Monday, July 22, 2013

Financial Crunch! Economic Collapse! (Part 15)

Theft by Deficit
By Al Duncan
August 2, 2013
By the Author of The Master Plan
In 1966, before Alan Greenspan became the Federal Reserve Chairman, he wrote an essay, which I highly recommend, called Gold and Economic Freedom. Herein lays the crux of what he presented, emphasis are mine: “The welfare state [the self-destructive system we operate under today] is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society [the working middle class] to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. Thus, the earnings saved by the productive members of the society lose value in terms of goods.
“The welfare statists [government officials] were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes [pork barrel, waste and fraud] with the money proceeds of the government bonds financed by bank credit expansion.
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process.”
As Greenspan explains, the gold standard limited government spending to the amount of gold held in reserve. The gold standard was unprofitable to the international bankers and moreover, interfered with their plans for a New World Order. So the central bankers, in collusion with devious government officials, embarked on a stringent campaign to repeal the gold standard. Stopping at nothing, they attacked and crucified anyone who opposed them. Eventually, the gold standard was repealed.
Knowing that government officials will always spend more than they have, the bankers had now provided a means for them to do so. Repealing of the gold standard provided an open door for deficit
The central bank of the United States is the Federal Reserve (Fed), a private bank owned by private
international bankers and businessmen. Congress authorizes the Fed to purchase U.S. notes, which the U.S. Treasury prints. The Fed then issues an equal amount of Federal Reserve Notes, which are used to buy U.S. Treasury Bonds. They literally create money out of thin air by placing a figure on a ledger in the form of a debit, and then demand that the American people repay that debt, with interest.
Debt, transfers accumulated wealth from someone, in this case, the American people, to someone else, bankers and businessmen. It’s an insidious scheme to “confiscate the wealth of the productive members of society.”
Inflation is caused by government deficit spending and printing money to repay it; inflation raises the cost of goods, while purchasing power is reduced, i.e., yesterday an item cost one dollar, today it cost two dollars, and tomorrow it cost three dollars. In addition, you are paying three times the original cost in tax. Massive money printing always ends in hyperinflation.
Government officials are parasites, they don’t produce anything; they only feed off of those who do. As one person said, the fatter the government, the skinner the people. And when government officials cannot meet their obligations or fulfill the promises they made to the public, they’ll figure out ways to appropriate the public’s money to fund their projects. Government officials don’t produce wealth; they only redistribute your wealth. Desperate government officials will always resort to expropriation, which is outright confiscation.
In the case of Portugal, the government nationalized three of Portugal’s telecom pension funds and placed the assets on the government’s balance sheet so that it would look good when it came time negotiated with the European Union. Those pension funds were expropriated.
The Cyprus government outright appropriated depositors’ funds from their bank accounts and then called it a tax. What the Portugal government did was subtle, what the Cyprus government did was blatant; both scenarios violate the rule of law and are theft; whether secretly or openly, bankrupt governments will do whatever necessary to survive.
Ten thousand Baby Boomers well turn 65 years old every day until 2030. There are approximately $15 trillion in private retirement funds, while the government has an annual deficit of $1.5 trillion. And so, there are now plans to nationalize private 401K and IRA retirement accounts. This ploy is being deceptively publicized as the government protecting the public against business failings or state bankruptcies. When governments are broke, everything is fair game. Your cash, your retirement funds, your bank deposits and your investments are at risk of being confiscated by the government through some contrived reason or another.
On May 6, 2012 Lauren Schmitz, a research analyst at the Bernard L Schwartz Center for Economic
Analyst (SCEPA), introduced HB5337. This 401(k)/IRA de-privatization is the brainchild of Teresa Ghilarducci, whom through funding from the White House and the Ford & Rockefeller Foundations engineered a new “Regulatory & Tax Incentive”. The purpose is to force Americans to convert their Retirement Accounts into Government Managed accounts.
Thanks to inflation, the purchasing power of your retirement plan is being eroded daily. In ten years, a $100,000 retirement fund will only provide $25,000 of purchasing power. A jump from two percent inflation to four percent inflation is devastating to a pension fund. Appropriately, many have cashed in their pension funds, paid the penalties and have taken charge of their own retirement funds rather than chancing it to value-eroding inflation or government seizure.
The U.S. is inflating its currency because of its debt problem. Since the dollar is still the reserve currency of the world, inflated dollars escalate the cost of commodities throughout the world. Food and energy is forty to seventy percent of the average worker’s income. So when the cost of living rises, people’s lives are affected, resulting in social instability, conflict within and between countries, and inevitably civil or outright war.
