One of our regular readers and contributors put it succinctly when he said, “This isn’t the ranting and raving of some Doom & Gloom Blogger…It’s Ben Bernake folks. The most powerful (financial) man in the world.”
And while we admittedly rant and rave from time to time, we still feel strongly that we’ve been on the right track discussing the real possibility of an economic collapse in the United States. Former Secretary of Treasury Henry Paulson’s aptly titled book referred to the 2008 crisis as “being on the brink.”
In case you haven’t been paying attention, or you’ve bought into the intravenously injected financial hopium of 2009 and the latter half of 2010, we remain on the edge of a fiscal, monetary, and economic crisis unlike any in the history of the world.
It’s big folks, really big. Trillions of dollars in debt, and perhaps in excess of one quadrillion dollars in leverage within the system. You may have a hard time believing these figures, but this is what we’re facing.
And when Ben Bernanke, the chairman of the Federal Reserve discusses the enormity of the situation, you’d better believe that it is serious. Remember, this is the same Ben “The Subprime Problem is Contained” Bernanke who has taken every opportunity to put a positive spin on the crisis from the get go. In a recent speech at the Annual Meeting of the Rhode Island Public Expenditure Council, Bernanke provides some insight as to how serious of situation we’re in and makes it clear where we stand on a number of issues:
The recent deep recession and the subsequent slow recovery have created severe budgetary pressures not only for many households and businesses, but for governments as well. Indeed, in the United States, governments at all levels are grappling not only with the near-term effects of economic weakness, but also with the longer-run pressures that will be generated by the need to provide health care and retirement security to an aging population. There is no way around it–meeting these challenges will require policymakers and the public to make some very difficult decisions and to accept some sacrifices. But history makes clear that countries that continually spend beyond their means suffer slower growth in incomes and living standards and are prone to greater economic and financial instability.
What Mr. Bernanke just said is that the government has spent too much money, and now you (not the policy makers) are going to have to make sacrifices. Without directly saying so, Bernanke implies that your income and living standards are about to decrease. Essentially, he is telling us that we are going into a depression (if we’re not already there).
Let me return to the issue of longer-term fiscal sustainability. As I have discussed, projections by the CBO and others show future budget deficits and debts rising indefinitely, and at increasing rates. To be sure, projections are to some degree only hypothetical exercises. Almost by definition, unsustainable trajectories of deficits and debts will never actually transpire, because creditors would never be willing to lend to a country in which the fiscal debt relative to the national income is rising without limit. Herbert Stein, a wise economist, once said, “If something cannot go on forever, it will stop.â€9 One way or the other, fiscal adjustments sufficient to stabilize the federal budget will certainly occur at some point. The only real question is whether these adjustments will take place through a careful and deliberative process that weighs priorities and gives people plenty of time to adjust to changes in government programs or tax policies, or whether the needed fiscal adjustments will be a rapid and painful response to a looming or actual fiscal crisis.
Basically, Mr. Bernanke is saying that all projections he is citing suggest that our debt will not go down – ever. It will continue to not only grow indefinitely, but will increase in velocity and severity. That is, it will continue to grow until our creditors finally stop lending – this from the mouth of the guy in charge of our monetary policy.
In case you missed it there will, without a doubt, be a period in the near future where our fiscal, monetary and economic policies will completely collapse – literally come to a stop. This is what one could refer to as a Rawlesian Patriots style economic collapse. Think Zombieland.
Of course, the Fed Chairman does give us two possibilities, so perhaps we won’t go full-out Mad Max Beyond Thunderdome. According to Bernanke, there could be a slower process as opposed to an all out collapse. Think Great Depression, where there was a breakdown in wages, jobs, economic growth, and the standard of living over a period of an entire decade. This scenario implies that the government is actually going to do something, deliberately, to avert a complete collapse. We believe that this “deliberate” process is what the Fed, Treasury and US government is currently engaging in, trying to pad the blow with stimulus, bailouts and increased spending. But, as we can see, this is simply not working.
Being that our elected representatives are not prepared to make the “sacrifices” and the banking cartels of the world could care less how painful the process of rapid collapse may be, we continue to urge our readers to prepare accordingly.
If you still believe that these people – the powers that be – are going to save the system and you, then that’s your prerogative. But given the fact that Mr. Bernanke, one of the key architects of our recovery, is now saying that the entire system is unsustainable, we suggest you start thinking worst-case.
And what would that worst case scenario be?
Try this – Rep. Brad Sherman discusses the 2008 TARP bailouts, promoted and overseen by Hank “On The Brink” Paulson:
Hat tip: Infowars.com, Yourdaddy, The Federal Reserve and Chairman Ben Bernanke have contributed to the content of this article.
