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Author: Subject: Why we are on the brink of the greatest Depression of all time

Maximum Peach





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  posted on 8/27/2012 at 08:09 PM
But hey, it'll all get better if we just print more money, spend more of what we don't have, and of course: tax the rich...

quote:
Why we are on the brink of the greatest Depression of all time

By Wayne Allyn Root | Published August 23, 2012


Everywhere from FoxNews.com to CNBC.com, I suddenly see commentators warning of pending doom, economic collapse, and a new Great Depression. Welcome to my club. Perhaps America's politicians and economists should have paid attention to an entrepreneur and small businessman that has been warning of economic collapse and a new Great Depression publicly for over two years.

More importantly, none of the current commentaries mention the "why's" of this slow motion economic collapse...beyond the obvious -- mountains of deficit and debt. None of them mention the dysfunctional structure of the current U.S. economy and the massive changes in the work ethic and mindset of the average American.

I am a successful small businessman and a patriot who loves America and always sees its greatness. I am also an optimistic, positive thinker who always sees the glass half full.

But not this time.

This time we are in such deep trouble, the only solution is a radical restructuring of the politicians, the economy, and the way we view personal responsibility versus government handouts. If those changes don't come then we are facing a long decline and the eventual end of America.

This time the results are going to be dramatically worse than 1929. This time we are facing The Greatest Depression ever.

Why? Because The Great Depression had NONE of the structural, economic, and social problems, nor the massive obligations we are now facing. Read the facts:

In 1929 America was not $16 trillion in debt, plus facing over $100 trillion in unfunded liabilities. Thatís over $360,000 in debt per citizen.

In 1929, most of our states were not bankrupt, insolvent and dependent on federal government handouts to survive. One county (Cook County which includes Chicago, Illinois) now owes over $108 billion in debt (the biggest part of it in unfunded government employee pensions).

In 1929, we did not have 21 million government employees with bloated salaries, obscene pensions, and free health care for life. Today 1 out of 5 federal employees earn over $100,000.

Today, 77,000 federal employees earn more than the governors of their states.

Staggering numbers of federal government employees retire at a young age with $100,000 pensions for life.

Unfortunately on the state and local levels itís even worse. There is now nearly $4 trillion in unfunded pension liabilities for state government employees.

Protected by their unions and the politicians they elect, government employees are bankrupting America. In Illinois there are retired government employees making over $425,000 per year.

No one could have imagined any of this in 1929. There is no possible way to pay these bills moving forward.

In 1929, Social Security, Medicare, and Medicaid didnít exist. The federal government had no such obligations threatening to consume the entire federal budget within a few years.

In 1929, there was no such thing as welfare, food stamps, aid to dependent children, or English as a second language programs. Americanís didnít consider it the responsibility of government to pay for breakfast and lunch for school students -- let alone for illegal immigrants at school.

Who could have imagined back in 1929 that one seventh of America's population would be on food stampsÖand the federal government would ADVERTISE to encourage even more Americans to sign up for food stamps and welfare.

Who could imagine back then that the federal government would team up with the President of Mexico to encourage Mexicans living illegally in America to sign up for food stamps?

Who could have imagined back then that the president would offer not just welfare, but waivers to allow any state to opt out of requiring work to receive welfare?

Back in 1929, who could have imagined 86 pregnant teenage girls all in one Memphis high school?

In 1929 we had families, moral codes, and churches to prevent this kind of tragedy. Do you actually believe this is just one abnormal high school? There must be record numbers of pregnant teens all over America. They have figured out that the choice is to either work a drab, depressing job paying minimum wage, or pump out babies and have government pay your bills for decades to come. But where will the money come from? This will overwhelm the system with generations of massive debt. This is a nightmare.

In 1929, legal immigrants wanted only to work. My grandparents, who came to this country from Russia and Germany, received no government benefits. They worked day and night to provide for their family and become American citizens. It was sink or swim. My grandmother Anna Root never took a penny in welfare, even when my grandfather died and left her with no job, no money, and 7 young children. So back in 1929 immigrants cost us very little.

Today we have millions of illegal immigrants and their children collecting billions of dollars in entitlements from U.S. taxpayers.

In one state (California) illegal aliens cost taxpayers over $10.5 billion annually just for education, health care and incarceration. Do you now understand why California is bankrupt and insolvent? This is spreading across the country.

More dysfunction? Today new studies show that almost 20% of American children under age 18 are obese and therefore prone to suffer pre-diabetes, diabetes, or cardiovascular disease.

