{"id":1442883,"date":"2023-12-08T16:00:00","date_gmt":"2023-12-08T21:00:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1442883"},"modified":"2023-12-08T16:00:00","modified_gmt":"2023-12-08T21:00:00","slug":"the-financial-disaster-no-one-is-talking-about","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/the-financial-disaster-no-one-is-talking-about\/1442883\/","title":{"rendered":"The Financial Disaster No One Is Talking About"},"content":{"rendered":"

The Financial Disaster No One Is Talking About<\/span><\/p>\n

\n

Authored by Brandon Smith via Alt-Market.us,<\/em><\/a><\/p>\n

Several years ago I predicted that the U.S. would ultimately be confronted with the debilitating economic conundrum of stagflation, something which the nation had not seen since the 1970s. I suggested that stagflation would become a household word again and that the majority of American concerns would revolve around rising prices coupled with stagnant wages and falling production.<\/p>\n

In 2018 in my article\u00a0Stagflationary Crisis: U.S.A.\u2019s Ongoing Collapse, Understanding the Cause<\/a><\/em>, I noted:<\/p>\n

Years ago there was a rather idiotic battle between financial analysts over what the end result of the Fed\u2019s massive stimulus measures would be. One side argued that deflation would be the outcome and that no amount of Fed printing would overtake the vast black hole of debt conjured by the derivatives implosion. The other side argued that the Fed would continue to print perpetually, resorting to QE4 or possibly \u201cQE infinity\u201d and negative interest rates as a means to stave off a market crash for decades (like Japan) while at the same time initiating a Weimar-style inflationary bonanza.<\/p>\n

Both sides were wrong because they refused to acknowledge the third option \u2013 stagflation.<\/p>\n

<\/a><\/p>\n

Sleepwalking into stagflation<\/h2>\n

The process of\u00a0stagflation<\/a>\u00a0is difficult to track because there are multiple paths that it can take, many of them largely dependent on the whims of the central bank and its policy decisions. All we can really do is look back at the limited number of historic examples simply and guess what will happen next. In the 1970s stagflation nearly crushed the country, with inflation rising by 7% to over 14% per year for a decade.<\/p>\n

When I hear Zennials complain about being born into the \u201cworst economy ever,\u201d I have to laugh because they really have no clue. The 1970s was\u00a0far<\/em>\u00a0worse in terms of erosion of buying power as well as overall poverty. If you look at film footage and photos of urban areas from Los Angeles to New York to Philadelphia during that time, many parts of these cities looked like bombed-out war zones.<\/p>\n

The country was truly on the edge of disaster.<\/p>\n

In the early 1980s, under Paul Volcker\u2019s leadership the Federal Reserve jacked interest rates up to over 20%. This stopped the inflation crisis but triggered a deflationary plunge that would sit like a giant boulder on the chest of the American consumer and small business owners for years to come. My own grandfather lost millions in his trucking and freight company during the rate spike; many people lost their businesses and homes.<\/p>\n

In other words, as bad as the situation is now, we haven\u2019t seen anything yet. Of course, we are quickly moving towards similar conditions and there is one thing we have today that the 1970s didn\u2019t:\u00a0A massive (and growing) national debt.<\/strong><\/p>\n

Currently, the U.S. national debt is $33.8 trillion and has a 120% debt-to-GDP ratio. In a single month, October 2023, the federal government added\u00a0over $600 billion<\/em>\u00a0to the debt. At the current pace the total debt will breach $41 trillion in one year.<\/p>\n

The\u00a0speed<\/em>\u00a0of this accumulation is frightening. To put this in perspective, the Obama administration and the Federal Reserve added around $9 trillion to the debt in eight years with the corporate bailout spree of the Great Financial Crisis. Compared to the Biden administration, Obama\u2019s spending looks absolutely miserly.<\/p>\n

How is this possible?<\/em><\/p>\n

The swirling debt spiral<\/h2>\n

As I have noted in the past, the U.S. economy rests on a foundation of\u00a0intrinsically worthless\u00a0<\/em>currency \u2013 and\u00a0so much debt<\/em>\u00a0that the\u00a0slightest<\/em>\u00a0rise in interest rates causes huge ripple effects.<\/p>\n

The 20% interest rate level of the early 1980s? Yes, it was worrisome, and led to not one but\u00a0two\u00a0<\/em>grueling recessions. After 200 years of existence, the U.S. ended the decade of the 80s with just under $3 trillion in debt.<\/p>\n

Today? Well, for comparison purposes, the Biden administration\u2019s 2021 budget added $2.77 trillion to the national debt.\u00a0In ONE YEAR<\/strong>! For comparison purposes, from 1776-1989, the federal government accumulated about $2.77 trillion in debt.<\/p>\n