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More beans, rice, Wright Brand Bacon, & seeds.
Well, it is about over folks. I had a phrase that I have been saying for years ie,”We have been living in the most “prosperous”time this country has ever seen or will ever see again” I hoped that I was wrong but I think I was right. With people buying fancy cars, taking expensive vacations,etc all on credit, I could see what was coming. When the US got into NAFTA,WTO, most favored nation status for China the handwiting was on the wall as plain as day. We must have leaders that stand up to the international corporations and take an America First mind set but they are completely in the pockets of these companies. The common man is screwed. Prepare for self sustainability as much as possible. Good luck, you will need it!
Is it just me, or does his words eerily resemble another famous quote by another famous economist:
“One way or the other, fiscal adjustments sufficient to stabilize the federal budget will certainly occur at some point. The only question is whether these adjustments will take place through a careful and deliberative process that weights priorities and gives people plenty of time to adjust to changes in government programs or tax policies, or whether the needed fiscal adjustments will be a rapid and painful response to a looming or actual fiscal crisis.” – Ben Bernanke, 2010
“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig Von Mises
Hmmm. Where have I seen this quote before? Notice how both economists predict pain, the only choice is whether we want it now or much worse later on.
Chris C.
Yeah,  I have noticed that also.   Pain now, or Pain latter, either way more Pain.
I believe there is a certain % of Americans, like those who read this blog, Â that are preparing themselves for the pain.
Reminds me of  that bible verse, about the righteous, barely being saved,…..”If  those prepared,  will suffer  through much pain,  then what will be,  of those , who have ignored the warnings?”
Extinction?
the question now is – do we run up our credit cards to buy solar/BbBs/etc… before the end comes or do we pay off the debt and hope for the best?
Who has been in charge of Congress/Senate for the last (how many years)?
Pain now, or PALIN later!  Hey lawdy momma, gimme the pain now!
To hell with the helicopters, warm up all of the B-52’s, C-5, C-130’s, C-17’s, & C-141’s aircraft.  This is going to be BIG, a real crowd pleaser! RAMP DOOR OPEN!Â
Joshua: Greetings, Professor Falken.
Stephen Falken: Hello, Joshua.
Joshua: A strange game. The only winning move is not to play. How about a nice game of chess?
http://www.economicpolicyjournal.com/2010/10/bernanke-tells-truth-united-states-is.html
@Tom,
Irrelevant at this point, plenty of blame to pass around. In fifty years when the historians write about this, I think they will lay the biggest share of the blame where it belongs, at the feet of the American people whose apathy and ignorance allowed this situation to develop until it was too late to turn back.
Even if we crash, it will only be as “bad” as we allow it to be. And by that I mean that we can all help eachother and be kind when possible or we can rip each other apart. If you have ever traveled to a poor country you know that even though the people may have almost nothing by US standards they have friendliness, hospitality and generosity that we can barely understand. So if we crash we don’t need to burn. It all depends on where we put our priorities and our hearts. We can learn from out poorer neighbor countries and try to be rich in spirit and heart.  (But I admit that I really don’t want to be without my car, heat and blow dryer so I pray, fast and ask God to help us through this. If it saved nations and cities in the bible and in European history it can help us too!)
Comments…..i would like to know the ‘experts’ opinion regarding Sketch’s comment? i started prepping waaaaay late and need more of everything. i have been seriously contemplating make some purchases via credit and hope for the best. what say you guys?
C: How does fasting fall into this? I really don’t understand this. Please explain.
Comments…..I bet an nice AR-15 will be worth about as much as a nice chunk of gold, when the SHTF…
Mike
Sketch & Anon-
The answer to your question depends solely on whether or not you fall into one of two categories
1) Christian that puts his faith in the Lord
2) Non-Christian who puts his faith in himself
If you fall into Category #1, don’t spend money you don’t currently have. Â Start making a list (or download lists already created like “The 100 items gone before you get there”) and begin accumulating the items that are of top priority. Â Do the best you can, sacrifice, and put every expendable dollar towards your prepping effort. Â In the end, the Lord is your refuge you shall not want and you’ll better off for it. Â You are a person that believes how you live your life now results in rewards (or consequences) that far outreach the grave and stealing money from a faceless credit card falls outside the bounds of your moral mandate.
If you fall into Category #2, then while I cannot advocate or endorse the move, I can’t see why you wouldn’t “run up your credit cards” (assuming with no intent to repay them since, heck, it won’t matter anyway). Â You’ll go on a massive spending spree, selfishly motivated to stock pile every item that isn’t nailed down, and bunker in. Â Because your faith is not in our Lord, but entirely rooted in your own ability to determine your life’s outcome, you will become possessed & overcome with the need to hoard more and more survival items. Â In the end, you believe the grave is the worst thing that can/will happen to you, and any money you steal now to prepare to delay/avoid the grave is a Machivellian justifiable means to an end.