This is long-range geopolitics. We know by their own admission that the powers-that-be plan to construct their New World Order atop the ruins of this current order, so we had better regard everything transpiring today as a part of this strategy.
None of this is happening by chance. The World Trade Organization (WTO) supervises international trade and regulates production and prices of goods between countries. The North Atlantic Treaty Organization (NATO) is the intergovernmental military. Both of these organizations are regulated by the United Nations (UN) Charter, which is devised and managed by the international bankers and corporate heads, the-powers-that-be.
The magnitude of debt in derivatives accumulated by the international bankers and placed upon the backs of the peoples of industrialized nations is so enormous it can never be paid down. And if attempted, it would cause human suffering beyond endurance. Therefore, the debt has to be defaulted on and so you are going to see inflation elevate in every country.
Creditor countries, such as China, know that the United States is inflating the dollar to deflate its debt. China also knows that inflation raises the cost of living and causes social instability. To curb China’s social unrest, the Chinese government is investing in food and energy producing companies around the world. China recently bought Smithfield Foods, the largest pork producers in America, and they purchased $35 billion of oil and gas assets, including shale gas assets in the United States.
The sudden conflict between China and Japan over a small island in the South China Sea is because it contains valuable gas and oil assets. The conflict between Russia and her neighbors over the Artic, is due to its minerals, gas and oil assets. That is why we see every developing market that has a wealth fund, focusing on controlling the supply chain. Commodity prices are rising daily and people in China and the Middle East are unable to feed themselves.
The WTO regulates the prices of commodities, and they know how to create social instability. NATO also knows that higher prices create instability and that conflicts will arise. Both organizations are managed by the United Nations, so they know in advance where and when conflicts will arise, because they created them.
The connection between geopolitics and markets is much tighter than most realize. The WTO’s
management of the valuation of assets and NATO’s security issues are strategically connected in the affairs of the world. This is why the Department of Homeland Security (DHS) purchased twenty-five hundred armored vehicles for the streets of America, thirty thousand drones for the skies of America and two-plus billion bullets, which are approximately five bullets for each American. They know that inflation creates social unrest, which leads to civil war.
One-half of the bullets purchased by the DHS are hollow points. They’re twice as costly as regular bullets, they explode upon impact as they travel through the body. According to the Geneva Conference, they’re illegal to use in war. Moreover, the DHS also purchased one million targets with pictures of American seniors, children, pregnant women, even infants.
Inflation and wage pressures are evident everywhere accept the United States. But even Americans can feel that the cost of living is rising. The United States is the only self-sufficient country in the world. America not only possesses an abundant supply of all natural resources such as raw minerals, gas and oil, but because of its agreeable climate, it’s capable of producing every type of food. Americans need nothing from any other country to exist luxuriously. Food, raw materials, energy, are hard assets that keep a population stable, and the United States possesses all of them in abundance.
It was once said that the sun never set on Briton. By hook or by crook, Briton had conquered every country in the world. When America won its independents, it foiled Briton’s plans for a New World Order. Britons realized that the self-sustaining America was destined to become the most powerful nation in the world, and it was this revelation that initiated the vicious onslaught to annihilate America.
To accomplish this, America had to be diluted morally, fragmented socially and bankrupted. Because it’s God who imparts morals, principals and the understanding of what is right and wrong, God was removed. Most Americans today are spiritually bankrupt and the youth have no clue of what is right or what is wrong.
To fragment the social structure, Americas were dumbed-down and diluted through various cultures, ethnic groups and strange beliefs. A people who could read, write, and understand what they are reading, were not easily duped. Foreigners could never comprehend that Americans “are endowed by your Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness.”
To assure that America could never regain her prosperity, the economy was utterly destroyed, her
means of wealth outsourced to other countries, and her lands dismantled and parceled out to foreigners; her lakes, streams, rivers, parks and National monuments belong to the U.N. Under the American Heritage Rivers Initiative and National Heritage Areas programs, Yellowstone National Park, Grand Canyon National Park, Great Smoky National Park, Yosemite National Park, to name a few of the twenty-one National Parkways consisting of thousands of acres of American land has been freely handed over to the U.N.
Wake up! We have been conquered by a band of gangster bankers and colluding corrupt politicians that have taken all we have, and the next phase of their plan is to eliminate us. Our only hope is to return to God, take our Republic back and reconstruct an entirely new government founded on the knowledge of our past mistakes. If we don’t, we’re doomed to a slow, painful death of various illnesses, while we’re being impoverished.
