Federal and State governments insolvent

**For those readers that are my regular readers, I apologize for not posting regularly. I've been working long and hard on this current article. Please spread the word**



If you watched 60 minutes this weekend, you've been informed of what's going on. There's a bigger story here which leads to politicians, corruption, and banks. All of these different entities have played a big part in our impending collapse. If the States are bailed out next year when they collapse, then I would expect by the end of 2012 we'll have a complete financial collapse of the whole US which includes debt, currency, and the economy.


Politicians


Our political leaders only job is to get re elected. After August 1971 President Nixon put a stop to the mass liquidation of our gold by telling the nations of the world that they could accept the dollar in exchange for paying our debt. This took the US fully off of the gold standard, which was what FDR wanted during the Great Depression, and also put us as the global exchange currency. I think Nixon did this with good intentions, but the very entities that were supposed to keep watch over our currency were corrupted along with the politicians.


Have you ever noticed that politicians, when trying to be elected, make all these campaign promises. These promises are made so that they can get votes. They end up making deals with Unions and promise gold standard pensions. Unions weren't the only ones, the corporations bought the politicians as well so they could have influence the create legislation to stamp out their competition. After the Campaign finance reform, this allowed special interest groups, which tend to be to one extreme or another, to buy politicians as well.


Glenn Beck asked a great question before the November elections. He asked how long does a politician campaign. He was told that they start campaigning 2 years in advance. The next question he asked was how much money do these politicians have to raise and how many people do they owe favors to by the time they get elected. Those were two great questions, this gives us the complete insight into why we have so much corruption inside Washington D.C.


Currency


All this talk about currency collapsing, what exactly are they talking about? Think of things based upon supply and demand. If the supply is up, the demand is down which gives it less value, if supply is down then it's more expensive. The US used to be on the gold standard, this means that every ounce of gold represented 1 dollar, you could take your dollar to the Treasury Department and exchange it for 1 ounce of gold. Based upon the diversity of metals that the Treasury department has allowed that specific amount of paper money to be printed. This put limits on the amount of money that can be printed. This is also what made our currency so strong and so stable.


After Nixon took us completely off of the gold standard, this took the ceiling off of the amount of currency being able to be printed. This is actually where inflation comes from. The more money that is printed, the less your dollar can buy, this is where prices actually rise and they call it inflation. During President Reagan's campaigning he made a big deal about having a 1 trillion dollar deficit, but by the end of his presidency he had allowed it to increase 3.4 trillion dollars. Before G. W. Bush left office his biggest deficit was 587 billion dollars, now we're running a starting year deficit of 1 trillion dollars. Remember, every time we run a deficit the Federal Reserve prints money in exchange for Treasury bonds of different denominations.


Banks


In my opinion, this is where history will lay the blame. Banking was invented early in history, but really took off when capitalism was implemented here in the US. There was nothing wrong with the banks until the implementation of the Federal Reserve in 1913. The Federal Reserve loaned our currency to us at an interest rate and also created the fractional reserve system. During the Great Depression some people thought that the Federal Reserve didn't print enough money to help bail everyone out, this is why FDR wanted to get away from the gold standard. After getting away from the gold standard in 1971, this opened the flood gates to put us on the path we're on now.


As much as I want to blame the banks, this also has a lot to do with how corrupt our system has become. Remember, politicians owe favors, some favors are deals with the devil. With Wall Street being based off of profitability and growth, banks wanted to make even more money. With credit being given away so readily, this padded the banks books. Eventually so much credit would be given away that there came a point when no one could get any more credit and the banks became insolvent which was part of the credit bubble that crashed starting in 2007.

Don't forget the creation of Fannie and Freddie really took off in the 1980's. Fannie was originally a New Deal program created by the government to promise loans to people with little to no credit or just bad credit. The federal government let Fannie go private in 1968 and then created Freddie to counter balance Fannie. This allowed a private company to put loans together for those who couldn't get a loan, but the government backed these mortgages. This is what lead to the housing bubble that crashed starting in 2007.

Once these banks became insolvent because of government regulation, the government bailed them out. Remember what I said earlier about currency, the more you have, the less it's worth. The Bush and Obama administration both authorized and signed the bailout bills. The bailouts were a 3 phase operation. Phase 1, give banks money to cover their bad debt, phase 2 and 3, the Federal Reserve drove down interest rates to keep people in their homes along with buying government bonds to artificially create a demand and drive bond rates extremely low.


