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We don’t really have to January 2, 2013 to go off the fiscal cliff. It’s December 4, 2012 and congress goes on Christmas vacation Friday December 14th 2012 and they don’t come back till after we fall off the cliff. Taxmageddon will show up in the stock markets and will come well before January 1, 2013. If no deal is done before that date of Friday December 14th 2012. (There won’t be any deal) The stock market will show the results prior to the date not afterwards. If you have a 401-k or any other investment in stocks or bonds brace yourself for heavy losses.

This is a warning on Friday December 14th or in just 10 days all stock markets will start a rapid decline worldwide and this will continue into Monday the 17th and all the way to Friday the 21st December 2012 if no deal is done. The republicans will stay in Washington but the democrat controlled Senate will be ordered shut down by Harry read and the correction or crash will take place. The democrats will blame the republicans as that is what they are already doing even before there’s anything to blame anyone for. What will the blame game be like after markets crash? Friday December 14 is the normal scheduled Christmas break for congress.

The real cliff comes from a market reaction to the lack of any deal that stops America’s economy from a $600 billion shock. That shock comes from the shift in taxes and spending equal to a 4% negative to GDP and the biggest losses will not be the taxes themselves but the market’s reaction to those tax increases could cost trillions of dollars in lost stock values.

If the stock market’s losses are 2000 points on the DJIA for example in dollars it is equal to $2 trillion in lost stock values. This is the true result of Taxmageddon if congress allows us to go off the Cliff. It has been said for every 1000 points lost on the DJIA is approximately $1 trillion is lost in stock values across all U.S. markets.

Currently Republicans have no options to avoid the fiscal Clift or taxmageddon that will not destroy the economy and all the choices that democrats will allow to pass the senate will force a recession. All the options are really bad and the only one that will work for just a little while is keep everything the way it is and extend the current tax rates, but Obama has said and he insists he will not except that outcome of kicking the can down the road. If anyone is holding the middle class hostage it is Obama not the republicans in the house. Obama wants a grand bargain for which there is no good economic out come for anything he wants, what Obama wants will cost millions of jobs. That’s not an option Republicans can agree to.

Obama has proven over the last 4 years he understands nothing about economics, business or how jobs are created. It needs to be said Obama’s an idiot to top all idiots; he is the king of fools and will lead America to its complete economic destruction in the next few weeks. Obama’s winning of the election doesn’t prove his genius; it just proves how stupid the American people have become, all because of Obama phones that cheaply bought votes with tax payer’s money. (That is if he really won? As I believe the election was a complete fraud)

http://gulagbound.com/35972/nationwide-white-votes-down-by-16m-smell-like-election-tampering/#.UKEgkmfNPFw

Obama says he will only accept a full 4.9% tax increase to the wealthiest tax payers and they are the job creators. That’s not a bumper sticker slogan anymore or a political talking point, it is just the facts. By the numbers it can be proven true that what Obama is demanding will certainly put us in a recession according to the congressional budget office = CBO. Let’s look at what faces the American people in the next few weeks and what the democrats have done in the past 6 years of the control of congress since January 2007. The American people have been setup with this no win scenario that we now have and democrats will be able to blame it all on the republicans no matter what republicans do because democrats control 85% of what is so-called the main stream media.

If congress does nothing we get the full force of the fiscal Clift which is a $600 billion shift in taxes and spending cuts. The media has been talking about this fiscal Clift but no one clearly explains exactly what that means. I don’t think any of media types are smart enough to see what it is or what it truly means for the economy, but I will attempt to explain it here. It’s not a matter of speculation it’s just really simple math and understanding economics.

If Republicans do what Obama and the liberal progressive democrats wants here is what the congressional budget office said about a deal republicans offered to raise taxes on the wealthy in the budget act of 2011 debt ceiling increase that threaten to shut down parts of government.

The CBO scored the proposal the republicans offered in 2011 that would raise taxes on the wealthy by roughly $80 Billion. The result was a recession and negative GDP growth of .5% or ½ %. They also said it would force 700,000 private sector jobs to be lost and by the end of 2013 push the unemployment rate from the current rate up to 9.1%. Again this was in 2011 and now Obama and the democrats want double or two times that much to $160 Billion in higher taxes from the job creators or the wealthy and that means twice the job losses to 1.4 million and twice the negative GDP growth -1%. This is what Obama wants; this is his so-called grand bargain. Only a complete idiot would think that’s a good idea, but that’s just Obama.

This doubling of higher taxes to the wealthy tax payers is the option that Obama is giving the republicans and this is not an option republicans can except, but it is insanity to ask for a tax increase that will force 1.4 million jobs to be lost to the middle class then lie about wanting to protect the middle class and force a recession in an already very weak economy that will loss 1.4 million jobs in the middle class. (Twisted logic) The only ones here protecting the middle class is the republicans not Obama.

How can the republicans agree to such an insane proposal when Republicans know it will cost so many jobs in the middle class and force us into a recession at the cost 1.4 million middle class jobs? They cannot. What sane person would vote for that? No sane person would vote for Obama’s so-called grand bargain and it’s not a deal of any acceptable kind. This whole Obama so-called deal is like trying to make a bargain with a terrorist who wants to kill you.

The Republicans have offered some concessions to higher taxes on the wealthy in recent discussions, but not the $80 billion and certainly not the $160 billion as the economy is weaker now then in early 2011 and any sizeable tax increase would not be good for the economy. There is no such thing as a grand bargain in what Obama is asking for; it’s more like a grand screwing to the American worker. Republicans are being asked to accept our grand economic destruction and the complete collapse of America’s economy into a deep recession or will it be a depression?

Taxes on the wealthy doesn’t include the automatic spending cuts from The Budget Control Act of 2011 said to be about $150 billion more that comes out of the economy and will have an additional negative effect on the economy. Obama is not trying to fix our fiscal issues and problems; Obama is trying to destroy the Republican Party and America along with it. I am all for spending cuts we need to shrink the spending of the federal government but not this way, not while taxing the crap out of everyone and forcing a depression like economy. These budget cuts should be done in increments’ in separate pieces of legislation over time slowing as the economy grows. I know this will not happen but that is the way it should happen.