Even worse, by 2020 experts predict that 52% of the adult population of America will have either pre-diabetes or diabetes.

Do you understand the cost of diabetes? This alone will overwhelm and bankrupt America's health care system.

In 1929 we had no federal disability program. Today almost 11 million Americans are on disability. There are more citizens on the disabled rolls than the population of 39 of our 50 states. This is far worse than the welfare or unemployment rolls- which have time limits. Disability is forever. The ratio of able-bodied workers to disabled in 1967 was 41 to 1. As of June 2012 it is now 16 to 1. It is impossible to pay this bill long term.

But wait...it gets worse. Now soldiers are in on the act. Are you aware 45% of returning vets are claiming "disability"-- a number that dwarfs all prior records in the history of warfare. No nation can afford this.

In 1929, we had an education system that was the envy of the world. Today our public schools are in shambles. We spend the most money in the world, and get among the worst results. The difference today? Teachers unions are in charge, instead of parents. Our students graduate with few skills, are qualified only for low paying manufacturing jobs that no longer exist -- they've been shipped to China and India. What will this workforce do for the rest of their lives? Live off the government dole? Who will pay for it?

In 1929 taxes were much lower. Forget the tax rates -- they were meaningless. In those days we had a cash economy, so most businesses paid little or no taxes. Sales and FICA taxes didnít exist. Today the combined local, state, property, gas, sales, FICA and federal taxes are the highest burden in history.

Unconvinced?

When income taxes started in 1913, the average American was untouched. Only the richest 350,000 Americans paid a 2% income tax. Today the average American works until April 12th just to pay his or her taxes.

This stifles entrepreneurship and hinders the financial risk-taking necessary to create jobs and get out of a Great Depression.

New numbers just out for July back up my contention that disaster looms. Sales tax revenues plunged an alarming $539 million below expectations in California last month. The jobless rate rose in July in 9 out of 10 battleground states -- Iowa, Florida, Michigan, Nevada, New Hampshire, Pennsylvania, Virginia, Colorado and North Carolina all had higher unemployment (while Ohio held steady). They say bad news comes in threes. Well here's the worst news of all- the American Petroleum Institute reports that demand for oil in July was at the lowest level since 1995. These figures are alarming -- to say the least.

Do you get the picture? Our country is staring at the Greatest Depression ever. We face a long slow decline towards the end of America -- unless we change paths and policy quickly.

The economy is crumbling. The situation is turning more hopeless by the hour. The more government gets involved, the worse it gets. Coincidence?

The solution is actually simple: dramatically cut the size, scope and power of government; cut spending; cut entitlements; cut taxes; cut government rules and regulations that smother, damage and destroy businesses, prevent startups, and kill jobs; reform Social Security, Medicare and Medicaid; reform public employee pensions; stop the wars (we can no longer afford to police the world); end or reform the Fed; end bailouts and stimulus (ask Japan about the failures of repeated stimulus); end the Democratic obsession with green energy and high speed rail (ask Spain about the waste in those two programs); encourage oil and energy exploration; encourage job creation by small business and the private sector; term limit politicians; institute school choice; and back the dollar with a gold standard.

Or, like so many other great empires of history, America may never recover from this Greatest Depression of All Time.


http://www.foxnews.com/opinion/2012/08/23/why-are-on-brink-greatest-depress ion-all-time/#ixzz24nZqBOfR


 

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True Peach



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  posted on 8/27/2012 at 09:02 PM
So explain to me how Mitt Romney as President will change any of this??? I have heard him talk of increasing defense spending and giving further unpaid for tax cuts to the wealthy.

How are things like getting rid of teachers unions gonna make anything better??? Remember, you get what you pay for. Get rid of unions so you can pay all school employees around the country less and you will get even worse results. People don't work harder and take more pride in their work for getting paid less. So send the kids walking to school instead of bussing them to dirty and unsanitary buildings that are maintained like crap and see how that improves education and how it guts more of the middle class. Taking wages back from these people and or taking their jobs completely just shrinks the economy further and puts more people on the unemployment rolls.

I am one of those collecting disability. I don't collect a lot as my income is based on a formula that pays me a percentage of what I was making in 1990 when I got hurt and that wasn't very much, around $33,000/year before taxes. I do not live the life of Riley and struggle to keep up with the bills and I have debt. A few concerts a year is my entire social life. It is tough but I am greatful for what I do get. Without it I am out on the streets.

