Insane government spending, massive debts, out-of-control money printing, and almost unimaginable political cowardice are about to exact a heavy toll from each of us. And now, as our massive debts begin to implode, and as the US dollar plunges in value worldwide, everything in your life is set to change--radically. Millions more Americans are about to lose their income, their savings, their buying power, and their homes.

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 As widely praised and widely quoted financial analyst Martin Weiss says,  insane government spending, massive debts, out-of-control money printing, and almost unimaginable political cowardice are about to exact a heavy toll from each of us.   And now, as our massive debts begin to implode, and as the US dollar plunges in value worldwide, everything in your life is set to change --radically.   Millions more Americans are about to lose their income, their savings, their buying power, and their homes.   Just about everything you buy -- food, energy, clothing and more -- will soon double, triple, even quadruple in price.  

Consider first where we are coming from

In the 218 years since the US dollar was born in 1792, the United States has suffered through:

• A civil war that devastated the nation's finances ...
• A flu pandemic that killed at least 50 million people worldwide, shutting down the US economy,
• A dust bowl and depression that left millions homeless and unemployed -- the worst US financial disaster of the 20th century.
• Ten major foreign wars and 44 recessions that have destroyed hundreds of thousands of businesses and millions of jobs.  

 

And yet throughout all these disasters, the US government has NEVER abused its money-printing power like it's doing today!   Like a mad counterfeiter, cranking out mountains of $100 bills to feed America's outrageous debt addiction, Federal Reserve chief Ben Bernanke is running amuck.   Consider that back in 1999, when the Fed feared that a computer bug would destroy the banking system, Fed chairman Greenspan pumped in what the experts at that time thought was a huge amount of money.   Then, after the 9/11 terrorist attacks, the Fed AGAIN pumped in what the experts said was a huge amount of money at that time.

But now, just look at any graph of the amount of money in circulation as a function of the time that has elapsed over the past 30 years.   Today, Fed Chairman Bernanke's mountainous levels of new money printing makes all those previous money printing episodes look like tiny hiccups.   The horrific truth is that the US Federal Reserve is now engaged in the greatest money-printing scheme since the Weimar Republic in Germany!   That's when the German government printed so much money, it ultimately took THREE TRILLION marks to buy a single US dollar.   And so it was that the seeds for the most destructive war in the history of mankind were planted:   Hitler promised, and delivered, an economic way out.   But the ultimate cost of his aggression was rather severe:   Sixty million people then lost their lives, and property damage ran into the trillions of dollars.

It's hard to believe that such inflation could be happening again.   But consider these facts:

From September 10, 2008 through the end of 2010, the Federal Reserve chief increased the nation's monetary base from $851 billion to $2.03 TRILLION!

That's an irresponsible, irrational, absolutely insane increase of 139% in America's monetary base in just 27 months ...and there's literally NO END IN SIGHT!   And the Fed is, in effect, STILL running the money printing presses 24/7!   Even worse, Fed Chief Bernanke has made it crystal clear that he will CONTINUE burying the world in newly created dollars to finance our record federal deficits!

So, with no real end to this madness in sight, global investors have been dumping dollars on a massive scale, sending the value of the greenback into a nosedive.   And believe it or not there's an even more terrifying threat to the US dollar on the horizon:

On February 10, 2011, the International Monetary Fund (IMF) disclosed details of its plan to replace the US dollar as the world's reserve currency!

Here's what that means

Right now, the US dollar is the currency used for most international trade and settlements.   And because many items sold on world markets can only be purchased with dollars, many countries are forced to buy dollars, whether they like it or not.   But now, the Fed's massive "counterfeiting" scheme has the IMF, the United Nations, the central banks of countries from China to Russia, and even the UK demanding a change.   Which introduces an even big danger:   If a new currency replaces the dollar, the prices of just about everything you buy will skyrocket!   -- which means that unless Washington makes DRAMATIC changes, the dollar's value will go into free-fall and will thereby light the fuse on the greatest explosion in consumer prices in our lifetime.   Oil prices, gasoline prices, food prices, all could double, triple, quadruple, or more.   You could suddenly find yourself paying more than $11 for a gallon of gasoline ...   $6 for a dozen eggs ...   $5 for a loaf of bread ...   $10 for a pound of hamburger and $11 for a gallon of milk!   Meanwhile wages would either stagnate or shrink, as recession ensued and employers began massive layoffs.