The options the republicans have are unacceptable and the whole problem with the country is making deals or compromising with the democrats a party that wants to intentionally destroy the country. Obama and the democrats have found a way to blame the whole thing on the Republican Party but the truth is the whole thing was contrived by the democrats. The democrats want America to go off the fiscal Clift because they can blame any deal and all of them are bad on the Republican Party.  No matter whose fault it really is the liberal fringe lame stream news media will carry the lie and the people will believe the lie. America’s favorite pastime is blaming someone else for what they did to themselves by voting for democrats and Obama to get the free stuff.

I have told you about what the CBO has said about just taxing the wealthy and it has a really bad outcome and now let’s have a look at the math on the even bigger problem going completely off the $600 billion cliff. There is very big chance of the whole economy completely falling apart if the full force of taxmageddon if the existing law isn’t changed. The cost is a dramatic 4% of GDP just disappears into thin air. This will have the same economic effect as a gallon of gasoline going from $3.50 a gallon to $6.00 a gallon. You can probably relate to that and you know what that will do to your finances then multiply that time 140 million working Americans and the national fleet of 250 million cars. I did do the math based on our usage and the $600 billion taxmageddon it’s a very close estimate. This is an example for the effects and it will not necessarily affect the price of gas but the overall economic effect will be the same. (Catastrophic)

This taxmageddon automatically just happens in less than 4 weeks on January 1st 2013 if congress does nothing because this is already the law. Again stock markets will react before that date of January 1, 2013 not after. The optimism market players have that congress will stop taxmageddon comes from fantasies of the media and or wishful thinking.

The last 2 years has proven we have a senate that refuses to bring anything that passes the house to be allowed an up or down vote. At last count the republican controlled House of Representatives has passed 39 bills and Harry Reid hasn’t allowed any of them to go to the floor of the Senate for a vote. The house of representatives is functioning just fine passing 39 bills proves that. It is the Senate and or Harry Reid that is completely dysfunctional. The house has also passed 2 bills to fix the Clift or taxmageddon but dirty Harry wont allow a vote on either one. The truth is the democrats are screwing things up they are the dysfunctional party and they want to force America to go off the fiscal Clift. There purpose is to destroy the Republican Party and America with them. Will the democrat’s devious plan work?

If congress does nothing we get the full force of the fiscal Clift the media has been taking about but no one clearly explains exactly what that means to you and the whole country and the whole world will suffer great economic distress from our taxmageddon. I don’t think any of them are smart enough to see what it really means but I will attempt to explain more clearly here.

Here is what taxmageddon or the fiscal Clift means to you and to the whole economy and this number seems to get bigger by the week as more deductions are found that just go away and the higher total of the taxes mount up. The total amount of higher taxes collected from the wealthy and the middle class and the working poor (now 28 million that now pay no taxes at all and probably voted for Obama) is now $ 538 Billion in higher taxes as all tax rates go up 5% higher than they are now and around 20 tax deductions go away. This huge number of $ 538 Billion and based on the CBO estimated results of what $80 billion in higher taxes to only the wealthy was projected to do can be used as a guideline to calculate the economic impact of going off the Clift or taxmageddon.

The CBO has currently stated they cannot do an estimate on taxmageddon deal because they need the legislation to score the cost to the economy but that legislation doesn’t exist yet so we have to use the last CBO estimate as a basis on the budget act of 2011 debt deal that got us in this mess.

The higher tax of taxmageddon of $ 538 Billion on every one that works or has taxable income is 6.7 times the $80 Billion scored by the congressional budget office in 2011. Logically and mathematically the higher taxes would have the same multiple in its negative economic effects of 6.7 times the money that goes missing from the private sector economy into the black hole of government deficits of $1.1 trillion for 2012. So the math is 6.7 times the 700,000 lost jobs or 4,690,000 jobs lost. The negative growth rate of -.5% will be 6.7 times more or -3.35% This is to show the trend that when this much money being taken from the private sector in just simple straight math and it shows it will be catastrophic for the economy and jobs. This will be worse than the 2008 bank collapse because it doesn’t stop this time. No big stock market corrections or crashes are in the CBO estimates, there not allowed to do that.

I can tell you it will be a lot worse than any CBO estimate and there are a number of reasons. Here are just a few: first people will change their spending habits according to affordability after a stock market correction or a market crash. The working population or the tax payers that support the whole economy and socialist system will pull back spending as 50% of the working population are somehow invested in the stock market like in a 401k retirement program and that hurts business even more as everyone feels poorer and spends less. Adding to the devastation caused from the $538 Billion in higher taxes. The stock markets worldwide will adjust to America going into a recession along with all American stock markets as we are all tied together economically whether we like it or not that’s just the way it is. The CBO is not allowed to speculate on how markets will react they have a stricter set of guidelines and that’s why they are way off on most of their estimates long-term. There estimates are good for a few weeks to maybe 6 months, after that as time goes by their longer term estimate are useless.

No matter what the outcome the Republicans will be blamed for it. The election didn’t change anything and we will get 4 more years of congressional gridlock and 4 more years of an Obama’s dictatorship.

Some examples you can reference to see how people react and change their spending habits after any economic catastrophe is the 2008 bank collapse the 1987 stock market crash and the September 11, 2001 attack on the twin towers in New York. People just stopped spending and the economy went directly into a recession and my point is – things will get a lot worse than the -3.35% negative economic decline and will more likely be in the 6% negative GDP range just like after the 2008 bank collapse and the first quarter of 2009 was negative – 6% GDP and we have still not fully recovered from that. On top of that the Federal Reserve can no longer bail anyone out they are out of options but they can take over the banks and federalize them.