Economy


For years since the Great Depression our countries economy has been built on spending and manufacturing. After 1971 with the US being the global exchange currency, the US exports and manufacturing declined with the last trade surplus being in 1976. From that period on, we've been building upon debt with more debt because we don't make anything. Once the housing and credit bubbles burst in 2007, our economy made a change, but the politicians didn't figure it out. Have you ever noticed how our politicians are telling you to go out and spend so you can start the economy with their different forms of stimulus? How can you spend when you're so broke paying minimum payments and you can't get credit.


I believe the economy is going to shrink, this might lead to mass starvation and even mass exodus to other countries. If you're economy is strictly based upon offering services, there's only so many people you can employ. We have two choices at this point, either reduce wages to bring manufacturing jobs back or devalue our currency so that its is not only no longer the reserve currency, but so that it's cheaper to do business here than anywhere else. What made America the industrial might it used to be was because of the cost of doing business, resources, and manufacturing. Now that we don't do this, we either need to get back to that, or realize that there's only so much room we can maneuver inside a non export economy because our only export, the US dollar, is about to cease to exist.


The Ultimate Collapse


We have so many factors playing into our current economic situation. There are also so many organizations pulling at every free spot of fabric of our nation, there's no way that we can keep the gravy train going. There are many extreme organizations inside of the US that want to pull us in their direction, there are different countries that we've made enemies out of, and there are those who are so bent on power that they'll sell a whole country down the river just to have it.


The biggest threat to our way of life would be a tie between debt and politicians, but they go hand in hand. Our politicians for so long have been telling us that they will give us this and that and expand services for the majority of voters in their area, but my question is, did anyone stop to think about how we're going to pay for that? The thing I was told growing up, especially during the 90's, is that America is rich, so we can afford it. If you have a million dollars, would you ever stop to think about paying a thousand dollars for something you want, the answer would probably be no for a poor person and yes for a rich person. I think that the farther we got away from the Great Depression, the easier it was to forget what hard times were and how to be responsible.


According to 60 minutes between 50-100 states and cities will be bankrupt and are currently unable to pay their basic bills because previous politicians made sweetheart deals with special interest groups and unions that they knew they wouldn't be responsible for. One of two things will happen, either the Fed will bail out the States and stave off destruction for one more year(After a year of bailouts by the IMF the Euro is expected to be dead by the end of 2011) or they will let the States declare bankruptcy and this will cause a domino effect and the US will collapse by the end of 2011.

The Future


Although I can't predict the future, I can look at recent events and get an idea. In Europe a country that represented 2% of the Euro economy, Greece, was bailed out because they thought that it would cause a domino effect and collapse the whole European Union. Once Greece fell other countries such as Ireland fell and Spain and Portugal are expected to be next. In exchange for these countries being bailed out, pretty much the banks not the government, the IMF came in and offered to bail these countries out, but they had to do Austerity programs. This caused the civil unrest we've seen on the news coming from Greece.


If you compare the EU to the US, you'll the same similarities between states and a centralized power. So, if the States go bankrupt as expected next year, the Fed will take the place of the IMF and bail them out. In exchange for bailing them out though, I'm willing to bet that they'll merge the states into one super state or something similar. The thing is though, unlike the EU where everyone's currency fails, the US Dollar will collapse and the IMF will come in with the same Austerity programs for the whole country, if we haven't had a civil war.


This is probably the scariest part, I believe the IMF is acting as the instigator for the new world order. With everyone being bailed out by the IMF, you get a new currency, a world currency. In order to have a world currency, you'll need a world government. Think UN with actual power to govern. I think this is most suitable under Obama because if there is enough civil unrest, he can suspend elections or even appoint who he wants as Reps. and Senators. Considering he's a one worlder, he's going to want to merge the US into this global government. This will ultimately be the end of the US as we know it and if anyone resists, they'll be squashed because at this point the US will be outnumbered. This will be like the movie Serenity where the country no longer exists, so the resisters will be labeled as rebels and allow the State to eradicate them.
 