I don't know the answers to all of these difficult problems but ending almost any of these programs are gonna screw somebody and it looks like those most in need will be the most affected. It isn't gonna be pretty once these programs start to fall or when school unions get busted up and hundreds of thousands are forced either out of work or to work for far less which for many will change thei quality of life big time. I could see lots more forclosures and lots more bankrupcy and lots more people looking for help with none to be had. Very sad.

It is a shame that the trickle down economics as explained to us never panned out and doesn't work. Had the middle class and poor grown along with the wealthy as it was explained to us to do we wouldn't be in such trouble these days. The wealthy have seen their wealth go up something like 30 times over the last three decades while the middle class and poor have stagnated. The trickle down hasn't even dripped down. So why is it that Romney wants to return us to a failed policy??? It didn't work, isn't working now, and won't work ever. It is a falicy!!! If that system actually worked the middle class would have grown along with the wealthy.

[Edited on 8/28/2012 by sixty8]

 

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Zen Peach



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  posted on 8/27/2012 at 09:37 PM
Is Obamanomics working?
 

Universal Peach



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  posted on 8/27/2012 at 09:42 PM
well, uh, just think what it would be like if he hadn't been in office.......

[Edited on 8/28/2012 by er1016]

 

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Maximum Peach



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  posted on 8/27/2012 at 10:23 PM
quote:
So explain to me how Mitt Romney as President will change any of this???

I doubt he will or could. I find his proposals lacking in boldness and not sufficiently aligned with the obvious reality we're facing. At the same time, Obama's clearly have no chance of changing anything, because for the most part his voting block is beholding to the status quo, to govt programs, or to unions. The agenda of those groups can not be maintained, yet that's his path.

The sad thing is that I think many people are way ahead of the politicians on this topic. They know what we're doing is unsustainable. Perhaps they don't know by how much, or the details of why, but they know something is coming that could well alter everything we've known about America and our lives.

quote:
How are things like getting rid of teachers unions gonna make anything better??? Remember, you get what you pay for.

Your statement is all too true, but perhaps not as intended. Like medical care, we pay more for education on a per-pupil basis than any country in the world, yet get crap results. Where's the money going? Certainly not to results. We're no longer rich enough to afford such a poorly performing system. Who runs the schools and sets this all in place? Mostly teacher's unions and their paid-for politicians.

quote:
It is a shame that the trickle down economics as explained to us never panned out and doesn't work.

I know this term is a political flash point for some. But consider for a moment: does trickle up, or trickle from the center, even exist when considering how an economic system works? Like it or not, the whole system is driven primarily by top-down investment decisions. The political rhetoric that seeks to use this term as some sort of rallying cry only ends up spreading ignorance and envy.

The economic health of a nation is only possible as long as said nation continues to produce wealth by selling more to other countries than it buys from them. Productive activities require investment. We have not nurtured the conditions whereby global investment in productive activities stays here to pay for the jobs and wealth needed to maintain the society that developed following WWII. We will not re-establish that by punishing success, confiscating wealth, burdening industries, or increasing costs. Only the reverse will alter the trajectory. But with one party's populist message running counter to many of these issues, little discussion is even possible, much less the bold changes necessary.

quote:
Had the middle class and poor grown along with the wealthy as it was explained to us to do we wouldn't be in such trouble these days. The wealthy have seen their wealth go up something like 30 times over the last three decades while the middle class and poor have stagnated.

One of the biggest factors, one that never gets sufficient attention, is what our decision in 1971 has contributed to this problem. Of course I'm refering to removing the dollar from the gold standard and running a completely fiat currency.

Because of having wealth to invest, the wealthy manage to maintain their worth realtive to the dollar's declining value. The poor and middle class don't have the ability to do this, so they are subjected to the full effects of currency inflation. Govt's have a vested interest in fudging the numbers on inflation, so the real impact may be hard to calculate. But even an average of 4-5% inflation per year has a devasting effect on the savings and wealth of those living mostly paycheck-to-paycheck. Over a decade or two, it really adds up.

Further; when politicians try to maintain their popularity by enacting stimulus spending funded by debt, they only put off and amplify this problem. Debt always means more money printing in a fiat currency system. This fuels currency devaluation, which ends up hurting the people they claim to want to help the most. Eventually, no amount of govt spending or stimulus changes the conditions for the average citizen, which is a sure sign that the end game for that currency is approaching.