I’ve been invited to speak before the Eagle Forum of California, Thursday, August 1, 2013 at 12535 Seal Beach Blvd., Seal Beach, CA 90740 at 7:30 p.m. Everyone is invited.
Purchase The Master Plan.
© 2013 Al Duncan - All Rights Reserved
“Al Duncan is the author of The Master Plan, which is now being revised. He is also compiling a booklet of about 60 short articles for publication and future availability. Until recently, he wrote a weekly column for a local newspaper, the Lake County Record Bee, distributed by Associated Press. The readers were basically secular and unaware of the New World Order, so his articles were written hoping to educate the reader on this subject. However, Al realizes that NewsWithViews attracts an informed reader, who is seeking to expand his or her understanding of the truths behind the daily events, and how these truths can best help them meet the challenges ahead.
“Al is the fourth generation of Real Estate Brokers and for the past eight years he has owned Al Duncan Real Estate, Inc. in Clearlake, California. For the past seven years he has been on the financial committee, participated as a Sunday greeter and head usher at Lake County Bible Fellowship in Lakeport, California.”
Warning to all police, firefighters, schoolteachers: Most government pensions to be confiscated within a decade
by Mike Adams
Sunday, July 21, 2013
(NaturalNews) Last week, Detroit declared bankruptcy, becoming the largest city in U.S. history to take such drastic action in the face of financial insolvency. A declaration of bankruptcy isn't what most people think it is, though: it's not just a statement of "we're broke!" It's actually a way for the city to clear its slate of all financial obligations and not pay the retirees it owes.
What are the largest financial obligations the city facing? Pensions. $3.5 billion worth of pensions, to be exact.
Yes, Detroit owes former government employees -- teachers, firefighters, cops and more -- a whopping $3.5 billion in current and future payments. Except Detroit doesn't have $3.5 billion to pay the pensions. The city is in a state of economic collapse. Remember, the U.S. government used billions in taxpayer money to help General Motors move its manufacturing offshore to countries like China. As a result of economically-insane actions and criminal mismanagement, a city that used to be the hub of industrial output in America has become a ghost town of abandoned buildings, crumbling infrastructure and financial destitution.
But even as all this was becoming apparent, the government workers there continued to collect fat paychecks and pensions, all based on the promise that endless population growth would out-pace the rise in pension obligations. Many pensioners are owed over $100,000 a year from the government, and this is true across California, Illinois and many other states as well.
Chicago, for example, owes $19 billion in pension payments that it doesn't have, and the city of Los Angeles is more than $30 billion in the hole. The story is much the same in every major U.S. city.
As the Detroit Free Press now reports:
Early this year, the Pew Center released a survey showing that 61 of the nation's largest cities -- limiting the survey to the largest city in each state and all other cities with more than 500,000 people -- had a gap of more than $217 billion in unfunded pension and health care liabilities. While cities had long promised health care, life insurance and other benefits to retirees, "few ... started saving to cover the long-term costs," the report said.
Read that report here:
Detroit's bankruptcy being challenged

Realizing it flat-out doesn't have the money to pay these pension obligations, Detroit had little choice but to declare bankruptcy in an effort to avoid paying the pensions. In effect, this is a confiscation of all pension funds by the government, meaning that retired cops, firefighters, school teachers and so on will never see a dime of the pensions they thought they had earned.
Naturally, those who are owed the pensions are furious about all this. Imagine working 40 years on the job, building up a retirement only to have that retirement stolen from you by a local government that's steeped in corruption and financial mismanagement. The word "incompetent" doesn't even begin to describe Detroit's political leadership. It's more like "brain damaged" or "criminally insane."
But it's also commonplace. Across the country, city governments have all spent the pension funds instead of saving them. Almost no large city has the funds necessary to pay its obligations to retirees. Pension financial planning strategies are tragic nightmares of broken promises, dishonest politicians and delusional workers (who still somehow believe they're going to get paid).
In Detroit, the pensioners are fighting back, claiming Michigan's state constitution forbids cities like Detroit from wiping away pension obligations by declaring bankruptcy. It's all headed to the courts now, where even if Detroit's bankruptcy is nullified, the city still doesn't have the money to pay its pension obligations.
So it's a no-win situation regardless of the outcome. Where the money doesn't exist, nobody gets paid regardless of the legal wrangling in the courts.