Skyrocketing food and energy prices would then mean that millions of formerly middle class Americans will be pushed into joblessness, poverty and utter dependence on the government.

How bad could this get?   Well, you know about the unrest that overthrew Egypt's government.   You've seen the chaos in the streets of Libya, Yemen, Bahrain and even in countries that were supposedly among the most stable in the world.   The demonstrators and rioters themselves said that they took to the streets mainly because of soaring food PRICES!

The first massive debt crisis is the massive implosion of FEDERAL debt that's now threatening to erode or even destroy your retirement, your Social Security, your healthcare and more.   Our national debt is now over $14 TRILLION ($10 trillion of which was racked up during the presidencies of Reagan and the two Bushes).   The White House recently admitted that the 2011 budget deficit will be a record breaking $1.7 TRILLION!

Yes, Washington bailed out General Motors, Fannie Mae, AIG and dozens of giant banks.   But there's no one on the planet rich enough to bail out America!

Can entire countries actually go bankrupt?  

Some already HAVE gone bankrupt!   Just a few months ago, Greece literally went bankrupt and was bailed out by the richer nations in Europe.   Then, it was Ireland's turn, and it too was bailed out by Europe's strongest countries.

Now, this same crisis is spreading to the United States.   But I repeat:   There's no country on earth rich enough to bail out America, even if they were willing to do so, which they aren't.

So what do government debt crises actually feel and look like?

Such crises cause national labor strikes like in Spain, Greece and Italy, and massive street protests like those happening all over Europe, including Ireland, Great Britain, and other countries -- even the firebombing of banks and government buildings -- along with demands that the government be replaced.   In addition, these debt crises have also caused huge cutbacks in government spending, including massive reductions in retirement and medical benefits, unlike anything we've yet seen in America.

Some people say it can't happen here.   And if you're among them, listen to David Walker, former US comptroller general and head of the US Government Accountability Office (GAO).   Former comptroller Walker warns that Washington's debts could sink the economy -- and SOON!   According to Mr. Walker, "The Greeks engaged in a variety of "creative accounting" practices, and there were a lot of big and bad surprises that caused Greece to erupt.

But Walker than reminds us that the US has been engaging in a lot of this same kind "creative accounting" for years, with regard to the Social Security trust funds.

"Now, we've got major "creative accounting" going on, with US government-sponsored entities Fannie Mae and Freddie Mac.   We own a majority of them, but we're not consolidating them into our country's financial statements.   We don't consolidate the Federal Reserve into America's financial statements either.   Their accounting is separate from that of the country as a whole.   They can create out of thin air hundreds of billions of dollars and add it either to their books or the books of their member banks, and it no way registers in the accounting of the federal government.

"And so the bottom line is:   We're not Greece.   But we could end up with identical problems!"   And please notice that Greece's problems included crashing stock and bond prices, 18% interest rates, and riots in the streets!

How soon could it happen here in the US?   Walker says next year, 2012!   Indeed at this very moment, Congressional Republicans and Democrats are desperately working on ways to cut federal spending.   But they now admit that they can't fix the problem without putting the biggest items on the chopping block:   Social Security benefits, Medicare benefits and more.   No mention is made of ending the wars and occupations in the Mideast and Central Asia, or closing down most of the 800 military bases the US maintains all around the world.   It seems that the costs of American empire cannot be touched.   Too many US corporations depend on the profits thereby generated.   Eisenhower was right when he warned us of the possibility that the military industrial complex could become economically preeminent.

Hence the dilemma:

So, either Washington cuts benefits for old folks -- in which case their income goes down and their medical costs go up ... or Washington fails to cut those benefits -- in which case the deficit explodes, bond investors go on strike, and interest rates soar like they did in Greece.   And that's a scenario that could make it impossible for Washington to meet its obligations to the oldsters.

Meanwhile, we are now witnessing America's SECOND great debt crisis, which is even more pressing than the first:   Thousands of US states, counties, cities and smaller towns are in even worse shape than Washington is!   Our state and local governments owe the poor, the infirm and seniors up to $2 trillion more than they can ever be paid.   Plus they also owe more to pension funds than they can ever pay -- a whopping $3.5 trillion.