Remember, the Lord has NEVER left or forsaken his people. Â The coming tribulation has been prophesized and is a necessary purification to usher in a new age of peace. Â In Genesis, when he led his people out of Egypt into the desert, he didn’t advise them to, “run up their credit cards, and take everything that wasn’t nailed down to Pharoah’s kingdom” he simply said, GO!” Â When they ran out of food, he provided Manna from Heaven, and specifically told them, “Do not pick-up the leftovers, for I will provide for you.” Â Yet, what did they do, they ran around like crazy people, scooping it all up. Â Shortly thereafter, all the excess Manna that they collected rotted before their eyes…
I believe that story has great relevance to our time. Â Yes we should prepare (that is prudence, and prudence is a virtue) but not at the expense of our morality or character. Â Don’t “run up a credit card” to gain “security.” Â Do what you can with what you have, put your faith in Jesus Christ, and trust that whatever storm may come, he will protect & provide for you & for your family. Â It’s the only move we’ve truly got, and the only one that provides you with any real sense of hope…
…otherwise, you’ll be standing there with a handful of rotted Manna provided by funds from a credit card company that never belonged to you in the first place.
In the peace of Christ our Savior.
Dad
Comments…..To : YourDaddy,
I want to thank you for your post. It is what I needed to hear tonight. So far, I have been cash and carry with my preps. I have tempted to charge and I have always stopped myself. I have been very blessed in my preparation. He will provide what we need and there is comfort in that. The borrower is servant to the lender. I really appreciate everyone that shares their insights on this blog. Peace and blessings to everyone 🙂
Comments…..
yourdaddy
thank you for a very fine response to my question. a little bit at a time it is!
@ zeta and yourdaddy
Well said.
it is time for an austerity program in america. this will enable our leaders to get us out of this mess. we all must have an increase in taxes to help pay our way out of this recession. i suppose cuts in entitlements will also help. our cities should have a reduction in the numbers of police and firefighters and paramedics.
In 1974 there were 16 million Americans on food stamps. Today there are close to 42 million on food stamps. In NYC 1.7 million are on food stamps. That is 1 out of 5 New Yorkers are on food stamps!!!!!
Welcome to the Depression of 2010. Food stamp debit cards merely replacing long food lines. Whats next? Gov’t confiscation of gold?
Zeta: I agree but the hands are fused on the printing press throttle & the throttles are on afterburner (stage III). I would have taken the pain 5 years ago. Was prepped then. This roller coaster ride is amusing & expected. Look at the AG/AU charts this morning.
Comments….. c said: (But I admit that I really don’t want to be without my car, heat and blow dryer so I pray, fast and ask God to help us through this. If it saved nations and cities in the bible and in European history it can help us too!)
—————————————–
Why would God help us through this when we did this to ourselves? People elected leaders that failed us and now we are jerking our knees to change it. Too late. Fasting and praying may make you feel better, but it does not change the outcome. Fasting has never saved a hungry child or anyone for that matter. Ever heard of the natural law? Natural law wins out over everything. Like Rome, we are destined to fail. In the mean time, I’ll just go about my daily business and be vigilant about my preps and watch for the hammer to fall. I won’t pray about it because God allows bad things to happen. John the Baptist I bet prayed before his head was chopped off. JMHO.
Comments…..Reality 101.
Believe what you will. It hasn’t worked for countless previous civilizations and only a fool would continue with the same belief system.
Taking on debt without the intention of repayment is fraud. Fraud is theft by deception. Theft proves lack of honor. Why would any logical reasoning person help someone who has proven thier dishonorable intentions.
We are in this problem because the collective citizenry chose to demand that government pays for programs that each of us couldn’t afford individually. So if we couldn’t afford it on an individual basis, what logic would infer that we could afford it collectively? Hmm, we lose $1 on each item, but we’ll make up for it on volume.
Government, both elected and hired help, will do everything possible to avert the inevitable. The people will clamor for more. In the end, the few who tried to prepare will suffer the most. Recall those who depend on the system and use credit foolishly with little intent to repay will live up to thier billing – THIEVES. Tis unfortunate that the prudent will be beset by a plethora of thieves demanding sharing of your resources. After all, we’re all in this together.
Â
This will create what will be termed a free-fire zone in many areas of the country. What gov’t remains will be helpless to stop it, but will try it anyway. Forget ZPG; think NPG (negative population growth).