Is Detroit "Too Big To Fail?" An Obama bailout may be imminent
There's already talk of Obama bailing out Detroit, meaning the federal government would take on the debt of the mismanaged city and its pension funds, eventually passing on those obligations to taxpayers all across the country.
Yep, that means you and I will be paying the $100,000 retirement pension of some ex-cop in Detroit. It's all part of the federal government's new plan to reward waste and punish fiscal responsibility.
No wonder Sen. Rand Paul says Detroit will only be bailed out "over my dead body." As reports, Sen. Paul has stated, on the record, "I basically say he [Obama] is bailing them out over my dead body because we don't have any money in Washington." goes on to state, "Paul said the reason he is going to fight to stop any efforts to bail out Detroit is that if the president succeeds in bailing it out, that will send a signal to the rest of cities and states nationwide that the federal government will bail them out to if they conduct reckless spending."
"Those who don't have their house in order, who are teetering on disaster, will continue to make bad decisions." - Sen. Rand Paul.
He's right, of course. But rewarding reckless spending has become the new sport in Washington, where globalist banks routinely receive hundreds of billions of dollars in taxpayer bailouts after losing money on outlandish derivatives bets that went sour.
If we bail out Detroit, then the precedent is set: The taxpayers will have to foot the bill to bail out Chicago, Los Angeles, New York, Phoenix, Seattle and every other city that's on the brink of financial disaster because bureaucrats are short-term thinkers who typically only think ahead to the next election, not the next generation.
"Public pension plans across the nation are in fiscal distress. Generally underfunded, most now require far greater contributions from governments than initially envisioned," writes the
California Common Sense organization, which goes on to state:
In 2012-13, Los Angeles's pension costs are expected to rise to $1.3 billion, or 18% of the city's budgeted expenditures. In 2002-03, just 10 years ago, pension costs were only $157 million, or 3% of total expenditures. Over the last decade, pension costs have grown at an annual average growth rate of 25% and have outpaced spending growth for every major area of the city's budget.
"In April Moody's Investors Service warned it could downgrade the ratings of Chicago, Cincinnati, Minneapolis, Portland and 25 other local governments and school districts as part of a change in how it factors public pensions into debt grades," writes "In Chicago, teachers' pensions alone cost $1 billion a year, while overall debt service accounts for close to a quarter of the city budget."
The top 10 biggest U.S. cities on the brink of pension bankruptcy

According to Business Insider, here are the top 10 U.S. cities whose pension obligations will soon collapse: (this article was originally published in 2010, so we have updated the "years" to reflect 2013)
#1 Philadelphia - Unfunded liability of $9 billion, $16,696 per household, only 1 year before the pension accounts are empty
#2 Chicago - Unfunded liability of $44.8 billion, $41.966 per household, money runs out in 4 years
#3 Boston - Unfunded liability of $7.5 billion, $30,901 per household, money runs out in 4 years
#4 Cincinnati - Unfunded liability of $2 billion, $15,681 per household, money runs out in 5 years
#5 St Paul - Unfunded liability of $1.4 billion, $13,686 per household, money runs out in 5 years
#6 Jacksonville - Unfunded liability of $4 billion, $12,944 per household, money runs out in 5 years
#7 New York City - Unfunded liability of $122 billion, $38,866 per household, money runs out in 6 years
#8 Baltimore - Unfunded liability of $3.7 billion, $15, 420 per household, money runs out in 7 years
#9 Detroit - Unfunded liability of $6.4 billion, $18,643 per household, money runs out in 8 years
#10 Fort Worth - Unfunded liability of $2 billion, $7,212 per household, money runs out in 8 years
Note that some of these numbers were actually optimistic. Detroit, for example, was predicted to run out of money in 2021, yet it already declared bankruptcy in 2013. What you are looking at here is a looming cascade of municipality bankruptcies over the next 10 - 20 years.
Cascading financial collapse

Nobody saves in America anymore; not cities, not states and of course not the federal government which Obama has brought to the astonishing debt level of $16 trillion (it was only $8 trillion when he first took office). It begs the question: If the cities bail out the pensioners, and Washington bails out the cities, who's going to bail out Washington and its exploding debt?
The answer, of course, is nobody. Central banks all around the world are already sitting on far too much U.S. debt that's being eroded by the hour as the Federal Reserve commits "quantitative easing" that dilutes the global dollar supply. They aren't going to take on trillions more to bail out a nation now seen as a global imperialist bully that runs NSA spying on its own allies while routinely engaging in economic espionage through currency manipulations.
