Thursday, October 31, 2013

When Will the Economy Collapse?

By Reginald Kaigler (DEMCAD)

Every once in awhile a stranger pops up in the comment section of my youtube channel and asks, "When will the collapse happen?" It always strikes me as a very strange question to ask given the current economic environment. After all, Rome wasn't built in one day and it didn't collapse in one day either. It was process that spanned over decades. Granted, I thought we would have entered the final phrase much sooner, but history is our best guide.

Many of the same problems that plagued the British Empire, Roman Empire and the Soviet Union are present in the current American Empire. Over-expansion, unnecessary (and damaging) wars, excessive spending, devaluation of the currency, rising poverty, over-the-top cronyism, extreme corruption in government, breakdown in law, lack of respect for leadership and decaying infrastructure are all classic signs of empire decline.

There are plenty of examples of these issues in the U.S. We currently have a record 90.6 million Americans not working, 47.7 million of food stamps, the wars in Afghanistan and Iraq have cost us trillions without any meaningful results, both the TARP bailout, IRS scandal and bank scandals highlighted the increasing corruption and fraud, the income gap between the top 1% and the lower 50% is growing to record levels, we have no hope of paying back the $17 trillion federal debt, credit card debt is near $1 trillion dollars, student loan debt is even greater at $1.2 trillion, our mortgage debt is $7.78 trillion and total household debt in $13 trillion.

Detroit and Flint were among the wealthiest cities in America with vast industrial sectors that fueled the great American middle class. Now, Detroit is bankrupted, tens of thousands of good paying automotive and industrial jobs have left the cities and the country. We have major U.S. cities like Chicago and New Orleans with less than 10 days of cash on hand. New York City and Philadelphia have dangerously low reserves.

The NSA's increasing, obsessive, expansive, paranoid surveillance programs just shows how desperate the U.S. government has become. The American leadership (if you want to come it that) has become so incompetent that the mainstream media can't even attempt to protect it without losing all credibility. The Affordable Care Act is being exposed as anything but affordable.

The law is fundamentally flawed because it is created with a series of unsupported assumptions. The plan requires more Americans to get a government approved health insurance plan. The problem is that many Americans don't want health insurance, others can't afford it and the law actually encourages the very people the system needs most to withdraw from the system.

Why would a young, healthy adult pay high premiums for a health insurance plan they will not likely use? They could save money by avoiding insurance and simply get insurance when they get sick. Young and healthy Americans will simply take the 1% fine and avoid paying for the pricy government plans, which means many of the new health insurance users will be the older and less healthy Americans. As a result, there will be less people contributing to the system and more users using more services. This will destroy both state and federal deficits. But don't worry, the federal government will just have the Federal Reserve create more money. This will cause the current record $17 trillion federal debt and the $50 trillion debt in liabilities to grow at an even faster rate.

The employee mandate forces businesses to provide insurance for all employees who work over 30 hours. So how will businesses respond? They will layoff full-time workers and replace them with part-time workers. No surprise here.

So by this point is should be obvious that the system is collapsing. The Federal Reserve's money pumping scheme clearly didn't help the economy recover. Existing home sales for Sept 2013 when down 1.3%. The unemployment rate is down, but that's because millions of Americans have given up and dropped out of the workforce. Is that a sign of an economic recovery? In September 2013, the labor-force participation hits 35-year low. Sure, many of the record 90.6 million Americans not working are high schoolers, college students and retired folks, but let's get real. The jobs are not there.

So this brings us back to the question: When Will the Economy Collapse?

A friend of mine had a cabin in Northern Michigan. We went up north and discovered a huge tree with a massive crack leaning over his cabin. Now, anyone who looked up could tell that the tree was going to collapse and slash the cabin. Nobody knew the exact hour and minute, but it was clear that it was going to happen. Needless to say, we hired someone to safely cut the tree down before it collapsed and destroyed the house.

Well, look at the economy as a large bridge severely damaged by an earthquake. Let's call the earthquake, the Federal Reserve. Although, there were many entities that damaged the bridge. Nevertheless, the mayor calls an engineer out to examine the bridge. After a few hours, the engineer's verdict is dire. he declares that the damage to structure of the bridge is catastrophic. He tells the mayor and his staff how they can put in some temporary structures to keep the bridge up.

The mayor then asks the engineer, "If we can't get the equipment, how long do we have until the bridge collapses?"

The engineer sighs, turns to the mayor with a heavy look and says,

"I can't tell you the exact second the bridge will collapse, but you need to call the fire department, alert the federal government and evacuate the area."

Not Looking for Work: Labor-Force Participation Hits 35-Year Low
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The Ten US Cities With Less Than Ten Days Of Cash On Hand
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How the $1.2 Trillion College Debt crisis is Crippling Students, Parent and the Economy
American Household Credit Card Debt Statistics: 2013