever
happen.
But when many of those people lost their jobs, suddenly they could
not make their mortgage payments and they lost their homes as well.
Sadly, we appear not to have learned much.
Today,
77 percent of all Americans are living paycheck to paycheck at least some of the time.
You Could Lose Access To Electricity
Why don’t more Americans have a backup source of power?
Most Americans are totally dependent on the grid, and that works well until the grid goes down.
Just look at what is happening down in Louisiana. The hurricane that
just roared through was not even that strong, and yet more than 100,000
people are still without power.
The following is from a recent
Huffington Post article….
Tens of thousands of customers remained in the dark
Monday in Louisiana and Mississippi, nearly a week after Isaac inundated
the Gulf Coast with a deluge that still has some low-lying areas under
water.
Most of those were in Louisiana, where utilities reported more
than 100,000 people without power. Thousands also were without power in
Mississippi and Arkansas.
So what would you do if there was a major national crisis of some
sort and the grid went down for an extended period of time during the
winter?
When Thieves Get Desperate They Will Steal Just About Anything
Over and over it has been proven that when people cannot feed their families they will steal to get what they need.
When things hit the fan here in the United States, we will see
widespread looting and robbing. In fact, we are already seeing it
happen in Europe. Just check out what is happening
in Spain right now….
Unemployed fieldworkers and other members of the
union went to two supermarkets, one in Ecija (Sevilla) and one in Arcos
de la Frontera (Cadiz) and loaded up trolleys with basic necessities.
They said that the people were being expropriated and they planned to
“expropriate the expropriators”.
The foodstuffs, including milk, sugar, chickpeas, pasta and rice,
have been given to charities to distribute, who say they are unable to
cope with all the requests for help they receive. Unemployment in the
Sierra de Cadiz is now 40%.
And already crime is rising in many areas of the United States. In
some communities thieves are stealing just about anything that is not
bolted down.
Just recently,
49 cows that were stolen from a farm in Massachusetts were discovered at an auction in Pennsylvania.
Who would be desperate enough to steal cows?
In other areas of the country thieves are stealing air conditioning
units from churches and they are stripping copper wiring out of city
street lights.
Are you prepared to defend your property when desperate thieves come knocking?
Shortages Can Happen
During an economic collapse shortages can happen very rapidly.
Thanks to the popularity of the “just in time inventory” philosophy,
most stores do not have much stuff sitting around in their back rooms.
When things go bad, you may not be able to get the things that you need.
Just look at what is happening in Greece. Right now, medicine
shortages have become a major problem. The following is from a recent
Bloomberg article….
Mina Mavrou, who runs a pharmacy in a middle-class
Athens suburb, spends hours each day pleading with drugmakers,
wholesalers and colleagues to hunt down medicines for clients.
Life-saving drugs such as Sanofi (SAN)’s blood-thinner Clexane and
GlaxoSmithKline Plc (GSK)’s asthma inhaler Flixotide often appear as
lines of crimson data on pharmacists’ computer screens, meaning the
products aren’t in stock or that pharmacists can’t order as many units
as they need.
“When we see red, we want to cry,” Mavrou said. “The situation is worsening day by day.”
The 12,000 pharmacies that dot almost every street corner in
Greek cities are the damaged capillaries of a complex system for getting
treatment to patients. The Panhellenic Association of Pharmacists
reports shortages of almost half the country’s 500 most-used medicines.
Even when drugs are available, pharmacists often must foot the bill up
front, or patients simply do without.
You Could End Up Dependent On The Government
Don’t think that it can’t happen.
Today, 46.7 million Americans are on food stamps and
more than half of all Americans are at least partially financially dependent on the U.S. government.
That may be hard to believe, but it is actually true.
During the month of June, the number of Americans added to the food stamp rolls was
three times greater than the number of jobs added to the economy.
What a great “recovery”, eh?
If you do not work very hard to prepare for what is ahead right now, you could also end up dependent on the government.
You Could Lose Your Life
Whenever there is a major economic crisis there is a spike in suicides.
And these days Americans are more wrapped up in materialism than ever
before. When the coming crisis strikes there are going to be millions
upon millions of extremely depressed people.
Suicide is about the most stupid thing that you can possibly do, but
when people lose all hope of things turning around a lot of them are
going to take their own lives.
It is foolish beyond belief, but a lot of people are going to make
that choice. We are already seeing a significant spike in suicides over
in Europe due to the economy. The following is from a recent
CNBC article….
A growing number of global and European health bodies
are warning that the introduction and intensification of austerity
measures has led to a sharp rise in mental health problems with suicide
rates, alcohol abuse and requests for anti-depressants increasing as
people struggle with the psychological cost of living through a
European-wide recession.
“No one should be surprised that factors such as unemployment,
debt and relationship breakdowns can cause bouts of mental illness and
may push people who are already vulnerable to take their own lives,”
Richard Colwill, of the British mental health charity Sane, told CNBC.
“There does appear to be a connection between unemployment rates
and suicide for example,” he said, referring to a recent study in the
British Medical Journal that stated that more than 1,000 people in the
U.K. may have killed themselves because of the impacts of the recession.
“This research reflects other work showing similar rises in suicides
across Europe.”
This is why I stress that preparation is not just about physical things like money and food.
We all need to get mentally, emotionally and spiritually prepared for what is ahead.
If we understand what is happening and we come up with a plan to go
through it, we will be in far, far better position to endure the coming
crisis than people that are totally blindsided by it.
A recent article on
shtfplan.com entitled “
How Horrific Will It Be For The Non-Prepper” explored some of these ideas more fully. I encourage people to go check it out.
For the moment, most people will just go on with their lives as if nothing is wrong because times are still quite good.
But time is running out. In fact, we might not
have much time left at all before the next major downturn.
A recent CNBC article entitled “
It’s Coming: One Pro Sees Big Stock Selloff in 10 Days” detailed how some analysts are warning of a major stock market decline later this month….
An equity strategist for Goldman Sachs is predicting a
September selloff that happens so rapidly he is telling clients to
protect themselves before Sept. 14.
The reason: Market disappointment over key meetings of the
European Central Bank and Federal Reserve—all within the next 10 days.
September may turn out to be a bad month for stocks or it might end up being just fine.
But one thing is for sure.
Time
is running out.
Are you ready?
It is true that the theory
of our Constitution is, that all taxes are paid voluntarily; that our
government is a mutual insurance company, voluntarily entered into by
the people with each other; that each man makes a free and purely
voluntary contract with all others who are parties to the Constitution,
to pay so much money for so much protection, the same as he does with
any other insurance company; and that he is just as free not to be
protected, and not to pay tax, as he is to pay a tax, and be protected.