The overall dynamics of the economy has changed dramatically since 2008. This decline will be worse than any decline before because of the huge $16.4 trillion total deficits and a much larger portion of that are held within the banking system now in 2012 than in the 2008 bank collapse. A GDP growing at only 2% and Inflation said to be low at 2.2% if you believe that? The economy isn’t really growing at all, it’s the inflation that makes it seem like it is. We are in a much weaker position economically in 2012 than in 2008. 

This is a worldwide problem as all the major economies are doing the same thing. The total world-wide printing by governments has increased $21 trillion in just the last 6 years and most of that new debt is in the banking system.

The middle class with 401k Retirement plans or any money involved in the markets stocks or bonds will likely lose 40% to 60% of their money in those retirement accounts. Just like in 2008 after the banks froze up and this is just to start with, so the working people who support the economy will not be spending at the same rates they are now and all the false optimism will be forced away with a collapse coming in just 10 days when congress goes home for Christmas vacations while the economy through the stock markets just falls apart.

I have followed and been directly involved in every economic catastrophe since Jimmy Carter was president as a business owner and Obama and the democrats’ have set us up for the biggest collapse in world history. (The political economy)

In the last 4 years since the bank collapse of 2008 here is what has changed and will give us a multiple of 3 to 4 times worse than in the last bubble bursting and all created by the Federal Reserve poor economic and monetary policies. The banks have been buying trillions in U.S. treasury debt adding to what they already hold and adding trillions to the problem because the Federal Reserve has been making up phony money with these dollar amounts in trillions and creating a new much larger bubble than we had in 2008. The Federal Reserve has been buying old debt with the Q.E 1-2-3, and the so-called twists and the banks have been investing some of the money into the stock markets and commodities as well and repurchasing new federal debt with the very same money the Federal Reserve has been putting into the banks. (A Ponzi scheme; if you or me did this we would go to jail for a very long time like Burney Madoff)

This pumping of artificial money into markets has artificially inflated stock prices by pumping trillions of dollars into the banks creating money out of thin air with nothing but faith to back it up. Markets will collapse quickly as that faith will evaporate in a steep decline or even worse a panic sell off like in the 1987 crash and like all other crashes will take everyone by surprise. The banks are holding this huge multi trillion-dollar bag of dogey doo in U.S. government debt and banks will be blamed once again for what the politicians did or didn’t do. This is a 1934 cartoon from the New York Times. This has happened before.

 65312741

The banks and the biggest investment firms which are banks are the biggest players in the artificially propped up stock markets and the bond markets. This is a worldwide condition that every government and economy in the world has been doing the same thing for the last 4 years. This bubble only needs a trigger to set it off and I believe the trigger is taxmageddon that comes in 10 days. This starts on December 14, 2012. The markets will decline and this decline will continue till Friday the 21st of December. The reason it stops there is because the 25th is Christmas day holiday and markets will be closed Saturday December 22nd to Wednesday the 26th of December. After that all the damage will be done and whatever congress and Obama do after that will make no difference, it’s too late to fix anything once the markets correct or collapse.

The economic losses will be similar to a repeat of the 2008 bank collapse only multiplied times 3 to 4 of what happen in 2008. There will be no rescue from the Federal Reserve and no bailouts of the banks as the federal government with the Dodd, Frank banking act allows the government to just take over the whole banking system there are no limits to what the government can do now under Dodd, Frank and that’s what will happen as that’s exactly what the bill is meant to do. Nationalize the banking system and here we go to the government controlling everything. (Communism) So what’s next? They’re going to steal all your money no matter where it is.

How much do you trust the government having control of all your savings and what do you think they will do with it once they have legally taken control of the banks and nationalizing the whole banking system and all the money? What did they do with the social security money? They spent it all, need I say more? If or when this happens think about what you will do if you have savings in the bank and that’s what everyone else will do. The results will be Runs on the banks just like in the great depression and finally just closing the banks as they run out of paper and digits in the computers. Banks only have about 10% of their deposits in cash or liquid assets the rest is loaned out to someone and even loaned to other banks that may go bankrupt and close their doors these loses quickly dominos through the entire banking system no matter who owns them.

The Federal Reserve has no bullets left and the bazooka doesn’t exist anymore.

In 2008 prior to the collapse of the banks the federal deficit total was about $9.6 trillion and its now $16.4 trillion. The interest rate set by the Federal Reserve was 5% in 2008 now its .5 or ½% it can’t get any lower than zero and lowering it 4.5% has done little good for the economy and reducing it, another ½% won’t make any difference after a market crash. We also will have reached the current debt ceiling of $16.4 trillion by the last week of December 2012 or first week of January 2013. Little has been said about this debt ceiling being reached but their parts of a grand deal Obama wants that’s no deal at all and will not come.

If I wanted to destroy America I would have done everything the democrats did since they took control of congress in January 2007 and I would refuse to change anything just as democrats and Obama have done and continue to do. If I wanted to destroy America I wouldn’t change a thing.

We are currently barrowing nearly $100 billion a month for deficit spending and just printing and digitizing most of that up in computers the paper doesn’t even exist, it’s mostly cyber money on a hard drive in computers. If markets do come crashing down in 2 weeks with the debt ceiling increase tied to a tax increase bill that will not come and congress is out on vacation it all comes to a head at the same time. Once things do fall apart it’s too late to fix the damage already done.

This is the perfect storm and America’s judgment day has arrived. If congress does pass something and it’s not economically sound like raising taxes on the wealthiest 2% the exact same thing will happen and markets will react as if congress did nothing at all. We will all pay a price for the people who backed Obama and voted for him. The utopia Democrats all dreamed of and like they have dreamed of in socialist Europe for the last 150 years that utopia never did materialize and will never come for America either. What is coming will be more like the opening of the gates of hell.

The Federal Reserve is a bank. It is not a branch of government and isn’t controlled by congress directly. When this bubble bursts there’s not enough money in the world to fix this crash. The Federal Reserve holds around $4 trillion in its own issued debt and when the crap hits the fan this time the Federal reserve bank will be just as broken as the banking system they artificially propped up for the last 4 years and its all self-inflicted from poor monetary policy’s mostly since 2007. They think they have it under control but if they did we wouldn’t be in this catastrophic position.