For the past couple of years, the states have been scraping by on billions of dollars in federal stimulus funds, but now that money is also gone.   So the day of reckoning is at hand:   A massive chain of state and local bond defaults could begin at virtually any moment.   One after another, nearly every state in the country is revealing massive deficits, declaring a financial emergency, and cutting essential services.

There's no overstating how serious or how pressing this crisis is.   Why?   Because, unlike Washington D.C., the states cannot merely print up the money they need to pay their bills.   Unlike Washington, they are bound BY LAW to balance their budgets each and every year.

But most US states and cities cannot balance their budgets.   Decades of gross mismanagement and corruption have left them with only one choice:   To cut their budgets to the bone and pray for a miracle.   And that's precisely what they're doing right now:   States and cities are laying off police officers en masse.   They're putting prisoners back on the street because there's not enough money to house them.   Philadelphia, Baltimore, Sacramento and many other cities are laying off firefighters and emergency medical personnel, shutting down firehouses.   Many states, including New York and New Jersey, have even refused to pay their pension funds!   Governor Chris Christie slashed New Jersey's budget by 26%.   He laid off thousands of teachers, fired 1,300 state workers, and drastically reduced funding to cities and counties.   Illinois recently raised income taxes 67% and it's still not enough to solve its deficit nightmare.   Also in Illinois, pharmacies have closed because the state failed to make its required Medicaid payments, and state employees are being evicted from their offices for nonpayment of rent!

Arizona is so desperate, it SOLD its state capitol, Supreme Court building and legislative chambers and now leases the buildings from their new owner.   As a result, even the New York Times recently warned that, for the first time since the 1930s, we're likely to see US states default on their debts!   The first major state or municipal defaults could explode into the headlines any day now.

On 60 Minutes, analyst Meredith Whitney, who accurately predicted the global credit crunch, predicted that up to 100 MAJOR American cities are likely to go bust THIS YEAR!

The just-described crises are likely to trigger a second wave of major bank failures from coast to coast

The likelihood of this new banking crisis is so explosive, Washington is doing everything in its power to keep it under wraps.   It's so hush-hush, the Treasury has deliberately spread blatant disinformation about the strength of our banks.   Time after time, Treasury Secretary Timothy Geithner and his associates have announced that US banks are "out of the woods" and "gaining strength."

The truth is, however, that the FDIC has a list of banks that are on the brink, and that list is growing by leaps and bounds.   However, the FDIC refuses to reveal the names of those banks.   Those names are THE best kept secret in the financial world.   Insiders, however, have told Martin Weiss that they include Bank of America, Citibank, Wells Fargo, SunTrust, Regions Bank, and Capital One.   Altogether, more than 2,000 US banks and thrifts are approaching insolvency.  

And now, with mortgage defaults still soaring, and with Congress in no mood to bail out the banks a second time, many of those banks are vulnerable to the next phase of this crisis.

This is dead serious.   Why?   Because if your bank fails, even if it's bailed out or taken over by the FDIC, you could miss out on promised interest income.   Plus, you could also lose access to your lines of credit, and suffer other serious expenses and inconveniences.   Worse:   If you own the bank's stocks, bonds, or debentures, or if you have deposits not insured by the FDIC, you could suffer substantial losses.

What does all this mean for the US stock market?

First let's summarize the circumstances we've just described:

• Washington's $14 trillion debt and $1.7 trillion deficit is on the verge of imploding,  
• States like California, Illinois, New Jersey and New York are nearly in financial ruin,  
• The entire housing and construction industry is locked in the savage jaws of a killer real estate depression,
• More than 2,000 banks vulnerable to this crisis ...
• The US Federal Reserve is flooding the world with newly created dollars, ...
• Leaders all around the globe are demanding that the dollar be replaced as the world's reserve currency ...

 

Nobody knows for sure which straw will break the camel's back.   It could be another explosive revolution in the Middle East.   It could be the sudden default of a major state or city.   It could be the announcement that the dollar has been replaced as the world's reserve currency.    But the camel's back will, in all likelihood, soon be broken.

Authors Bio:

Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've always been more interested in political economics and what's going on behind the scenes in politics, than in mechanical engineering, and because of that I've rarely worked more than 8 months a year, devoting much of the rest of the year to reading and writing about that which interests me most.