Much of what has/is causing the growing gap between classes is currency related. Without a sound and stable currency, no amount of tax policy, govt austerity, trade policy, industrial policy, stimulus or anything else much matters. The policies of the Fed in continuing to prop up a dollar not supported by anything are the single most destructive element to an economically healthy America. The middle class is bearing the brunt of the pain for a bunch of central bankers who can't admit they aren't as smart as they've told everyone for decades.


[Edited on 8/28/2012 by Fujirich]

 

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True Peach



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  posted on 8/27/2012 at 10:32 PM
quote:
Is Obamanomics working?


I don't know if it would work or not. He only got one peice of legislation through by the skin of his teeth. We will never know with the filibuster machine in place and I don't see that changing should Romney get elected. I just see the filibuster machine switching sides and looking for payback. Visious system we have. Maybe at another time his plans may have worked better. Maybe if he would have started with what W started with??? Unfortunately we will never know because the fact is he did have to start with what W left. I know those on the right don't want to hear that but it is the facts.

 

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  posted on 8/27/2012 at 10:33 PM
I don't think the point of getting rid of teachers unions and other public sector unions is just to cut pay. I believe the majority of teachers work hard and give their best for the students. There are some that don't though. They should be fired. Instead, they are protected by the union at the expense of the kids and the country.

I'm ok with truly disabled people collecting that benefit, but I think it has become a popular program for people gaming the system. Just look at the increase in the number of people receiving disability. I don't understand why someone can injure there leg and receive disability for the next thirty years. Is there not some other job that person could learn to earn a living? There are a lot of jobs that don't require working legs (just an example - not making light of disabilities). Instead of helping the disabled person improve their condition by helping them learn a new skill, the government just gives them a check to do nothing. There obviously are disabilities where a person can't work, and that is fine, but I would bet a majority of people on disability could do something to earn a living.

 

Zen Peach



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  posted on 8/27/2012 at 11:33 PM
I'm just glad that the republicans in congress have worked so hard with the democrats to bring the country back from economic hardship....oh wait....that didn't happen did it?

 

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  posted on 8/28/2012 at 05:32 AM
When Obama tried to get a tax implemented on companies for sending jobs off shore the Republicans blocked it. When Obama tried to get a jobs bill passed the Republicans blocked it. The Republicans have followed Limbaughs lead and obstructed and blocked every step of the way. That being said under Obama there is still 27 straight months of private sector job growth. With no help at all from the republicans.

 

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  posted on 8/28/2012 at 07:21 AM
Another hit piece by fox news that the cause of all of Americas problems are due to entitlement spending. No mention of massive nation-building or capitalism that lost its focus on American values and instead is rebuilding China, or a stupid energy policy that continues to rely on imported oil. No, its the guy collecting SSI or teachers that are bringing this country down. I am no Obama fanboy but some of this stuff from fox news is laughable.

 

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  posted on 8/28/2012 at 08:12 AM
i don't think this is a partisan debate. republicans and democrats both suck. what fuji posted is fact. how we got there is through a combination of both parties leading us down the wrong road.

unfortunately, i think we're too far down to correct it. hopefully i'm wrong.

how do we fix it? i've promoted fairtax.org for years on this board. it eliminates waste, provides for the poor, encourages the middle class and brings jobs that were shipped overseas back here to the states.

 

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Zen Peach



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  posted on 8/28/2012 at 08:35 AM


Wayne Allyn Root of the shuckster "The Winning Edge" football picks infomercial? Maybe he can reduce the deficit by actually get one prediction right one of these years. Call now, operators are available!

 

Zen Peach



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  posted on 8/28/2012 at 08:54 AM
quote:
i don't think this is a partisan debate. republicans and democrats both suck. what fuji posted is fact. how we got there is through a combination of both parties leading us down the wrong road.


First of all, everything is a partisan debate.

Second of all, I question the use of the word "fact" in reference to the totality of that piece by Mr. Root.

 

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  posted on 8/28/2012 at 08:54 AM
quote:


Wayne Allyn Root of the shuckster "The Winning Edge" football picks infomercial? Maybe he can reduce the deficit by actually get one prediction right one of these years. Call now, operators are available!


LOL, that says it all.

 

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  posted on 8/28/2012 at 09:01 AM
There is nothing anyone can do to reverse this problem. It has taken 100 years to create this monster first the creation of the Federal Reserve, which turned our money making ability over to private bankers, then the 16th amendment calling for an income tax on every individual in the country. Finally the 17th amendment giving the popular election vote to Senators thus removing the checks and balances that States were able to put on the Federal government. All of this occurred in 1913 and barely anyone noticed at the time that this was greatest altering in the architecture of the Constitutional Republic the founders had in mind. Three years after this transpired the United States was embroiled in WWI, Twenty-four years later WWII, followed by the Cold War (a third world war by proxy), and now the GWOT.

