He’s Dead, Jim

“Doctor McCoy. You are needed in the Federal Reserve Banking System, STAT.”

The US economy is teetering on what will eventually be a collapse. A lot of us will one day be a lot poorer. Maybe not tomorrow, Maybe not in a few months. But definitely not maybe.

All of the supposed recovery since 2008-2009 has been the result of easy credit. Take a look at the rates that the Federal Reserve Banking system has lent out money for the past sixty years. And notice the period from 2010 to 2015–it can’t go lower.

effective federal funds rate

Now pretend it’s a heart monitor, running from left to right. Chirp! Chirp! Chirp! Beeeeeeeeeeeep. Doctor McCoy would take one look at that flat-line heart rate monitor and conclude the patient was gone. Expired. Fell of the twig. Kicked the bucket. And then we’d hear him say, “He’s dead, Jim.”

Decades of profligate spending and borrowing, by the government, the banks, and corporations have driven debt levels into an exponential climb. Never something that ends well. What if your credit card balance looked like the following graph? And it just shows the debt of the Federal government. Student loans, home loans, as well as state and local government debt all follow the same pattern:

gross federal debt

We want benefits now. And politicians promise them. And then they borrow, never worrying that they will still be in office when the Pied Piper shows up to collect. And as long as we get our Medicare, Social Security, welfare benefits, and any other government payment, we really don’t care, do we?

And corporations have figured out the game also. Their CEO’s are no fools. When given the opportunity to borrow money for free, they did so. And use that money to buy back their own shares and thereby drive up the prices of those shares. And that’s how CEO’s have been raking in record bonuses and salaries for the past seven years. It’s also why a shrinking number of the rich own more and more of the wealth of this nation. And why the middle class is disappearing.

Take a look at another graph. It will be good for you. This one plots the rise of the Dow Jones stock index alongside the total assets of the Federal Reserve Bank. Assets as in money that has been borrowed from them. It’s an almost perfect match, and it shows just where all that money went.

federal reserve assets and dow

Not feeling richer these days? That’s because all of this “Quantitative Easing”, a nebulous term for lending money for nothing to all the rich and powerful companies and investment banks, has gone directly into the pockets of Wall Street. The proof is that you and I are so stretched that we have nothing much left to save, much less invest:

personal savings rate

This credit-driven joy-ride is out of control. It’s going to crash, it always does. All the kings horses and all the kings men won’t put this economy together again. And that’s a good thing. Because the only way this nation will ever return to a healthy and prosperous economy is for the middle-class eating zombies that control it to be shot in the head. And the markets are about to do that dirty task for us.

Sad part is that when the zombies die, it’s going to affect all of us. The value of things that we own, from our homes to our retirement savings is going to go down with the Titanic. It’s likely the US Dollar, riding high for how, will also eventually take a serious hit. Things are going to cost more. Then we will finally understand what has been done to us by the government, the banks, and Wall Street.

The longer term consequences of this crash are going to be the most painful. Pension funds are gong to suffer the same fate as that IRA or 401/403 account you’ve got in stocks and bones. There won’t be what is needed to pay out what was expected.

So what does somebody do to protect themselves? I’m not qualified to give financial advice. If I was, I’d be writing this from my multi-million dollar yacht and not from a 3-bedroom house in the suburbs. I can only offer the advice being given by the guys you won’t find on the MSM right now. That’s because they call them prophets of doom and it upsets the official message being currently given. “Don’t panic about your IRA–you are in it for the long term.”

Oh, they will have them on the MSM media, again, when the bubble pops. As they did in 2008-2009. They’ll be asking them, “What went wrong with the economy.”  And those fellows, if they are true to their past message will say, “When you give the control of the economy to a private central bank, this is what happens. When you turn from sound money and print paper money, this is what happens. When government growth is unchecked and they borrow from tomorrow to pay voters off today, this is what happens.”

And what about now? Their advice is timeless.  Be frugal. Save. Avoid debt. Invest in yourself– think practical skills, not college degrees. Don’t buy the lie that stocks are necessarily a wise investment, or that bonds are “safe.”  Think about some protection–such as a small percentage in previous metals. And if you are still hanging around the stock market as it makes the typical “dead cat bounce” recoveries over the near future, consider leaving the party early. If you have the means, consider investing/storing some things outside of the country.

The economy is toast. So pass the mustard, please. I’m going to make a baloney sandwich.

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