Posted on 12/24/2009 7:26:31 AM PST by FromLori
Do you believe everything the government tells you? Economist and statistician John Williams sure doesn't. Williams, who has consulted for individuals and Fortune 500 companies, now uncovers the truth behind the U.S. government's economic numbers on his Web site at ShadowStats.com. Williams says, over the last several decades, the feds have been infusing their data with optimistic biases to make the economy seem far rosier than it really is. His site reruns the numbers using the original methodology. What he found was not good.
Maymin: So we are technically bankrupt?
Williams: Yes, and when countries are in that state, what they usually do is rev up the printing presses and print the money they need to meet their obligations. And that creates inflation, hyperinflation, and makes the currency worthless.
Obama says America will go bankrupt if Congress doesn't pass the health care bill.
Well, it's going to go bankrupt if they do pass the health care bill, too, but at least he's thinking about it. He talks about it publicly, which is one thing prior administrations refused to do. Give him credit for that. But what he's setting up with this health care system will just accelerate the process.
Where are we right now?
In terms of the GDP, we are about halfway to depression level. If you look at retail sales, industrial production, we are already well into depressionary. If you look at things such as the housing industry, the new orders for durable goods we are in Great Depression territory. If we have hyperinflation, which I see coming not too far down the road, that would be so disruptive to our system that it would result in the cessation of many levels of normal economic commerce, and that would throw us into a great depression, and one worse than was seen in the 1930s.
What kind of hyperinflation are we talking about?
I am talking something like you saw with the Weimar Republic of the 1930s. There the currency became worthless enough that people used it actually as toilet paper or wallpaper. You could go to a fine restaurant and have an expensive dinner and order an expensive bottle of wine. The next morning that empty bottle of wine is worth more as scrap glass than it had been the night before filled with expensive wine.
We just saw an extreme example in Zimbabwe. ... Probably the most extreme hyperinflation that anyone has ever seen. At the same time, you still had a functioning, albeit troubled, Zimbabwe economy. How could that be? They had a workable backup system of a black market in U.S. dollars. We don't have a backup system of anything. Our system, with its heavy dependence on electronic currency, in a hyperinflation would not do well. It would probably cease to function very quickly. You could have disruptions in supply chains to food stores. The economy would devolve into something like a barter system until they came up with a replacement global currency.
What can we do to avoid hyperinflation? What if we just shut down the Fed or something like that?
We can't. The actions have already been taken to put us in it. It's beyond control. The government does put out financial statements usually in December using generally accepted accounting principles, where unfunded liabilities like Medicare and Social Security are included in the same way as corporations account for their employee pension liabilities. And in 2008, for example, the one-year deficit was $5.1 trillion dollars. And that's instead of the $450 billion, plus or minus, that was officially reported.
Wow.
These numbers are beyond containment. Even the 2008 numbers, you can take 100 percent of people's income and corporate profit and you'd still be in deficit. There's no way you can raise enough money in taxes.
What about spending?
If you eliminated all federal expenditures except for Medicare and Social Security, you'd still be in deficit. You have to slash Social Security and Medicare. But I don't see any political will to rein in the costs the way they have to be reined in. There's just no way it can be contained. The total federal debt and net present value of the unfunded liabilities right now totals about $75 trillion. That's five times the level of GDP.
What can we, the people, do to stop the government from, you know, taking all our money?
We should have acted 20 years ago. There's not much you can do at this point to prevent the eventual debasement of the dollar. This involves both sides of the political spectrum. It's not limited to the Republicans or the Democrats. They've both been very active in setting this up.
What can individuals do?
The only thing individuals can do now is look to protect themselves. I wish I could see a way, but shy of severe slashing of the social programs that is so politically reprehensible and would create such problems and social unrest, I don't see that as a practical solution.
If you're a young 20- or 25-year-old guy or gal, would you move to another country? What would you do?
We still have a great country. We're going through a period of economic pain. It's happened before. This is the kind of thing that's taken us decades to get into and it will take us decades to get out. Although the hyperinflation is going to be limited largely to the U.S., the economic downturn will affect things globally. I can't tell you how things will go with a hyperinflationary Great Depression, which is where I see things going.
It's the type of thing that will tend to lead to significant political change. People tend to vote their pocketbooks. You could have the rise of a third party. You could even have rioting in the streets. I'm not formally predicting that — anyone can run these different scenarios. For the individual, what you need to do, from an investment standpoint, look to preserve your wealth and assets. Don't worry about the day-to-day fluctuations in the markets. What I'm talking about here is over the long haul...
[Gold is] going to be highly volatile, as will the dollar, over the near term, but longer term, physical gold I would look at as a primary hedge for preserving the purchasing power of your wealth and assets. Maybe some physical silver. Get some assets outside the U.S. dollar. I might even look to move some assets physically outside the United States. The key here is to look at a longer range survival package, battening down the hatches, and preserving your wealth and assets during a very difficult time. Once you're through that, you'll have some extraordinary investment opportunities, and I can't tell you what it's going to be like on the other side of this crisis.
15 minutes in a pressure cooker. This the safest.
You can also add Clorox to the water and there are some filters.
Two, in case something happens to the first one....
And don't forget, George Lucas (who wrote Star Wars) is an uber-Leftist. He called Obama a “Jedi”.
Leftists CAN BE AND ARE Fascists! The Nazi party was the “National SOCIALIST Party” - they were leftists, not right-wingers.