The American government is widely hated throughout the world today. Most nations probably wouldn't mind seeing the USA collapse into financial oblivion. And within a few years, they may just get their wish.
"On average, pensions consume nearly 20 percent of municipal budgets," writes Anthony Flint of The Atlantic Cities. "But if trends continue, over half of every dollar in tax revenue would go to pensions, and by some estimates in some cases would suck up 75 percent of all tax revenue."
Financial collapse is not a doomsday conspiracy theory; it is mathematical inevitability

The upshot of all this is that if you are counting on a government pension to pay your bills during your retirement years, you may need to write that off because it probably won't be there for very much longer.
This is true not just for local and state government workers, but also for federal government workers. Yep, all those TSA agents, DHS workers and FDA bureaucrats are going to see their own pensions stolen, and I can't say that I'm shedding tears over TSA goons not getting their pensions. ("Pedophilia pensions!")
"I mean the statistics in California are staggering," said Sen. Rand Paul. "I think there's over 100,000 people there getting over $100,000 a year in retirement. You got police chiefs in medium-sized cities getting $350,000 a year for a salary. It's become untenable. But the main thing is we cannot send a signal from the federal government that cities and states are going to be too big to fail."
Where all this really hurts, though, is at the local level. In most cities, people like firefighters, cops and school teachers are wildly under-paid. They dedicate their lives to serving the community, often putting their own lives at risk in the process. Stealing their pensions is especially malicious given how much they have sacrificed to earn them.
But there's nothing that can be done to save them at this point. The mathematics are already in motion and unstoppable. Nearly all big-city pension obligation projections have been based on the false assumption that endless economic growth would provide a never-ending tax base from which pension obligations could be paid. That assumption, however, was a willful delusion in which city managers and bureaucrats happily engaged.
There is a day of reckoning coming for America, and it's going to be a day of nationwide outrage as pensions all across the country are confiscated or destroyed in a cascading chain of bankruptcies. At the same time, the federal government will no doubt embark on a Cyprus-style private bank account confiscation program that steals private wealth from the American people. Wiring money out of the country will be made illegal, and all forms of wealth -- including retirement accounts -- will be subject to government confiscation.
At that point, only people who have gone to great lengths to protect their assets will have anything left. What holds value in such a scenario? Land, bullets, rifles, hand tools, stored food, silver coins, gold coins, iodine disinfectants and antibiotics, to name a few obvious items. Skills and education also rank high.
Detroit's bankruptcy tells us the era of financial demise has begun. Now it's only a matter of time before what happened to Detroit spreads to Los Angeles, Chicago, Philadelphia, Boston and other large U.S. cities. It is no coincidence that DHS and the feds are now routinely running paramilitary police state training exercises in high-density urban areas.
As bad as pensions are, unfunded health care liabilities are far worse
For the real story on all this, take everything you've just read about unfunded pensions and dig that hole ten times deeper. Because the unfunded health care obligations are ten times worse.
According to the Pew research document at , a fiscal assessment of 61 large U.S. cities revealed that while pensions are 74% funded, retiree health care liabilities are only 6% funded.
You read that correctly: cities have only saved 6 cents on the dollar for what they're going to need to pay the health care costs of retirees. And that's assuming health care costs don't keep skyrocketing thanks to hare-brained monopoly programs like Obamacare which lock in guaranteed monopolies to the drug companies, cancer centers and hospitals that now extract nearly one out of every four dollars of economic activity generated in across America.
Here's the chart:
What this means in reality is that health care obligations will have to be abandoned. So at the same time cities confiscate pension funds, they will also abandon health care obligations.
For many retirees, this means they will lose their pensions and their health care benefits at the same time.
This is what will ultimately lead to widespread riots in the streets followed by the police state crackdown that the federal government has been planning with its purchase of
billions of rounds of ammunition, thousands of armored assault vehicles, full-auto assault rifles and other equipment to be used on the streets of America. The IRS is now training with AR-15s in order to engage American taxpayers at gunpoint. Even the Wall Street Journal now admits that the militarization of American police is wildly out of control, saying:
Law-enforcement agencies across the U.S., at every level of government, have been blurring the line between police officer and soldier. Driven by martial rhetoric and the availability of military-style equipment -- from bayonets and M-16 rifles to armored personnel carriers -- American police forces have often adopted a mind-set previously reserved for the battlefield.