Sources:
 
http://www.youtube.com/watch?v=KsdUpzSjaEA
http://www.reuters.com/article/idUSTRE66I05U20100719
http://news.bbc.co.uk/2/hi/2817995.stm
http://www.youtube.com/watch?v=nBNm3AWF_qE
http://www.chinatranslated.com/?p=993
http://www.cardeapartners.com/aoi/fincad-derivatives-market-could-be-worth-700-trillion-by-year-end/
http://hubpages.com/hub/Survive-Total-Economic-Collapse
http://www.ehow.com/how_4546748_survive-sudden-economic-collapse.html
http://www.marketoracle.co.uk/Article7171.html
http://www.youtube.com/watch?v=KAT__cgdoPs
http://www.benzinga.com/10/08/443492/faber-and-schiff-the-american-bond-bubble
http://www.youtube.com/watch?v=ktEiN2zXZbo
http://beforeitsnews.com/story/314/416/Buying_Gold:_Why_Are_The_Chinese_Gobbling_Up_Gold_Like_There_Is_No_Tomorrow.html
http://bobchapman.blogspot.com/
http://beforeitsnews.com/story/314/416/Buying_Gold:_Why_Are_The_Chinese_Gobbling_Up_Gold_Like_There_Is_No_Tomorrow.html
http://www.trutv.com/video/conspiracy-theory/full-episodes/wall-street.html
http://www.stansberryresearch.com/pro/1011PSIENDVD/MPSILC22/PR?o=230927&s=233550&u=51973801&l=197794&g=156&r=Milo
http://business.financialpost.com/2010/07/26/michigan-residents-turn-to-alternative-currency/
http://libertymaven.com/2010/07/19/competing-currency-being-accepted-across-mid-michigan/10234/
http://www.sandiego6.com/news/local/story/Tijuana-Airport-to-Stop-Accepting-U-S-Dollars/3KGwK6NUaEyuA52yquO91g.cspx
http://www.washingtonpost.com/wp-dyn/content/article/2010/12/19/AR2010121903022.html?wpisrc=nl_pmopinions
http://bobchapman.blogspot.com/2010/12/bank-bailout-boondoggle-of-billions.html
http://online.wsj.com/article/SB10001424052748703886904576031401310024990.html?mod=WSJ_Bonds_LEFTTopNews
http://peterschiffblog.blogspot.com/2010/12/three-investment-themes-for-2011.html
http://jimrogers-investments.blogspot.com/2010/12/things-are-happening-with-dollar-that.html
http://bobchapman.blogspot.com/2010/12/bob-chapman-hyperinflation-end-of.html
http://en.wikipedia.org/wiki/History_of_banking
http://en.wikipedia.org/wiki/Fannie_Mae
http://projects.washingtonpost.com/top-secret-america/articles/monitoring-america/1/

Headline news

Today a site where I posted a lot of my articles decided to ban me from posting because of the subjects of my blogs. When I wrote the administrator of the site, he was just as just as rude and unprofessional as I've ever seen. I tell you here and now, I'm not an Alex Jones supporter, nor have I ever supported him. He does have some good points, but I don't trust his sourcing. A few months ago Glenn Beck did a segment on the Chinese not purchasing anymore US bonds and 15 days to the New World Order. Thinking he was crazy, I decided to research it on my own. Glenn Beck was right to a point, but I don't think anyone really knows what's going to happen. I do know that if we make it to 2012, it will be a miracle and I might just start believing in God again, but I don't see that happening.

Today on "Freedom Watch" Judge Napaletanno talked about European civil unrest coming here to America and its possibilities. The following show "Follow the Money" not only did Eric Bolling talk about European civil unrest coming to America, but also an economic collapse happening as well. Peter Schiff who predicted the housing and credit bubbles bursting also tonight predicted the bond bubble bursting which I wrote about on Monday. What's starting to concern me is that this is starting to be talked about more and more by the mainstream media and they're accepting it. This isn't just one kook talking about it, heads of companies and reporters are starting to tell people, hey this is coming.

Anyone who knows me knows I only deal in facts although my wife says facts are subjective. The fact is the military does war game simulations of martial law frequently, what's different this time is they're actually moving food around which tells me they know its coming. Fact is, the Federal Reserve can't buy bonds quick enough to keep rates from raising. The Federal Reserves QE1 started out at $600 billion and turned into $1.8 trillion. Fact  is, if interest rates rise, more and more people will not only lose their homes due to high payments, but unemployment will go higher for those industries that rely on the housing market. Fact is, our economy will never be what it was because our economy was based upon borrowing money we didn't have, that's what got us here in the first place. Fact is, not only is the House talking about passing a $1.2 trillion spending bill, but they've already agreed to pass a $900 billion stimulus 2 which includes extending unemployment for 13 months and retaining the Bush-era tax cuts. Fact is, even with the new Republicans coming into the House next year, spending will continue to soar. Fact is, China is buying shorter term bonds and starting to diversify in Gold and Commodities.