We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip.
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Zen Peach



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  posted on 8/28/2012 at 09:09 AM
quote:
quote:


Wayne Allyn Root of the shuckster "The Winning Edge" football picks infomercial? Maybe he can reduce the deficit by actually get one prediction right one of these years. Call now, operators are available!


LOL, that says it all.


So no problem then?

 

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  posted on 8/28/2012 at 09:25 AM
well the end of the world is not as close as some like to think.
 

Zen Peach



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  posted on 8/28/2012 at 09:44 AM
Basic laws of math don't apply to the United States. What was I thinking? Nothing bad could ever happen here.
 

Zen Peach



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  posted on 8/28/2012 at 09:49 AM
A mere 1% rise in interest rates would cost an additional ONE TRILLION DOLLARS in interest payments over 10 years.

Nothing to worry about.

 

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  posted on 8/28/2012 at 10:42 AM
i also don't think getting finacial advice from a bookie is a good idea. (i apologize for my next comment) i also don't think the allman brothers whipping post forum is a great place for finacial advice.
 

Zen Peach



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  posted on 8/28/2012 at 12:52 PM
quote:
There is nothing anyone can do to reverse this problem. It has taken 100 years to create this monster first the creation of the Federal Reserve, which turned our money making ability over to private bankers, then the 16th amendment calling for an income tax on every individual in the country. Finally the 17th amendment giving the popular election vote to Senators thus removing the checks and balances that States were able to put on the Federal government. All of this occurred in 1913 and barely anyone noticed at the time that this was greatest altering in the architecture of the Constitutional Republic the founders had in mind. Three years after this transpired the United States was embroiled in WWI, Twenty-four years later WWII, followed by the Cold War (a third world war by proxy), and now the GWOT.

We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip.
Gordon Gecko


This is really goingn to hurt you but I agree with what you wrote. None of us here was alive when these changes were made and it doesn't appear that we have anyone in D.C. willing to upset the status quo. Two hundred years or so isn't a bad run....but unless something is done, I'm not sure by the end of this next hundred years anyone will recognize this country.....heck, I'm starting to not recognize it now!

 

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  posted on 8/28/2012 at 01:08 PM
quote:
quote:
There is nothing anyone can do to reverse this problem. It has taken 100 years to create this monster first the creation of the Federal Reserve, which turned our money making ability over to private bankers, then the 16th amendment calling for an income tax on every individual in the country. Finally the 17th amendment giving the popular election vote to Senators thus removing the checks and balances that States were able to put on the Federal government. All of this occurred in 1913 and barely anyone noticed at the time that this was greatest altering in the architecture of the Constitutional Republic the founders had in mind. Three years after this transpired the United States was embroiled in WWI, Twenty-four years later WWII, followed by the Cold War (a third world war by proxy), and now the GWOT.

We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip.
Gordon Gecko


This is really goingn to hurt you but I agree with what you wrote. None of us here was alive when these changes were made and it doesn't appear that we have anyone in D.C. willing to upset the status quo. Two hundred years or so isn't a bad run....but unless something is done, I'm not sure by the end of this next hundred years anyone will recognize this country.....heck, I'm starting to not recognize it now!



I suspect we haven't even a decade left much less nearly a full century. I've only recently resigned myself to the fact that as things stand now in this country they're simply unsustainable for the long term and we'll fall off the fiscal cliff soon enough and we'll be forced to undergo one massive reset. What will arise after the fall out is anyone's guess. But everyone will be f*cked to some degree, even the rich. I feel sorry for the very young in this country and things are bound to get worse before they get better. I'm glad I haven't any children.

[Edited on 8/28/2012 by Chain]

 

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  posted on 8/28/2012 at 01:49 PM
quote:
quote:
quote:
There is nothing anyone can do to reverse this problem. It has taken 100 years to create this monster first the creation of the Federal Reserve, which turned our money making ability over to private bankers, then the 16th amendment calling for an income tax on every individual in the country. Finally the 17th amendment giving the popular election vote to Senators thus removing the checks and balances that States were able to put on the Federal government. All of this occurred in 1913 and barely anyone noticed at the time that this was greatest altering in the architecture of the Constitutional Republic the founders had in mind. Three years after this transpired the United States was embroiled in WWI, Twenty-four years later WWII, followed by the Cold War (a third world war by proxy), and now the GWOT.