Â
Look for the BRIC countries to cut us off. Connect the dots. China is buying all domestic gold output. China is encouraging its people to buy gold. China is deleveraging thier investments in the US Dollar. China has cut exports of REEs (rare earth elements). China is considered a currency manipulator (so how is QE and soon to be QEII not manipulation?). Similar stories out of Brazil, Russia and India.Â
More tax revenue? How? Oh, the old story about massive corporate profits of course. First thing to consider is PE Ratios. Not good. Oh well, they can always raise prices for goods and services to pay the additional taxes. Except just where does this money come from? Oh that’s right. It comes out of your pocket after you already paid taxes on it. Okay, stealth tax number two on top of inflation.
The truth. There is no such thing as investing in America. Never was, never will. It is investing in future tax revenue receipts. Redistribution of these tax receipts buys votes with a helluva handling fee. Gov’t will do everything it can to protect tax revenue streams.
Â
You can buy PMs, but a better choice is developing self-sufficiency by gaining knowledge and skills in growing food, small scale manufacturing and repair skills to keep the most basic tools working. Imagine the demand for someone to pull a cart full of potatoes when local commerce depends on transportation of goods to the consumer. As long as any commerce survives, profits exist. Prepare now or don’t. Your choice, choose wisely.
@Mushroom…austerity? How’s the cigars and wine at your place? I’m bettin” you haven’t worked on an austerity plan as of yet…
Beans, band aids and bullets…if you don’t have’em it may be too late. Shop today!
Dad – You are very wise with all your comments. Very much appreciate reading what you add to this. Who are you and how do I spend a few days talking with you. Maybe in a boat fishing or something……..
I would enjoy that.
Bill- Just a 39 yr old Catholic guy with 4 kids, a devoted wife, lives near Houston, was a LB in the SEC 20 yrs ago and who knows nothing about fishing.  I do golf though (8 handicap).  🙂
One more thing to consider…
Don’t ever count out the possibility of a miracle. Â The multiplication of the loaves & fish comes to mind. Â You may only have accumulated 3 months of survival stores, but don’t be surprised if 30 months down the road, your stash is still providing for you.
All the Lord asks of us is FAITH…in HIM. Â In every instance in history when our Brothers & Sisters have had their faith tested (Moses, Abraham, Job, Noah, David, The apostles etc) God responded in magnificent and enormous ways. Â I know alot of folks on this message board & others are filled with trepidation with the prophesised coming events (and make no mistake, they will be beyond anything we’ve ever experienced) but don’t elevate your prepping efforts above your faith.
One final thing, be mindful of others who will be in need when this time comes to pass. Â While you begin/continue to prep, continually thank the Lord for the Holy Spirit whom he has sent to “speak” to us and is likely the source of our zeal for prepping in the first place. Â The Lord never moves his hand without preparing his remnant flock first. Â I find it somewhat telling that there are so many people who have embraced this movement in what can only be described as an “uncoordinated, coordinated” worldwide plan. Â Each one of us has not only the fore-knowledge of pending events, but has been instilled with a God-given grace to MOVE on that knowledge. Â Only the Holy Spirit could execute something like this.
Scary/exciting/hopeful times await just around the corner.
Seek ye first the Kingdom of God, and his Righteousness…And all these things shall be granted unto you.
Amen
Dad
Thanks Dad. Y0u are wise beyond your years. V/R
Folks…please leave religion out of this.
As just one example of its hypocrisy and worthlessness,
let me point out that all our recent Presidents have invoked “gods” name as they seeked to invoke some legitimacy to their actions.
If you need religion to get thru the night, fine.
Just keep your dependencies to yourself.
Yeah..I know this will likely get responses, but I’ll submit that we need to move beyond our past levels of …what’s the word? Existence,… to a higher state of awareness. One where if you need a supreme being, then there’s no need to evangelize it to others.
I don’t know why but I see a World War III coming when this sistem collapse… First there will probably be a revolution that can easily be turned into something much worse… I have a really bad feeling about this.
Jim-
Unfortunately, “Religion” and “This” are linked.
I find it somewhat amusing that you’ve just engaged in the same behavior you asked all of us to refrain from (pushing your Atheistic belief system on the group).
You can request silence on this topic, but I hope you’re realistic to know that probably won’t happen. Â Yours/ours salvation is much too important to cower quietly simply because you request moral pluralism. Â Even now, while you still live out Jesus’s last words of, “forgive Jim Father, for he knows not what he does” God is calling you home. Â Eternal seperation from God is a fate too terrible to imagine.
…you wouldn’t be maxing out your credit cards this weekend for preps, would  you?  Time to join the rest of us in Group 1 (from post above).
Dad