Call me crazy if you want. Call me a fear monger even, but facts are facts and you can't run from them, just ignore them. If you haven't prepared, start preparing, you don't have much time. If you don't know how to survive an economic collapse, research it or read my older blogs. If you don't know how to survive martial law, research it or read my older blogs. Anything you don't know, check my older blogs first, then research it if I haven't covered it. Get out of money, buy Gold and Silver. One thing I'm doing that my grandfather told me is going to the bank and looking for pre 1970 coins. Anything before 1970 has 40% silver and anything before 1964 has 90% silver. Do what you have to do, but make sure you're prepared, because if you aren't, it's no one's fault but your own. If I'm wrong, hey, you just got rich accidentally, but if I'm not, you're prepared.

Sources:

http://www.tomdispatch.com/post/175113/Michael_Klare_the_great_superpower_meltdown
http://peterschiffblog.blogspot.com/2010/12/market-update-commodities-us-dollar.html
http://online.wsj.com/article/SB10001424052748704828104576021413142892094.html?mod=WSJ_Bonds_LEFTTopNews
http://pragcap.com/northern-trust-qe1-failed-why-will-qe2-work
http://www.sooperarticles.com/finance-articles/investing-articles/federal-reserve-launches-qe15-157842.html
http://en.wikipedia.org/wiki/Quantitative_easing
http://www.businessinsider.com/why-quantitative-easing-is-bad-for-the-economy-2010-11#
http://online.wsj.com/mdc/public/npage/2_3051.html?mod=2_3002&sid=1224040&page=bond

Obama using redistributionist policies on rest of the world

Why would the US want to give up its stature as not only a global power, but also as the global currency? Our current President and Fed chairman Bernanke are thinking that an imbalance in trade is unfair to other countries. I would say that this is really mismanaged thinking or that there is something else going on and we’re not watching the other hand.


Currently the US has a trade deficit of 40% of the worlds total GDP and China leads exporting with 23% of the worlds surplus. Is there anything wrong with this? I would say no, there is nothing wrong with having a trade deficit because it allows countries like the US to focus on other things other than manufacturing.

Let me give you an example of what I am thinking. The US is one of the leading nations in research and development because we’re a service oriented industry. Our businesses have to come up with new ideas on how to make people’s life easier. Countries like China, Japan, and Germany are able to manufacture these products at a cheaper price and we are able to have the most up to date technology at a nominal fee. The benefit is that the rest of the world has jobs because they’re able to produce things while here in the US we have jobs by providing things to people. Of course there are some things that can’t be made overseas either for security reasons or because of the level of technology of the producing country. If you look at it this way, it’s a healthy redistribution of wealth because everyone benefits without taking from one to give to another forcefully. This is only successful though if our dollar remains strong and the benchmark currency for the world.

The problem with the thinking in the Fed and the Obama Administration is that they think that in order to have a growing economy you must have a trade surplus, that’s actually the opposite from what I’ve researched. I’m beginning to see that they are applying their redistributionist philosophy to the rest of the world just like they’re doing to the so called “rich” here in the US. By devaluing the dollar they are actually leading to the collapse of the dollar which in turn hurts the rest of the world. The only other reason they could be trying to even the playing field is if you listen to these “conspiracy” nuts that claim one world government is being planned in back room deals. The only thing is they are starting to sound more and more sane the more research is done.

In conclusion, the Obama Administration has got it backwards again. By having a strong dollar and paying off our debt, we make products overseas cheaper to purchase. When products are cheaper, then not only do we grow, the rest of the world grows as well. By watering down our money so far, Obama is actually leading to the collapse of this nation and its currency due to failed policies. Get ready for QE3 and QE4 because if QE2 doesn’t completely destroy our dollar the others will do so for sure. Are you ready for a world where you dollar is the weak currency and something that used to cost a dollar is now $15?

**Bloggers note: This research is based upon my research from previous articles which is why I did not put any sources at the bottom this time. If you would like my sources I would recommend that you read “Game over America” and “Federal Reserve Bankrupting America”.