I am a realist and do not hope for any better outcome for which there is no evidence of any possible better outcome. Hope is like wishing for something it only works in fairy tales but not so much in the real world. I have watched and participated in the political economy for over 30 years and I know what the politicians will do before they know what they’re going to do.

There are no grand deals to be made and any choices they do make will be bad ones for the economy. The policies of the federal government and the democratic controlled congress have put us in a box we cannot get out of. All of the possible outcomes stink. The poorly contrived political economic policies of the past our going to haunt us and our children through eternity and the bill is coming due now,  in the next few weeks not in 5-10 or 20 years.

We are about to witness the destruction of America through its economy from within our own elected government. This is all absolutely intentional it is not by accident that this is going to happen. Liberal progressive Democrats are just the tool or the useful Idiots for the destruction of America. There is someone else behind all this but this article is not about that.

The visible and undeniable end of America starts in 10 days. Obama is not trying to fix our fiscal Issues and Problems; His s trying to destroy the Republicans and to do that Obama’s going to destroy the economy and the country with it.

Congress goes from one screw up to the next screw up and the reason for this is the compromise of capitalism in trade offs for a larger more expensive government and more socialism and wealth redistribution. This will only end when we collapse under the weight of too much socialism, the government will go away with it and that’s weeks away not years. The deal Obama and the democrat controlled senate offers are going to collapse the economy. Keeping taxes the same for everyone will just put off the date as it will come up again.

The bottom line on taxmageddon or the so-called cliff is no matter what happens Americans gets screwed.

 If we get exactly all that Obama’s asking for we go off the cliff and into a deep recession. The congressional budget office has stated this and I agree.

 If congress does nothing at all we go of the bigger cliff. So no matter what: deal or no deal we go off the cliff. That’s the deal, we go off the cliff.

 The only alternative is keeping all tax rates at their current levels for everyone and Obama said that’s not acceptable. So we go off the cliff.

 The republicans are already being blamed for this but they haven’t been in control of congress since 2006 and they still are not in control but the lying media says republicans are to blame.

  Lou Dobbs agrees with me 

http://video.foxbusiness.com/v/1998558236001/fiscal-cliff-is-no-joke

Paul Ryan: That leads us to conclude Obama’s trying to get us to our fiscal cliff,” Ryan said. “He doesn’t want to come to the middle.”

http://dailycaller.com/2012/12/04/paul-ryan-addresses-fiscal-cliff-were-nowhere-were-farther-than-where-we-started/

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Painting a happy face on this taxmageddon is just putting lip stick on a pig. It’s just 45 days away until the US falls off the fiscal cliff and around $600 billion or 4% of Gross domestic product goes into the black hole of deficit spending from $450 billion in higher taxes on everyone not just the rich and an automatic $150 billion in spending cuts for a total of $600 billion shift in economic activity. For those with poor math skills pay attention to this, the taxes are not a plus to the GDP it is taken from existing GDP wages to employees and profits of companies

 

The current GDP growth rate is only 1.7% so far in 2012 and 4% of that will shift into the oblivion of deficit spending and deficit reduction and still leave us with an additional shortfall of $600 Billion in deficit spending. The CBO – congressional budget office has stated in their testimony to congress that just an increase in taxes on the rich of an estimated $80 Billion in tax increases will force a lose in jobs of 700,000 and a negative .5% GDP (½%) and or a recession. Now that number is just on the wealthiest and business owners has doubled to $160 billion a year in higher taxes to the wealthiest since the election and the simple math is negative -1% GDP and 1.5 million jobs lost just from taxing the rich not the taxmageddon that will tax the crap out of everyone and everything which is 3 times that number if they don’t do anything.

 

If you allow the bush tax cuts to expire January 1, 2013 than taxes go up on everyone including 25 million low-income Americans that don’t pay any federal tax at all will pay taxes. This is what the democrats voted for on November 6 2012 and all this will at the very least cause a decline in real terms of GDP gone missing of a negative – 2.5% of the GDP growth rate figured strate line without the projection of how businesses will react or how the spending habits of people will change and they will change dramatically more negative than a -2.5% growth rate decline.

 

The dollar amount lost by doing nothing and allowing current law to expire on January 1, 2013 and then tax rates go up 5% on every one who works and or pays taxes. it will cost the American workers and the rich $450 billion total and 150 billion in spending cuts totaling $600 billion then my estimate of job losses of 5 times the 700,000 jobs or 3.5 million jobs lost and the job losses will happen as fast as the money disappears from paychecks every week. The moneys just not there anymore for us to spend or save as it is taxed away at a rate of $1.2 billion a day from higher taxes to everyone. I want to repeat this part and make this clear, this is already the law, congress doesn’t have to vote on anything the existing laws will allow this to happen January 1, 2013 and congress doesn’t need to vote on anything it’s automatic. Next is why a deal will not be made and everyone working will get the 5% tax increase unless you move out of the country or your state succeeds from the union which neither is likely.

 

The political blame games and the real goals of the Democratic Party are why no deals will be made and why we will go off this fiscal Clift or so-called taxmageddon. This will be once again blamed on the republicans for what the democrats did. (There’s a 100 year history of this) The progressive, liberal democratic parties goal has been and still is to destroy the constitutional America we know and change us into a socialist dictatorship (I believe all the evidence shows we are already a socialist dictatorship and have been the last 3 years and 10 months and even possibly the last 12 years) and doing away with the constitution and replacing it with a communist constitution and this taxmageddon is exactly what the democrats need to do that and they will try to make it look like the republicans fault (this is already being done) and the lame stream liberal progressive socialist media will help them do it with their normal lies and disinformation.

 

Here is what to expect in the next 47 days. A lot of grand standing by democrats telling you conservatives economic policies are why the economies is so bad and its Bush’s fault even know the democrats have controlled congress for almost the last 6 years.