It\u2019s\u00a0impossible\u00a0<\/strong>to overstate this point: The Biden regime saddled the nation with\u00a0over 200 years\u2019 worth of debt\u00a0in just one year<\/em><\/strong>.<\/p>\n

With a debt over $33 trillion, barely-above-historical-average 5.25% interest rates are\u00a0catastrophic.\u00a0<\/em>Because of \u201ccompounding interest,\u201d what Einstein called \u201cthe most powerful force in the Universe.\u201d He called it one of the greatest \u201cmiracles\u201d known to mankind \u2013\u00a0if you\u2019re a creditor<\/em>. If you\u2019re a debtor, though? That miracle becomes a disaster\u2026<\/p>\n

Today, the U.S. government\u00a0regularly borrows money<\/em>\u00a0just\u00a0<\/strong>to make interest payments. The Treasury department\u00a0also writes new IOUs to fund old IOUs that come due<\/em><\/strong>. Finally, the government borrows\u00a0still more<\/em><\/strong>\u00a0to fund all spending which exceeds tax collection (this is \u201cdeficit spending,\u201d which\u00a0increases\u00a0<\/em>the national debt \u2013 sometimes the two are conflated).<\/p>\n

At higher interest-rate levels, borrowing enters a destructive spiral. There\u2019s interest payments on debt, which was itself borrowed to make interest payments on debt. To put it in simple terms, it\u2019s a bit like a broke person taking on a stack of new credit cards to make the interest payments on a stack of old credit cards. It\u2019s\u00a0financial suicide.<\/em><\/strong><\/p>\n

Eventually the avalanche of debt will stall inflation but it will also wreak havoc across the economy and trigger a deflationary crisis.<\/p>\n

We\u2019re seeing the beginning already\u2026 The\u00a0crash across manufacturing<\/a>\u00a0and industrial sectors. Frozen wages. Layoffs and bankruptcies piling up in the\u00a0freight sector<\/a>.<\/p>\n

These are all clear indicators of impending recession. Meanwhile, U.S.\u00a0home sales have plunged<\/a>\u00a0to a 13 year low as prices continue to rise.<\/p>\n

These are all red flags of an impending deflation event that is certain to cause\u00a0massive unemployment,<\/em>\u00a0likely within the next year. It would seem the magic of the Covid-era money-printing spree is finally fading away \u2013 and we\u2019re seeing the real economy underneath.<\/p>\n

The expectation among investors is that the Fed is poised to cut rates or return swiftly to QE. This is not going to happen, at least not anytime soon. The Fed, I believe, wants a crash. After addicting markets to easy money for over a decade, the central bankers know\u00a0exactly\u00a0<\/em><\/strong>what will happen as they continue to cut off the drug supply.<\/p>\n

I suspect we are about to see a major change in the behavior of the economy going into 2024. The stagflation phase is nearly over. The discussion around dinner tables across America will turn to the exploding national debt, and debt in general. The big debate will once again turn to this: Will the Fed keep rates steady, risking deflationary implosion and debt default, or, will they cut rates, return to stimulus to pay the debt, and risk double digit inflation? These are the two choices in front of the U.S. government \u2013 and either way,\u00a0we lose<\/em>.<\/p>\n

That\u2019s why it\u2019s more urgent than ever to own financial assets that aren\u2019t based on debt, that aren\u2019t IOUs but actual, tangible things you can see and touch. There are only a few left in this globally-financialized world \u2013 and of them, only\u00a0physical precious metals<\/a>\u00a0are also private, safe haven stores of value. If you don\u2019t own real\u00a0physical gold<\/a>\u00a0and silver soon, your financial future will be tied to the U.S. government\u2019s financial future.<\/p>\n

The U.S. economy will fail. Those who don\u2019t ensure their financial independence will sink with the ship. You can take steps now to protect yourself and your family, but the opportunity won\u2019t last forever. Once it\u2019s obvious that the ship is sinking, it\u2019s too late \u2013 the lifeboats will already be full.<\/p>\n

Don\u2019t go down with the ship.<\/strong><\/p>\n

*\u00a0 *\u00a0 *<\/p>\n

As the world moves away from dollars and toward Central Bank Digital Currencies (CBDCs), is your 401(k) or IRA really safe? A smart and conservative move is to diversify into a physical gold IRA. That way your savings will be in something solid and enduring.\u00a0Get your FREE info kit on Gold IRAs from Birch Gold Group.<\/a>\u00a0No strings attached, just peace of mind. Click here to secure your future today.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nFri, 12\/08\/2023 – 11:00<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/financial-disaster-no-one-talking-about<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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