We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip.
Gordon Gecko


This is really goingn to hurt you but I agree with what you wrote. None of us here was alive when these changes were made and it doesn't appear that we have anyone in D.C. willing to upset the status quo. Two hundred years or so isn't a bad run....but unless something is done, I'm not sure by the end of this next hundred years anyone will recognize this country.....heck, I'm starting to not recognize it now!



I suspect we haven't even a decade left much less nearly a full century. I've only recently resigned myself to the fact that as things stand now in this country they're simply unsustainable for the long term and we'll fall off the fiscal cliff soon enough and we'll be forced to undergo one massive reset. What will arise after the fall out is anyone's guess. But everyone will be f*cked to some degree, even the rich. I feel sorry for the very young in this country and things are bound to get worse before they get better. I'm glad I haven't any children.


I understand your sentiments and agree with your timeline, but I have a different perspective. I'm glad I do have young children (15 & 11). I'm hopeful they are the kind of young people who can survive what's coming, embrace the challenges that will present, and help move our society forward. Both of them seem much better adjusted and more aware than I ever was, and I have hope they will be up to the challenge. A massive reset may be the only way forward into a better society. I have almost zero hope and faith in our current generation's ability effect that type of change with our current system.

 

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  posted on 8/28/2012 at 04:33 PM
When that reset occurs, you can bet there will still be people saying it was because we didn't spend enough and that taxes were too low.
 

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  posted on 8/28/2012 at 04:34 PM
quote:
"things were much better around here when the sky wasn't falling"


Just because you're not looking up, doesn't mean the sky isn't falling.



According to CEO and Chief Global Strategist of Euro Pacific Capital Peter Schiff, the U.S. economy is heading for an economic crash that will make 2008 look like a walk in the park. Stimulus programs can delay this day of reckoning, but only for so long and only at the expense of making the eventual meltdown much, much worse.

Schiff, who famously warned investors about the housing and financial crisis in his 2007 book Crash Proof, says the Fed's palliative efforts during the housing meltdown have made the next crisis inevitable.

"We've got a much bigger collapse coming, and not just of the markets but of the economy," Schiff says in the attached clip. "It's like what you're seeing in Europe right now, only worse."

In this nightmare scenario detailed in The Real Crash: America's Coming Bankruptcy, the current economic pause is actually the beginning of a material slowdown or recession into year end. At that point, the Federal Reserve will unleash a third round of Quantitative Easing ó weakening the dollar without jump-starting the economy. As a result of dollar weakness, import prices rise, pressing the margins of corporate America. Lower margins lead to heavy layoffs, sending millions of workers into unemployment during a time when they can least afford it. Banks fail, housing collapses, and taxes are raised in a futile effort to give the tapped-out government the capital to try yet more futile stimulus.

"That's when it really is going to get interesting, because that's when we hit our real fiscal cliff, when we're going to have to slash ó and I mean slash ó government spending," says Schiff.

Those cuts will not be at all unlike the draconian austerity measures in Greece, with programs like Social Security and Medicare being dramatically cut or possibly disappearing entirely. The easiest way to put it, is that everything you don't think could possibly happen in America will come to be.

"Alternatively, we can bail everybody out, pretend we can print our way out of a crisis, and, instead, we have runaway inflation, or hyper-inflation, which is going to be far worse than the collapse we would have if we did the right thing and just let everything implode," he offers.

So what should investors do to protect themselves? Schiff has three suggestions:

1. Get Out of Treasuries

The U.S. dollar is going to get trashed in Schiff's scenario. Locking in a yield on a government 10-year bond of 1.5% is a paltry return in the first place. Should inflation tick up to even 5%, a level much lower than that seen in the early 1980s, bond owners would have 3.5% less buying power at the end of every year. If they go to sell the bond, they'll only find buyers at a much lower price than what they paid.

2. Own the Right Stocks

With bonds and the dollar bearing the brunt of the pain, Schiff says stocks will outperform dramatically, provided you own the right ones. Exporters and multi-national corporations will benefit from a weak dollar. Better still would be to buy foreign stocks and avoid the U.S. entirely.

3. Buy Silver and Gold

Schiff says the recent weakness in these precious metals is just a pause as we wait for the other shoe to drop. Most of those on Main Street haven't even taken positions yet in gold or silver. Once they start dropping bonds and looking for a place to hide, the price of these metals will soar.

 
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