 

It’s at this point I want to inform and or remind everyone who reads this. The democrats have now controlled congress for 5 years and 10 months the reason the economy went off the Clift and the banks collapsed in 2008 was under the control of the Democratic Party for 21 months it was not the Republicans it was the democrat controlled congress that did it by their actions or lack of actions. To believe otherwise means you have been misinformed and you believe the lies of the liberal progressive news media.

 

The democrats didn’t inherit this economic mess they caused it. http://wp.me/pO1Ho-9w 

 

So if you still think this was all done by Bush your eating the little balls of crap the liberal media has been feeding you for your entire life and the last 6 years. All you need to do is a search for congress January 2007 to 2012 and you will see the democrats have controlled everything for the whole time period and then blames republicans and Bush for what they did. To say well that’s just politics does not make it right and it doesn’t fix the mess we are in. If they are getting away with these lies it’s because some Americans like those voting in democrat party for the democratic party are allowing them to get away with it. I don’t get my news from fox I seek the truth always this is the real no spin zone. I go to the federal record and look at the numbers and if you really want the truth it’s in the numbers not the news media they all sound like parrots to me spinning their stories as they see the truth with 10 different versions or opinions about the same story and none of them are right.

 

Facts compared to opinion and views. The glass is half full or is it half empty? No matter what you opinion or view is; the same amount of water resides in the glass. its math and math is not an opinion or a view. This goes to the next part the historical events of the past that can give us a clear picture of the possibilities and the near term effects of economic events like taxmageddon.

 

I have seen many economist discuss this $450 billion tax increase like it’s a good thing and the value of the dollar will increase because the deficit would shrink and that’s would be a good thing under normal text-book economic conditions it would be, except for the facts they seem to forget that we would definitely go into a very deep recession or depression from a $450 billion tax increase and while we have a deficit of $16.4 trillion hanging over our heads that’s not good for bonds or the value of the dollar if we are borrowing $600 billion while the economy is shrinking at a rate of 3% and could quickly go 6% negative GDP  it is likely under these conditions no one will loan us any money and people who hold our bonds would sell them very fast causing a panic sell off or a crash in the bond markets.

 

This has happened before in 1980. I can tell you right now when the economy starts to decline and go into a recession under the new much higher tax rates that what the economist are telling you say it’s a good thing is idiotic and that’s being kind. As the whole dynamics of the entire economy changes very quickly in economic declines the stock markets and bond markets will change and go into a severe decline and bond markets will be up for a few days maybe and then be sold off to cover losses in other stock markets and commodities markets this is always a worldwide event and everything will all change dramatically as well. None of it will be good. It will all be bad news (do you have a 401-K) and even before the first dollar in higher taxes is stolen away from the rich, the middle class and working poor this will unfold and become history. When this happens and it will, the economists college degrees can all be thrown out the window or used as toilet paper because nothing works in severe declines. I have been in 3 severe economic declines or crashes as a business owner and an investor.

 

Currently what gives the dollars or the bonds the value they do have is the confidence that the government can pay the interest on the debt and that confidence level all changes if we go into a recession. Confidence is nothing more than a thought and as quick as we can change our minds or in one day that confidence could disipere and this could cause a second bond market collapse worse than the one in 1980 because the debt is 32 times larger than in 1980

 

The Bond Market Collapse of February 1980 The time is November, 1979; the place, the White House. Like in November 2012, a dark financial cloud hovers over Washington — not only fiscal troubles, but also the threat of hyperinflation.

 

President Jimmy Carter and Congress have been gridlocked for months, unable to deal with the brewing storm. Unlike November 2012, the next presidential election is a year away. But investors don’t wait for the ballots. Nor do they have to. They begin issuing their sell orders immediately, venting their wrath primarily in the U.S. bond market by dumping medium and long-term U.S. Treasury securities. Treasury bond prices collapse, while interest rates surge. (We are set up for this perfect storm once again triggered by taxmageddon)

 

The tipping point comes on February 5, 1980. That’s when Treasury bond prices fall so far that their yields surge above the 11% level the all-time peak reached during the Civil War. “Faced with a prolonged buyer’s strike,” says one bond market pro, “we decided to throw in the towel and get yields up to a level where some cash buyers might be shocked off the sidelines.” But the next day, panicky bondholders begin unloading bonds at any price … and there are still few takers even at record interest rates everyone is still selling. The selling is so intense that all except two of the largest, best-capitalized bond dealers on Wall Street Merrill Lynch and Solomon Brothers effectively abandon their market-making role.

 

Now, it’s no longer merely a case of a price collapse. It’s a market collapse in the literal sense of the word: The dealers themselves are packing up and going home! By February 19, the collapse gathers even more momentum, as Treasury bonds lose over 5% of their face value in a single trading day!

 

Investors aren’t just shouting their protests from the rooftops. They are shutting down the market for U.S. Treasury securities, making it impossible for the U.S. government to borrow the money it needs to stay alive — and to avoid defaults on maturing debts. 

 

Result: With Paul Volcker (idiot) at his side, President Carter (another idiot) acts, announcing an anti-inflation bombshell: An unprecedented package of CREDIT CONTROLS that clamps down on virtually all forms of credit. (Dodd-Frank bank regulations will have same effects) The U.S. economy is pushed over a cliff and into a tailspin. Carter’s chances for re-election are doomed. But the bond market recovers and the U.S. Treasury is able to resume borrowing. 

 

But this all happened when the total of all federal deficits was about $ 500 Billion and now its $16.4 trillion anything even ½ of that historical recount would destroy the country and the dollar. Inflation ran between 12% and 15% in that period from 1977 to 1982 and bonds sold are governments borrowing money to finance the spending of money they don’t have. Just imagine if this only in part happens in such a weak economy and with borrowed money amounts $16.4 trillion and a need for a least and additional $50 billion a month after taxmageddon. While at the same time the economy is in a steep decline with a president that’s adverse to business. (The perfect economic storm that will end America) This also really screws up all the CBO estimates of the impact of the recession caused by taxmageddon and things will get a lot worse than there projected declines. The economy is always a moving target.