This also tells you why government is secretly begging for a mass pandemic to wipe out all the elderly people in America: it would save cities and states from bankruptcy! No wonder government loves to promote Big Pharma -- it's the fastest way to kill people off and therefore not have to pay their retirement benefits. Longevity is the enemy of government because the longer you live, the more you collect in benefits. The sooner you die, the more you help government meet its unfunded financial obligations.
I wouldn't be surprised to find the White House one day running a new public relations campaign with the message "Kill yourself. It's good for America."
Or "Suicide is patriotic."
Sources for this story include:
1) My memory, experience, observations and reasoning.


Detroit and the New Feudalism
Share This Chart With Anyone Who Believes The U.S. Economy Is Not Going To Crash
Michael Snyder
July 21, 2013
Anyone who thinks that the U.S. economy can keep going along like this is absolutely crazy. We are in the terminal phase of an unprecedented debt spiral which has allowed us to live far, far beyond our means for the last several decades. Unfortunately, all debt spirals eventually end, and they usually do so in a very disorderly manner.
The chart that you are about to see is one of my favorite economic charts. It compares the growth of U.S. GDP to the growth of total debt in the United States. Yes, U.S. GDP has certainly grown at a decent pace over the years, but our total debt has absolutely exploded.
40 years ago, the total amount of debt in our system (government debt + corporate debt + consumer debt, etc.) was about 2 trillion dollars. Today it has grown to more than 56 trillion dollars. Our debt has grown at a much, much faster rate than our economy has, and there is no way in the world that we will be able to continue to do that for long.
Posted below is the chart that I was talking about. The blue line is our total debt, and the red line is our GDP. As you can see, this chart kind of speaks for itself...
So how did we get here?
Well, of course the federal government has been the biggest offender. It would be a tremendous understatement to say that the politicians in Washington D.C. have been reckless. Since the year 2000, the size of the U.S. national debt has grown by more than 11 trillion dollars.
Posted below is a chart that demonstrates the dramatic growth of the national debt as a percentage of GDP. In particular, our debt has absolutely exploded as a percentage of GDP since the financial crisis of 2008...
Does that look sustainable to you?
Of course it isn't.
Right now, the mainstream media is very excited that the federal budget deficit for this year might be less than a trillion dollars, but they are really missing the point. The debt of the U.S. government is still growing much, much faster than the economy is, and the United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.
What we are doing to future generations is absolutely criminal. We are piling up mountains of debt that will haunt them for the rest of their lives just so that we can make the present a little bit more pleasant for ourselves.
As I noted in
another article, during Obama's first term the federal government accumulated more debt than it did under the first 42 U.S presidents combined. And now we are entering a time period when demographic forces are going to put a tremendous amount of pressure on the finances of the federal government.
The Baby Boomers have started to retire, and they are going to want to start collecting on all of the financial promises that we have made to them.
As I have written about
previously, the number of Americans on Medicare is projected to grow from a little bit more than 50 million today to 73.2 million in 2025.
The number of Americans collecting Social Security benefits is projected to grow from about 56 million today to
91 million in 2035.
Where are we going to get the money to pay for all of that?
Boston University economist Laurence Kotlikoff has calculated that the U.S. government is facing unfunded liabilities of
222 trillion dollars in the years ahead.
There is no simply no way that the U.S. government is going to be able to meet those obligations without wildly printing up money.
And of course the federal government is not the only one with massive debt problems. We just saw
the city of Detroit go bankrupt, and there are lots of other communities all over the nation that could soon follow.
Posted below is a chart that shows the growth of state and local government debt over the years. In particular, please take note that the total amount of state and local government debt has grown from about 1.2 trillion dollars in the year 2000 to about 3 trillion dollars today...
But the chart posted above does not even take into account the massive unfunded pension obligations that state and local governments are facing. According to the Detroit Free Press, state governments are facing unfunded pension obligations of nearly a trillion and a half dollars...
From Baltimore to Los Angeles, and many points in between, municipalities are increasingly confronted with how to pay for these massive promises. The Pew Center for the States, in Washington, estimated states’ public pension plans across the U.S. were underfunded by a whopping $1.4 trillion in 2010.

And many large cities are dealing with similar situations. Detroit was the first to go down, but could Chicago or Los Angeles eventually be forced to declare bankruptcy too?...
Chicago recently saw its credit rating downgraded because of a $19-billion unfunded pension liability that the ratings service Moody’s puts closer to $36 billion. And Los Angeles could be facing a liability of more than $30 billion, by some estimates.

According to a report that was released earlier this year, the largest U.S. cities are facing hundreds of billions of dollars in unfunded pension liabilities at this point...
