Saturday , 27 May 2017


U.S.'s Runaway Financial Train is About to Destroy the Status Quo

People riding a runaway train can party and remain oblivious to the fact that the train is about to crash into a huge obstacle. Our runaway financial train is about to destroy the status quo as it crashes into the obstacle of mathematical consequences – the inevitable financial train wreck. “If something cannot go on forever, it will stop.” [Let me explain.] Words: 974

So says GE Christenson (www.deviantinvestor.com) in edited excerpts from his original article* entitled Gold, Paper, and a Train Wreck.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), may have edited the article below to some degree for length and clarity – see Editor’s Note at the bottom of the page for details. This paragraph must be included in any article re-posting to avoid copyright infringement.

Christenson goes on to say, in part:

Let’s begin with a few facts and assumptions and follow the logic:

  • Gold has been a store of wealth for more than 3,000 years. Silver has been used as money in most countries of the world. Both are still valuable.
  • All unbacked paper money eventually reverts to its intrinsic value of zero. Throughout history, there have been no exceptions to this statement. The world’s current experiment with unbacked paper money is only 41 years old and looking rather strained.
  • A person, business, or government cannot increase their indebtedness forever by spending in excess of revenues. This seems self-evident. Eventually, the person, business, or government will become unable to find anyone willing to lend under those circumstances. “Deficits don’t matter” is nonsense.
  • “If something cannot go on forever, it will stop.” This is Stein’s Law and seems obvious, but we often act as if we don’t believe it.
  • Politicians and governments will do everything possible to retain current power, even if it is destructive in the long term.

My belief is that most people will agree with these simple and straight-forward statements.

New eBook

Survival Investing with Gold & Silver

by GE Christenson – aka Deviant Investor

Kindle      All Formats

The current debt of the U.S. government exceeds $16 Trillion and will increase at current growth rates to about $25 Trillion in another four years. Interest rates on the national debt are historically low because the Federal Reserve continues to “print money” and then makes huge purchases of government bonds. Assume a modest 5% interest rate on $25 Trillion of national debt in 2016.

  • Do you believe that our economy can generate $1.25 Trillion in annual taxes just to pay the interest on the debt?
  • How about funding a 6% interest rate on $35 – $45 Trillion in national debt by the year 2020?

The interest payments would be about $2.4 Trillion – approximately the entire revenue for the government in 2012. “If something cannot go on forever, it will stop.”

Who in the world is currently reading this article along with you? Click here

Incidentally, the present value of unfunded obligations of the U.S. government for Social Security, Medicare, Medicaid, military pensions, and other commitments is $100 Trillion to $220 Trillion depending upon who is counting. It does not matter which calculation is correct since it is impossible for the US government to fund and pay either present value estimate.

Our politicians will probably address the budgetary problem, as created by them, by taking the easiest way out, by angering the least number of voters, stalling, blaming others, appointing committees, and by concealing the problems and consequences as best they can. Possibilities include:

  • printing $Trillions and blaming the resulting inflation on a convenient scapegoat,
  • defaulting on all debt owed to foreigners,
  • means-testing Social Security, Medicare, and other programs,
  • forcing pension funds and IRA’s to buy T-Bonds,
  • higher taxes,
  • higher inflation, and
  • reduced military spending.

Many more creative suggestions will be set forth, but they probably will not include balanced budgets, fiscal sanity, or debt repudiation.

Sign up HERE to receive munKNEE.com’s unique newsletter, Your Daily Intelligence Report
  • It’s FREE
  • It contains the “best of the best” financial, economic and investment articles to be found on the internet
  • It’s presented in an “edited excerpts” format to provide brevity & clarity of content to ensure a fast & easy read
  • Don’t waste time searching for articles worth reading. We do it for you and bring them to you each day!
  • Sign up HERE and begin receiving your newsletter starting tomorrow

If paper money eventually declines in value to nearly zero, the national debt is never repaid, government…continues to borrow and spend in excess of revenues, and this process… is extended for only a few more years, should we assume that:

  • the dollar decline in value against all commodities will cause all food, energy, metals, and practically everything you need for survival to substantially increase in price?
  • government guarantees, programs, and promises will be changed, reduced, eliminated, or devalued? How much good is receiving Social Security income if your monthly benefit purchases only seven loaves of bread, a few fishes, and a tank of gasoline?
  • taxes will increase and our standard of living will decrease?
  • most paper wealth in the form of debt instruments, T-Bonds, T-Notes, state government bonds, and corporate debt will substantially decline in value and purchasing power?
  • gold re-enters the global monetary system in some form, not because politicians and central bankers want it, but because they are forced to include gold in order to create a credible monetary system that will inspire confidence in the new currency?