 

It was massive deficits of that time period that caused this to happen and those deficits were only $50 billion to $75 billion a year and now there over $1 trillion a year. This extremely high 16% interest rate at the peak is what the market set is the sacrifice that investors demanded in order to kill the threat of hyperinflation or the extreme devaluation of a currency. It really never worked but they won’t tell you this because it makes both Carter and Volker look like the idiots they are. Inflation remained high and the higher interest rate had only one purpose atract money to finance deficit spending. The higher interest rates fueled inflation in higher cost to barrow money that doest reduce cost it increases cost thus inflation increases. Liberal progressives always get it backwards. This is what Washington ultimately delivered. That at least in part will happen with taxmageddon coming in just 7 weeks. (Merry Christmas)

 

The general notion here is that, given the root causes of our economic distemper, rampant financialization, over-leverage and over-indebtedness, a politically dominant parasitic banking sector, an aging population, over promised entitlements, a financial business model based on fraud, Federal Reserve monetizing of debt, and a dysfunctional political system, to mention only the top of the list how can the USD appreciate in real terms? It cannot! It only has one way to go and that’s down. There only needs to be a trigger to set this whole decline into motion and I believe its taxmageddon.

 

This is how investors play the markets and why the dramatic decline or a crash will become obvious in the next 45 days or less. Businesses and market players make their decisions based on future projections of business activity and profits or the lack of profits. All market investment is determined by future projections or guesses of economic activity 6 months before they accrue not afterwards. You can expect a crash or at least a major correction of a few thousand points in the next few weeks and up to the week before January 1, 2013. Just like the decline after the banks collapsed in September 2008 this decline will continue well into 2013 just like the one in 2008.

 

Either way whatever happens in Congress the democrats will not make a deal because they want the economic collapse. They want the crash and they need it because democrats want the country to end as we know it so they can abolish the constitution. Making a deal with the democrats and Obama will not happen and their actions and the long history of changing constitutional law through the Supreme Court in the last 100 years and especially the last 4 years of ignoring constitutional law and playing dictator or King at every turn should prove that to people who have been paying attention Democrats hate the constitution.

 

Liberal progressive democrats have worked hard to circumvent the constitution and make unconstitutional law legal through the courts. It’s a term called judicial activism. This entire deal making process will be like trying to negotiate with a terrorist that wants to kill you, it’s a useless endeavor. Democrats’ have a long history of behavior that never changes in the liberal progressive Democratic Party. So why would any sane reasonable person expect that to suddenly change now? Liberal, progressive, Democrats want an economic collapse.

 

The conservative media will keep doing what they always do giving the benefit of the doubt to the liberal democrats and they will hope and or wish that Obama and the democrats will find a middle ground or a compromise with republicans, but the last 4 years of their actions shows that doesn’t fit Obama’s or the democrats play book. It’s always their way or the highway anything else is just imaginings and hopeful thinking so far hope has gotten us into this horrible position. The only compromises made have gotten us to the current fiscal Clift otherwise known as taxmageddon everything else has been my way or the highway with the democrat’s control of the senate and Obama. I think the democrats set America up perfectly for total economic destruction with an expiration date January 1, 2013

 

You can’t make a deal with the devil and expect anything good to come from it. I don’t think John Bonner will make a deal with the devil and if he does there’s a price to pay either way all Americans will lose no matter what our politics are.

 

What you are about to witness few weeks and months no one alive has ever seen before. This will be way worse than the great depression or the civil war. Hell on earth is what is coming and it’s not years away it’s only a matter of weeks and months and I repeat it’s not years away. To think this destructive pattern of the democrats’ and Obama can continue and Americas economy can survive 4 more years is just wishful thinking.

 

You can Hope I am wrong as I really hope I am wrong, but I said in back in 2004 and in my book 2012 that came out in November 2009 this president Obama would be the last president of the United States and so far I was right. From 40 years of observing politics and studying political history. I understand how a liberal thinks and they don’t use logic. This lack of logic is why all their ideas and policies always fail it is a form of insanity and that’s why what I say here may not make any sense to a sane person but their is no logic to there thinking it is insanity.

 

We don’t have 4 more years under any president or any dictator. The book 2012 explains it all. I said in 2009 it would either happen in 2012 or by the middle of 2013 and now we are just weeks away. You will see this unfold in the next 6 to 7 weeks in the stock markets as I expect a 2500 point correction from the September highs and so far it 1000 points down with 1500 to go and it will get a lot worse in early 2013.

 

I really hope I am wrong and I know you do too.

 

By the way very soon after taxmageddon and I mean very soon after we fall apart, the real Armageddon between Israel and Iran will start. First it will be conventional weapons but it will escalate quickly after other Arab countries join Iran in an all out WAR and an attack on Israel. Israel is surrounded by nothing but enemies with combined armies in the millions and with no allies. Regardless of what Democrats say or Obama he will not back Israel, Obama is a Muslim he will side with the Muslims. If attacked by multiple countries at one time Israel will have only one choice and that’s nuclear weapons = Armageddon. Israel has claimed 80 nuclear weapons and that’s enough to destroy all the Arab or Muslim countries major cities. The deadline for this is March 2013 set by Israeli Prime Minister Benjamin Netanyahu. Here it comes! 200 million dead in one day is very possible with 80 nuclear weapons and the real sh-t hits the fan.

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Fromt cover of 2012 size 128 x 192 small

2012 cover

What’s really going to happen in 2012 is a question that is asked about 1 million times a day worldwide on the Internet search engines. Many Webster’s have scurried to cash in on the near hysteria about 2012. There are hundreds of theories based on hundreds of theories with no facts to back any of their claims of disaster. At last count there were over 600,000 different websites based on the 2012 and end of the World theories. I can tell you right now it won’t be the end of the world. Although what I have to say will sure make it seem like the end of the world. I have researched many of these other 2012 websites of prophecies. I have researched the science and the history of man the geological history of the planet and there is zero evidence of any of the claims they make. They are all just making baseless claims to scare people and make money.