Early this year, the Pew Center released a survey showing that 61 of the nation’s largest cities — limiting the survey to the largest city in each state and all other cities with more than 500,000 people — had a gap of more than $217 billion in unfunded pension and health care liabilities. While cities had long promised health care, life insurance and other benefits to retirees, “few ... started saving to cover the long-term costs,” the report said.

So where will all of that money come from?
That is a good question, and nobody has an easy answer at this point.

Meanwhile, U.S. consumers have been racking up staggering amounts of debt over the past several decades. Just consider the following numbers...
-Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.
-Car loans just keep getting longer and longer, and approximately
70 percent of all car purchases in the United States now involve an auto loan.
-The total amount of student loan debt in America recently surpassed
the one trillion dollar mark.
-One study discovered that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt, and according to a report published in The American Journal of Medicine medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States.
-Consumer debt in the United States has risen by a whopping
1700% since 1971, and 46% of all Americans carry a credit card balance from month to month.
Sadly, most people don't realize how damaging credit card debt can be. If you just carry an "average balance" on your credit cards each month, and those credit cards have just an "average" interest rate, you could end up paying
millions of dollars to the credit card companies by the end of your life...
Let’s say you are an average American household, and you carry an average balance of $15,956 in credit card debt.
Also, as an average American household, let’s assume you pay an average current rate of 12.83%.
Finally, let’s assume you carry this average balance for 40 years, between ages 25 and 65. How much did your credit card company make off of you and your extreme averageness?
Answer: $2,629,618.64
Incredibly, a large percentage of the population does not seem to understand these things. An astounding 43 percent of all American families spend more than they earn each year.
Are you starting to understand why approximately half of all Americans die broke?
We are a nation that is completely and addicted to debt.
If you do not believe that it will ever catch up with us you are being delusional.
We have piled up the biggest mountain of debt in the history of the planet, and a day of reckoning is fast approaching.
This article first appeared
here at the Economic Collapse. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.
Detroit Destroyed by Democracy
25 Facts About The Fall Of Detroit That Will Leave You Shaking Your Head
By Michael Snyder, on July 20th, 2013
It is so sad to watch one of America's greatest cities die a horrible death.  Once upon a time, the city of Detroit was a teeming metropolis of 1.8 million people and it had the highest per capita income in the United States.  Now it is a rotting, decaying hellhole of about 700,000 people that the rest of the world makes jokes about.  On Thursday, we learned that the decision had been made for the city of Detroit to formally file for bankruptcy.  It was going to be the largest municipal bankruptcy in the history of the United States by far, but on Friday it was stopped at least temporarily by an Ingham County judge.  She ruled that Detroit's bankruptcy filing violates the Michigan Constitution because it would result in reduced pension payments for retired workers.  She also stated that Detroit's bankruptcy filing was "also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy", and she ordered that a copy of her judgment be sent to Barack Obama.  How "honoring the president" has anything to do with the bankruptcy of Detroit is a bit of a mystery, but what that judge has done is ensured that there will be months of legal wrangling ahead over Detroit's money woes.  It will be very interesting to see how all of this plays out.  But one thing is for sure - the city of Detroit is flat broke.  One of the greatest cities in the history of the world is just a shell of its former self.  The following are 25 facts about the fall of Detroit that will leave you shaking your head...
1) At this point, the city of Detroit owes money to more than 100,000 creditors.
2) Detroit is facing $20 billion in debt and unfunded liabilities. That breaks down to more than $25,000 per resident.

3) Back in 1960, the city of Detroit actually had the highest per-capita income in the entire nation.

4) In 1950, there were about 296,000 manufacturing jobs in Detroit. Today, there are less than 27,000.
5) Between December 2000 and December 2010, 48 percent of the manufacturing jobs in the state of Michigan were lost.
6) There are lots of houses available for sale in Detroit right now for $500 or less.
7) At this point, there are approximately 78,000 abandoned homes in the city.
8) About one-third of Detroit's 140 square miles is either vacant or derelict.
9) An astounding 47 percent of the residents of the city of Detroit are functionally illiterate.
10) Less than half of the residents of Detroit over the age of 16 are working at this point.
11) If you can believe it, 60 percent of all children in the city of Detroit are living in poverty.
12) Detroit was once the fourth-largest city in the United States, but over the past 60 years the population of Detroit has fallen by 63 percent.
13) The city of Detroit is now very heavily dependent on the tax revenue it pulls in from the casinos in the city. Right now, Detroit is bringing in about 11 million dollars a month in tax revenue from the casinos.
