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.
Many thanks for fine post! If Americans were all online and protected themselves by heeding the advice of Jim Sinclair and John Williams they would stand a good chance of surviving the coming debacle.
Bump!
The Bible says to learn a trade that will allow you to go to any city and find work.
Knowledge, not politicians, is the most valuable commodity. Learn how to make something from scratch that people really, really need. It could save your life someday. You die, so does your gift.
“Hyperinflation is what I’ve been afraid is coming our way. I don’t see how it can be avoided. I have such a hard time accepting this reality. That this would happen to my beloved country is a nightmare.”
You echo my thoughts and conserns.
Bump for later read
I know I saw that and could have choked but it was the story as written. I like one of the other responses that we don’t let them escape!
For 2010, little improvement seen in job market
http://www.marketwatch.com/story/little-improvement-seen-in-job-market-in-2010-2009-12-24
Filter it to remove sediment & then put in 1 drop of chlorine bleach per cup of water. If you boil the water to purify it, transfer it back and forth between two bottles to re-aerate it - tastes better that way.
Not to be too pedantic, but the Weimar Republic saw hyperinflation in the 1919-1923 period. They recovered and did pretty well for most of the 1920's. From 1929-1933 they suffered like everyone else in the world, but they did not experience remarkable inflation in the 1930's.
They are now. Wait until Marxism spreads throughout Central America. With the USA heading in that direction what is going to stop it? I spent six weeks in Nicaragua in 1996 on a project for Bell South International. Costa Rica could turn into that sort of hell hole overnight. Costa Rica has no military to speak of, but other players in the region do, like Chavez........
“We should have acted 20 years ago.”
No, 59 years ago, when Sen. Joe McCarthy tried to warn us. Us frogs are now cooked in the pot, about to be scooped out and eaten.
In my opinion you don't run anywhere. You stand and fight back. Obama and Reid are cowards at best. Bullies are usually are.
be back
Thank you for posting this for me. As it turns out, I ended up having enough time to do it myself after all.
Thanks. At least we have plenty of chlorine for the pool.
My German grandfather told me stories about people taking wheelbarrows full of worthless paper money to the store just to buy whatever necessities were available, like bread.
Thank you Obamapelosireid...
you invested in wine? - (couldn’t pass that up)
Funny you should mention that. There is a house being built about a mile down the road from me. There is a water line 50' from this guy's property, yet he drilled two wells, each costing about $20K to drill. One of them has a hand pump installed on it. I haven't met the owner yet, but I've been told he is a retired MD. The house they are building looks like something you would see in a gated community, very high end, but it also has solar panels on the roof. Curious.
How bout the one where they put them in a cage in public and starve them to death .
I know. They’ve got a pretty good leader in Oscar Arias Sanchez, and a fairly representative government, but no army (only a national guard) to protect their relative wealth.
As long as you can own firearms in Costa Rica, you should be pretty much set.
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