What I know and understand better than anyone is economics. 21 years ago I forecasted the scenario exactly like we now have in our politics and our economy. My focus has always been mainly on the US economy because it is the largest economy in the world. That 1990 forecast was that due to our politics and out of control deficit spending would eventually lead to a collapse banking system and a collapsed currency. I forecasted that we would have trillion-dollar deficits and it would lead to the destruction of our currency and our country and I wrote a book about it in 1990. I have recently written a new book to update the more current events and what will happen in the next few years up to 2013 and it’s all based on economics which has nothing to do with anyone’s prophecies just economic forecasting. This new book is called 2012 what’s really going to happen in 2012.

To be honest I’m trying to cash in on the 2012 hysteria just like everyone else by selling my book. Not for the same reasons as the others who have written about the end of the Mayan calendar in 2012 and then claiming it means some kind of end of the world scenario which it does not. The Mayans said little to nothing about any great disaster that comes on December 21, 2012. They’re in fact are no disaster Mayan prophecies only the end of the calendar and the start of a new one and that’s it. My purpose is to inform the public about the factual evidence. What I see coming in the form of economic forecasting for the American economy and the world economy. This happens in just two short years and needs to be told. It just so happens that my calculations and the amount of time it takes for this financial fiasco to completely unfold just happens to come around the year 2012 and could possibly happen in 2013 at the latest.

All the proof is within the government reports on the economy that comes out each month. Within these government reports you can find the evidence of everything that I say in the book 2012 or on this page or any other page that I write. The government just hopes you don’t find out or figure out what all these numbers really mean and who is responsible for this mess. I have a feeling that they’re not even smart enough to see it and that’s exactly what Alan Greenspan said about the bank collapsed in 2008. I knew what was going to happen to the banks and why in 2004, to me it was just simple mathematics. This really makes me wonder about the intelligence level of 800 economists’ that work at the Federal Reserve building in Washington DC and none of them saw it coming. I know a few people who work at the federal reserve and I know why they didn’t see it coming. I tried to warn people but nobody listened, they thought I was crazy and now we have exactly what I predicted in 1990 and in 2004, a collapse banking system and $60 trillion that just disappeared.

Now I will give an explanation of what I predict will happen in 2011 and lead up to the total collapse of the US economy in 2012.

This explanation will include the politics that created the mess and who the real culprits are that will eventually lead to the destruction of our country. To explain it without pointing out the people who did it would leave unanswered questions and cause people to blame innocent parties and that would be wrong.

Most people know about the more than a trillion-dollar per year deficit spending of the federal government. For those who do not know for the years 2008 two 2011 will have accumulated $6.1 trillion in additional deficit spending in just that four-year period. It took from the creation of the Federal Reserve in 1913 and up to the year 2007 for the total federal deficit spending to get the $9 trillion amount. That’s 94 years from the creation of the Federal Reserve. But it only took four years to add an additional $6.6 trillion to the public debt. With the passing of the bill that keeps federal income taxes to the current levels this will add an additional $450 billion to the deficit for the fiscal year 2011 which ends in September of this year. This will put the total public debt up to $15.6 trillion in this short period of just four short years. This was all done by the liberal progressive Democrats that controlled Congress from January 2007 to January 2011.

Presidents can’t spend one dime without Congress first approving the spending. The last budget that the Republican Party was responsible for had a $161 billion deficit and that was voted on by April 15, 2006 for the fiscal year 2007 that started October 1, 2006 and ended on September 31 2007. You can see the big difference after the democrats took control of congress and it cannot be blamed on the bank collapsed in 2008 because liberal progressive Democrats started their runaway spending by April 15, 2007 on their first budget which started in October 2007 and ran to September of 2008 and including off  budget deficits it was $900 billion the first year they took over Congress. Here is a chart to show all this out-of-control spending on this page.

https://jamesgarrett42.wordpress.com/2011/01/18/will-america-survive/

This page called Will America survive, also explains in a lot more detail the dates these budgets are made and how politics plays out. All this deficit spending money has to be borrowed under normal economic conditions. The real problem is there’s nobody with any real profits to buy the U.S. Treasury bonds at the average rate of $125 billion every month. Remember that in 2008 all banks went broke with the credit default swaps going worthless. It was said to cost the World Bank’s an estimated $60 trillion. So the question is where is all this money is coming from since all banks went broke or bankrupt in September of 2008?

All the economic growth worldwide is currently from governments printing of money trying to stimulate their economies. The answer to the question is that governments all over the world are just making money up out of thin air. Countries are buying huge amounts of debt bonds from the US with their printed up money. So what we have is their buying our worthless dollars with their worthless dollars. There’s no way this can continue without somewhere along the line the general public finding out what’s really going on and a severe devaluation of all paper currencies. Once investors realize what these governments are actually doing the confidence in these currencies will be lost and smart people will try to get their money out of these markets and the banks, then transferring their paper in some kind of a hard currency like gold or silver.

Here’s the problem; if everybody tries to sell all at once and creates another panic selloff much like we had after the 2008 bank collapse. If Stocks sold off very quickly and our markets dropped by as much as 1000 points a day like in 2008 and into early 2009. A panic of some kind is what I believe will trigger this next panic selloff in the bond markets and the trigger could be anyone of the major markets collapsing and that panic selloff going into the bond markets. It could be a major stock market correction or it could be the bond market itself in a panic selloff. But what I really think the trigger will be is a municipal bond market collapse here in the United States that will ripple into all markets here in the United States and around the world.

The most likely trigger setting all this on into motion will be the American municipal bond market. There are $2.8 trillion in city and state municipal bonds. These are bonds that were sold by the state or the city’s to build infrastructure like roads and bridges. This is additional money that is considered public debt is like U.S. Treasury’s but issued by the states and it should not be confused with the federal deficit it is additional to the federal deficit. A lot of these municipal bombs are held by union pension funds. There are currently many cities that have already default on these bonds and there are many more much larger cities that are threatening to file for bankruptcy wiping out these bonds entirely. (New York City and Los Angeles) We also have states right now like California and New York that are going to try to change the state laws to where they can also file bankruptcy because they can no longer afford to pay the interest on their municipal bond debt. Just one large union pension fund pulling a couple of billion dollars out of one particular municipal bond fund could set the whole thing in motion and create a panic. I saw something exactly like this happen to a bank back in 1985 and it caused a run on the bank and in three days it was closed. It was $1 billion bank and everybody lost their money.