14) There are 70 "Superfund" hazardous waste sites in Detroit.
15) 40 percent of the street lights do not work.
16) Only about a third of the ambulances are running.
17) Some ambulances in the city of Detroit have been used for so long that they have more than 250,000 miles on them.
18) Two-thirds of the parks in the city of Detroit have been permanently closed down since 2008.
19) The size of the police force in Detroit has been cut by about 40 percent over the past decade.
20) When you call the police in Detroit, it takes them an average of 58 minutes to respond.
21) Due to budget cutbacks, most police stations in Detroit are now closed to the public for 16 hours a day.
22) The violent crime rate in Detroit is five times higher than the national average.
23) The murder rate in Detroit is 11 times higher than it is in New York City.
24) Today, police solve less than 10 percent of the crimes that are committed in Detroit.
25) Crime has gotten so bad in Detroit that even the police are telling people to "enter Detroit at your own risk".
It is easy to point fingers and mock Detroit, but the truth is that the rest of America is going down the exact same path that Detroit has gone down.
Detroit just got there first.
All over this country, there are hundreds of state and local governments that are also on the verge of financial ruin...
"Everyone will say, 'Oh well, it's Detroit. I thought it was already in bankruptcy,' " said Michigan State University economist Eric Scorsone. "But Detroit is not unique. It's the same in Chicago and New York and San Diego and San Jose. It's a lot of major cities in this country. They may not be as extreme as Detroit, but a lot of them face the same problems."
A while back, Meredith Whitney was highly criticized for predicting that there would be a huge wave of municipal defaults in this country. When it didn't happen, the critics let her have it mercilessly.
But Meredith Whitney was not wrong.
She was just early.
Detroit is only just the beginning. When the next major financial crisis strikes, we are going to see a wave of municipal bankruptcies unlike anything we have ever seen before.
And of course the biggest debt problem of all in this country is the U.S. government. We are going to pay a great price for piling up nearly 17 trillion dollars of debt and over 200 trillion dollars of unfunded liabilities.
All over the nation, our economic infrastructure is being gutted, debt levels are exploding and poverty is spreading. We are consuming far more wealth than we are producing, and our share of global GDP has been declining dramatically.
We have been living way above our means for so long that we think it is "normal", but an extremely painful "adjustment" is coming and most Americans are not going to know how to handle it.
So don't laugh at Detroit. The economic pain that Detroit is experiencing will be coming to your area of the country soon enough.
 Steve . 21 July 2013
You left out the fact that Detroit has been run by Democrats for 50 years.
You left out the Unions that vote for Democrats like lemmings.
You left out the fact that Detroit has had a predominately Black government for most of those years.
You left out the fact that most of the crime is Black on Black.
I could go on but you were oh so politically correct in facing the major issue - African Americans showed us what they can't do; run a city or live in it as productive citizens.
I know I will catch flak for this post but I am sick of the truth being avoided because people are afraid (politicians too) of stating the truth for fear of being having the race card pulled on them. And everyone knows many other major cities are headed the same way for the same reason.
Mr. Ditba--Steve22 July 2013
You are correct. Blacks are, and have been for the past 40 years, raised in broken homes. No fathers, and mothers that are usually young and semi-literate when their first child is born. The consequences of this paradigm are evident throughout the USA. The George Zimmerman trial is an excellent example. A teenage black didn't like the way another person was looking at him. He thought he was being followed. What does he do? He attacks the guy and begins beating the hell out of him. Any rational person in Trayvon Martin's position would have high-tailed it home and simultaneously called the police. This is the prevailing attitude amongst young black men. "Look at me wrong, and I'll kill you". I recently watched a local news broadcast from Los Angeles where they were reporting on the teen mobs that were attacking and robbing businesses and law-abiding citizens. The proceeded to show video footage of the mob. EVERY person was black. Yet it was NEVER mentioned. They simply referred to them as "unruly teens". We know why people are racially profiling. ONE race is committing 50% of all violent crime. That race is black. Blacks make up 12% of the population. Eliminate the females (which account for a small fraction of the crime) and you are left with 6%. Take away the old and the very young and we are looking at 3% of the USA's population accounting for 50% of the violent crime. And they wonder why we are profiling them. These criminal thugs are going to be dealt with in the same manner that Trayvon Martin was dealt with if they don't start to change their collective ways. Forget President O-blah-blah and his band of race-baiting scumbags! We The People understand what is happening.
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Financial Crunch! Economic Collapse!

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