The above begs the question, how do you prepare?

Perhaps we should cash out all paper investments, buy gold, and hunker down on rural farmland but this will not work for most people…[because, while they] know much is wrong in our economy, they are not ready to abandon their current lifestyle. The problem is that by the time it becomes clear that economic disaster is upon us, it will be too late for most people to protect themselves. A partial solution is simply to buy physical gold and silver – NOW!

When will this economic collision/collapse/crash/disaster occur in the United States? Jim Sinclair, one of the premier financial intellects of our time, thinks we may have until perhaps 2015 – 2017 before the collision. He recommends having physical gold bullion in your possession or perhaps stored in a secure private storage facility. I think silver coins and bullion stored in a secure and private facility are also a wise investment.

Conclusion

We don’t know when the crash will occur but it makes far better sense to prepare now, even if early, than to wait and hope. If all of these potential disasters miraculously disappear and our financial world continues as it has, preparation will be, at worst, inexpensive insurance. “Buy that insurance” while you still can.

Are you prepared? Do you have enough financial insurance – physical gold and silver?

*http://www.deviantinvestor.com/1734/gold-paper-and-a-train-wreck/

Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

Related Articles:

1. Forget About the Fiscal Cliff! Increased Taxes & Austerity Measures Are Coming to the U.S. Regardless! Here’s Why

financial cliff

It’s easy to find analysts and investors who are certain that a deal [to avoid the fiscal cliff] will be reached, or at least that the can will be kicked down the road to buy more time. It’s also easy to find more pessimistic views that are based on the lack of cooperation in the past, and a deeply polarized country and political system. However, I think many are missing the point, which is that austerity is coming to America – taxes are going up and government spending will be reduced – [and. as such,] the United States is likely to face a recession and market correction in 2013, regardless of whether or not a compromise is reached over the Fiscal Cliff. Words: 970

2. Take Note: Don’t Say You Weren’t Forewarned!

economic-train-wreck

It is relatively easy to predict further commodity price inflation as a result of the massive money printing going on worldwide and that hard assets, not paper assets, will help protect purchasing power but it is much more difficult to project where else this money printing leads and to what extent a crash is inevitable. What is the endgame? Will it be another financial crash such as in 2008 or will it be a more destructive financial and economic crash that causes a severe but temporary disruption in the delivery of goods and services? Words: 1470

3. A Must Watch Video On Why America Is In A “Death Spiral”

warning3

The video*  below is one of the best overviews of what is going on and one of the best explanations of what lies ahead that I have heard. As such, in my opinion, it is A Must Watch!

4. . These 25 Videos Warn of Impending Economic Collapse & Chaos

economic Armageddon

The internet is awash (drowning?) in hundreds of doom and gloom videos providing dire warnings of coming world depression, food shortages,  rioting in the streets, rampant (hyper) inflation, deepening banking crisis, economic apocalypse, financial Armageddon, the demise of America – well, you get the idea. Below is a small sample of such videos with a hyperlink to each.

5. The Ultimate Fear Mongering Video – or the Ultimate in Insights, Forecasting & Sound Advice? You Be the Judge

global-financial-crisis

Warning: New evidence points toward an imminent financial collapse and the destruction of American wealth. Income, investments, retirement, and even personal safety are now at severe risk. In this new video I lay it all out for you. Words: 515

6. The Top 18 Economic Documentaries

economy-financial-black-hol

Economic Reason has gathered together the Top 18 ‘reality’ economic documentaries which are bought to you by www.munKNEE.com.