The Marxist-fascists will make owning gold illegal( This happened in the 1930s.) and make it illegal to trade in or exchange to foreign currencies.
One of my life long friends is building an off grid house right now. I've been helping him with sizing of the panels, batteries, voltage regulator, inverter, power management equipment, etc. He's doing solar, wind and eventually will have a generator set up off of a stream that flows across his property. It takes a lot of careful planning unless you are willing to spend a fortune on batteries and PV panels. His refrigerator runs off of 48 volt DC. That's great and all, but it cost about four times what a regular frig costs....
Thank you, I had not thought of that. Are you serious about boiling stones? Does that really work? I’m a city girl that is trying to learn to be self-sufficient.
There are well-stocked shops in the larger towns and cities. The quality does vary, so it helps to know something about the subject matter. Cuba is desperate for cash, so they tend to ship the "marquis" brands (like Cohiba, Montecristo, and Partagas) before the tobacco has been sufficiently aged.
I look for somewhat smaller cigars (corona, robusto, belicoso) from the smaller production facilities - Bolivar, Fonseca, Punch, Romeo Y Julieta, Hoyo de Monterrey, to name a few). Overall, the quality ranges from merely good to exquisite.
That's true in most places.
Napoleonic Code.
“Liberals have long been working to manufacture the coming economic crisis. I am firmly convinced that they have a plan of what they want on the other side of the mess and plan on being the ones to survive the crisis best so they can end up on top permanently.”
The fruit from the seeds the commies planted years ago is ripe for the picking! Look for the real constitutional America to survive in small well guarded places in remote areas only the self sufficient and well armed have a chance.
Eventually the economic disaster will devolve into war!
When the US goes down the world is going to find itself in a unbelievable mess. Biblical in proportions.
Having debt vs. accumulating savings is a tricky decision to make in the runup to the impending hyperinflation.
On the one hand, as a debtor, you could make out well when the dollar loses value. Then you can repay debt for quarters, dimes, or even pennies on the dollar. So there’s an argument for accumulating debt.
But the kicker is, will your income really track inflation? The answer is, only if you still have a viable job or business. Now, if the inflation is bad enough, the economy collapses and puts your earnings in jeopardy.
So if you hold debt during the coming catastrophe, you are in essence doubling down. Timing is, as always, critical; and nobody knows what the timing of nationwide and personal economic events will be.
Holding cash is pretty much the mirror image of holding debt. You can expect to see the value of your cash (and cash-based) accounts erode due to the coming hyperinflation. Yes, it’s convenient to to have it in a liquid form, but how far south will the dollar and the economy go, and how soon? Will it go far enough south that the existing financial systems (checking, savings, and credit card accounts) can no longer function?
I see I have posted a number of questions and not many answers—other than that hyperinflation is almost inevitably coming. The most we can hope to do is to organize our thinking about the possibilities, assign what we believe are reasonable probabilities, and then make our choices. And be ready to change those choices, to the extent that we can, as these baleful events develop.
Thanks. I’ll see what I can turn up...
You read my mind. This is exactly what I've been saying for years. You would not believe how many times I've been brow beat and flamed on this very site for saying that exact thing or discussing the steps I've taken to prepare for the coming collapse...
As the article correctly points out this has been happening for some time nearly 3 decades now. It has just been well hidden from the citizens.
I agree the world will feel this sudden stop. They are heavily invested in the US and the productivity of our citizens. Our dollars are backed by the “good faith and credit” of the United States. That my FRiends is us. In a crazy sense we're not the biggest consumers of the worlds goods, we're the biggest slaves. We've pledged our own productivity...
Weimer tried the tactic to print itself out of their WWI debts. I submit this is what 0bama is doing about our debt too. They think they can do this and stop just short of the crash. The problem is once you see the signs of the crash...it is already too late. The greed of the administration will blind it to the signals to stop.
I submit the fact we're seriously discussing these kind of events...it is already too late.
I think the really massive deficits will start when medicare bubble and social security bubble hit. We are $12 billion to $18 billion in debt without those debts being considered. We could work out of that debt over a decade or so. But we are $50 to $100 billion upside down on unfunded liabilities on those two. That is when the real fun starts.
parsy, who hopes he is wrong
I'm past the talking part.
In the past I've read articles and message board comments asking why the US doesn't appear to be shaping events during the end times in the Bible. I don't claim to have any special input on it, but an economic collapse could remove America's influence in the world.
If that turns out to be the case the irony would be that liberals accused evengelicals of trying to bring about end time events but it'd actually turn out to be liberals who did it.
Not too late to prepare, but certainly too late to prevent the coming collapse. We're gaining $1 million in public debt every six seconds. Prior to the passage of Obamalamadingdong-care, our debt is projected to hit 85% of GDP by 2019. That's only nine years away and it tells me that what we have going on is far beyond unsustainable. Land and lead is what will help folks survive. I certainly wouldn't want to be living in a city in about 8-10 years.....
Thanks for the post.If interested check out “Ragnar’s Urban Survival:A Hardtimes Guide to Staying Alive in the City”/Benson,Ragnar/Paladin Press.Quick read-not comprehensive by any means(too short)-but does a good job of covering the basics of survival in a worse case scenario.
I would add a couple of things to the survival gear and strategies list: A Bible, a copy of the Declaration of Independence and a copy of the US Constitution! All of course will be illegal to possess in time!
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