7. Almost 3 Million Views! Why U.S. Debt & Budget Will NEVER Balance

us-collapse1

This short video – on the sustainability of government spending – should be watched by everyone, including those not yet old enough to vote. It should be shown in every high school and college classroom.

8. The U.S. Economy is Going to Collapse…It is Unavoidable…It’s a Mathematical Certainty…Here’s Why

economic-collapse

The level of debt has surpassed the possibilities of being serviced. Mathematically, the debt problem cannot be solved, regardless of economic policies. That, unfortunately, is written. For it to be serviceable would be to violate the laws of mathematics and that cannot happen. [As such, America is quickly approaching a catastrophic economic collapse. As repelling as that sounds, it’s in your own best interest to learn just how bad the situation is. This article is an attempt to do just that.] Words: 310

9. A Disaster of Unprecedented Proportions (The End Of The World As We Know It) Is Coming Sometime This Decade and It Will Be Irreversible!

crisis

“The end of the world as we know it” is what David Korowicz predicts is coming sometime this decade – an “ultimate” crash that will be irreversible – TEOTWAWKI! Words: 1395

10. The Average U.S. Citizen Is Clueless Regarding the Desperate Shape the Country Is In! Are You?

crisis

The corrosive nature of politics and government has destroyed the economy and the moral fiber of citizens. These issues are not insurmountable, but they are very close to being so. Their ramifications are potentially existential in nature: the average length of life, the very time span or cycle of a nation has been proven in history to be approximately 250 years.  Since the USA was born in 1776 this says we have about 14 years of life remaining for America. The way things are going we don’t doubt it. [Let me explain.] Words: 768

11. If You Are Not Preparing For a US Debt Collapse, NOW Is the Time to Do So! Here’s Why

us-collapse1

Timing the U.S. debt implosion in advance is virtually impossible. Thus far, we’ve managed to [avoid such an event], however, this will not always be the case. If the U.S. does not deal with its debt problems now, we’re guaranteed to go the way of the PIIGS, along with an episode of hyperinflation. That is THE issue for the U.S., as this situation would affect every man woman and child living in this country. [Let me explain further.] Words: 495

12. This Will NOT End Well – Enjoy It While It Lasts – Here’s Why

…The US Government and its catastrophic fiscal morass are now viewed by the world as a ‘safe haven’. This would easily qualify for a comedy shtick if it weren’t so serious….[but] the establishment is thrilled with these developments because it helps maintain the status quo of the dollar standard era. However, there are some serious ramifications that few are paying attention to and are getting almost zero coverage from traditional media. [Let me explain what they are.] Words: 1150

13. U.S. Between a Rock & a Hard Place: A Recession Now or a Financial Collapse Later! Here’s How to Invest in Such Precarious Times

kicking the can, obama cartoons

Over the past few years, policy leaders worldwide have grown accustomed to kicking the can down the road with each step in this ongoing financial crisis making incremental moves rather than cultivating viable long term solutions. More recent attempts seem to have evolved into simply just trying to kick the can out of the driveway. Now we fear there may not be enough firepower left to simply kick the can over. [Having done so, we are left between the proverbial rock and a hard place.] If lawmakers do nothing, by all accounts we are likely to see a recession. Should lawmakers extend the Bush-era tax cuts, you make no progress towards long term deficit reduction, potentially raising the risk and magnitude of a future financial crisis. [Let me discuss this predicament further and how best to invest in such precarious times.] Words: 1602

14. Regardless of Who Wins in November the U.S. Is Going Over the Financial Cliff! It’s Just a Matter of Time – Here’s Why

financial cliff

The outcome of the election of 2012 will [only] determine the rate of speed at which we approach the [financial] cliff [because] neither political alternative is willing to change course, to steer away from the cliff. The cliff is so high that whether we go over it at 200 mph (Obama) or whether we merely slip over the edge (Romney), the end result is the same — fatal for the economy and perhaps our entire political system. It is the fall that will kill us. [This article explains why that is going to be the case.] Words: 1135

15. What’s Coming: A “Fiscal Meat Grinder,” A “Fiscal Cliff” and a Potential “Major Market Meltdown”!

fiscal cliff

The International Monetary Fund, the U.S. Congressional Budget Office, the National Association of Manufacturers and many other authorities are now warning that with the largest tax increase in U.S. history — plus the largest government spending cuts our nation has ever seen – one of the deadliest financial crises in U.S. history is set to strike the U.S. economy beginning this coming New Year’s Day. Barring a miracle in Washington….. Words: 1028

16. John Mauldin: The Next Few Years Are Not Going To Be Pretty – Here’s Why

global-financial-crisis

The next few years are not going to be pretty. We’re looking right into the teeth of a rolling global deleveraging recession—the End Game, I’ve called it – and the decisions we make in the next couple years about how to handle our debts and budget deficits here in the U.S., in Europe, in China, in Japan, and elsewhere, are going to be absolutely crucial. Words: 507

17. Events Accelerating Towards an Ultimate Dollar Catastrophe! Here’s Why

With the U.S. election just months off, political pressures will mount to favor fiscal stimulus measures instead of restraint. Such action can only accelerate higher domestic inflation and intensified dollar debasement culminating in a Great Collapse – a hyperinflationary great depression – by 2014. [Let me explain why that is the inevitable outcome.] Words: 2766

18. Major Inflation is Inescapable and the Forerunner of an Unavoidable Depression – Here’s Why

Whether our current economic crisis will end with massive inflation or in a deflationary spiral (ultimately, either one results in a Depression) is more than an academic one. It is the single most important variable for near and intermediate term investing success. It is also important in regard to taking actions which can prepare and protect you and your family. [Here is my assessment of what the future outcome will likely be and why.] Words: 1441

19. An Inflation Inferno is Expected – but When?

Daniel Thorn­ton, an econ­o­mist at the Federal Reserve Bank of St. Louis, argues that the Fed’s pol­icy of pro­vid­ing liq­uid­ity has “enor­mous poten­tial to increase the money sup­ply,” result­ing in what The Wall Street Journal’s Real Time Eco­nom­ics blog calls “an infla­tion inferno.” [Personally,] I think it’s too soon to make sig­nif­i­cant changes to a port­fo­lio based on infla­tion fears. Here’s why. Words: 550

20. Major Price Inflation Is Coming – It’s Just a Matter of Time! Here’s Why

The developed economies of the world have opened the money spigots…[and this] massive money and credit creation is sitting in the banking system like dry tinder just waiting for a spark to set it ablaze. How quickly it happens is anyone’s guess, but once it does we are likely to be enveloped in a worldwide inflation unlike anything before ever witnessed. [Let me explain further.] Words: 625

21. U.S Likely to Hit the Financial Wall by 2017! Here’s Why

The deficits aren’t going to stop anytime soon. The debt mountain will keep growing…Obviously, the debt can’t keep growing faster than the economy forever, but the people in charge do seem determined to find out just how far they can push things….The only way for the politicians to buy time will be through price inflation, to reduce the real burden of the debt, and whether they admit it or not, inflation is what they will be praying for….[and] the Federal Reserve will hear their prayer. When will the economy reach the wall toward which it is headed? Not soon, I believe, but in the meantime there will be plenty of excitement. [Let me explain what I expect to unfold.] Words: 1833

2 comments

  1. Social Security, Medicare, and Medicaid programs are ONLY 6% of the 2013 Recommended Discretionary Spending, while the Military budget is OVER 60% (and that does not include all the secret or “Black” programs)! If we “just” reduced our Military to about 40% it would be at 2002 levels, and we were not in greater danger then than now. http://www.OneMinuteForPeace.org

    The US Gov’t needs to end all our Wars (including the War on Drugs) we are not winning and get back into making things better in the USA by rebuilding our infrastructure ASAP, before China*buys all the Earths raw materials needed to do it with.

    Articles attacking Social Security, Medicare and Medicaid are nothing but a cheap shot at all those that have the least ability to defend themselves (above article not included).

  2. Yet another major roadblock to using real estate as an investment!

    The Fed is now forcing everyone to use Wall Street as the only place to invest, by using “our” money to reduce the value of “our” Real Estate investments!

    What is next making holding Gold and or silver illegal?

    No wonder the Wealthy now keep their money off shore…