The true status of the economy can be seen in tax collections by the states. Every quarter the states are reporting lower and lower tax collections on both employee’s wages and taxes on corporate Profits. So how can the economy be growing like all economists and talking heads are claiming on the boob tube, if every 90 days the states are collecting less in tax money? This evidence shows that American people are once again being lied to. All the evidence you need is on the Internet and all around you, all you need to do is look. The states and the federal government collect taxes on a percentage basis and if incomes are down and corporate profits are down; the dollar amounts in taxes collected also go down. This is the current situation in most states in America.

This collapse in the municipal bond market could be followed very closely by a collapse of the U.S. Treasury bond market which would trigger a huge selloff worldwide of all government bonds. The only thing that backs up these bonds is faith that they have worth or value. Faith is a thought and people can change their mind in a matter of seconds. A lose of faith is what causes panics and when people think they’re losing all their money they really panic. Here’s the problem: this is only the beginning. When this crash of the municipal bond market does take place it will domino into every major market in the country.

The bond market is tied directly into the banking system. Most banks keep their reserve funds invested in U.S. Treasury bonds and municipal bonds. Not only would the banks lose face value on the bonds they held if they didn’t sell them in the panic. It would put them under the legal reserve requirements required by the federal government and make many of the banks insolvent once again just like in 2008. This gives us a repeat of the 2008 bank collapse which triggers many other markets to collapse as well. This is where our real problems start.

Once this happens whole world will know that we have just been printing of money out of thin air to pay our interest on all are borrowing of money. Here’s a list of effects of a bond market collapse and it may not be in order but all these markets will be negatively affected at the same time as the bond market collapse. It will just take a longer for each affected market to show up publicly, depending upon which one it is. For example the real estate market would take two or three months to show up in any economic numbers even though the effects would be immediate.

When the bond market collapses the interest rates will skyrocket on that day and in the weeks to follow. The more people would continue to try to sell in the days that would follow a market crash higher the interest rate will go and the lower the face value would go. Under normal conditions the governments by intervening and buying their own debt bonds in the markets can keep interest rates low just like the record low-interest rates we have right now and the last two years. But in panics the government loses control and interest rates go to very high undesirable levels.

It’s at this point the cat is out of the bag and if the government wants to try to regain control to bring down interest rates as they were before the panic they have to come up with hundreds of billions and even trillions of dollars of more money made up out of thin air, digitized or printed up phony money. This money printed up out of thin air adds to the deficit and further exaggerates the problem. This is the exact scenario that can cause the hyperinflation of a currency.

If they try this, it takes a devaluing currency from the panic selloff of the bonds and devalues it even more. This is not really an option but it’s what governments normally do to try to keep the economy going as long as they can for the purpose of buying time and just praying by some miracle that the problem will go away on its own. We have survived these type panics in the past but we have never had the huge federal budget deficits as we have now. We have never been in a position that looks anything like what we have now. However we have a lot of history of countries and currencies collapsing. Looking at this history we are doing the exact same things to collapse our currency and that will destroy a country.

These higher interest rates on the bonds will directly affect the interest rate on a home mortgage loans. For Every percentage point in higher interest rates on bonds, the mortgage lenders will increase their interest rate at about the same amount. If the bond interest rate increases 3% then mortgage loans would go up from their current 5% to 8%. This leads to a second collapse in real estate market just like we had after the 2008 bank collapse. The value of real estate has dropped 30% or more since 2008. Only this collapse will be worse than the one you’re still in now and the reasons are as follows. Under the current economic conditions we could see an additional 30% drop in real estate values within months of this scenario and not over a three-year period. This has a secondary effect of causing all the collateral that the bank holds in real estate being worth less money than the dollar amount of the mortgage on the house. This makes all the banks in fact insolvent with loans outstanding much greater than the collateral that backs them up.

The higher interest that would be demanded by the holders of U.S. Treasury bonds would dramatically increase the interest that the federal government would have to pay on all its $15.6 trillion worth of debt by the end of 2011. The current interest paid on the US debt for 2011 is estimated to be $250 billion at about 3.3% interest. If this interest rate doubles so does that $250 billion and this would have to be added to the estimated deficit for 2011 of $1.5 trillion bringing the total to $1.75 trillion and that is only the on budget deficit and does not include off budget spending and adding the off budget deficit would put us in excess of a $2 trillion deficit for 2011. This will probably trigger another panic selloff as soon as these numbers are realized by the public and investors. What comes after the year 2011 is the year 2012.

The stock market will no doubt have a major correction if the bond market collapses. There’ll be trillions of dollars lost in the stock market and many trillions more in the bond markets face value of U.S. Treasury’s. These losses will be magnified in that U.S. Treasury’s are often borrowed against as collateral in the stock market by the big players like mutual funds and the like. As the face value the bonds dropped radically combined with large losses in the stock markets. There will be margin calls for cash to keep the portfolios solvent. When these things happen they feed on themselves because these portfolios are invested in stocks and bonds have to be sold to cover the losses from the leveraging. This feeds the panic and drives prices down and even more money is lost. This usually doesn’t stop until the markets are closed at the end of the day or they just stop all trading to halt the panic.

I have seen this happened two times before in the last 30 years. Back in the 1987 stock market crash and again at the September 2008 bank collapse. I was directly involved in one of these knowing it would happen before it happened to try to make money from the crashes. But in either case I lost money even know I was right about the crashes I still lost money, because you get caught up in the market and can’t get out. Because your positions are in the money they will not cash them in because someone has to be on the other end of the deal or trade and most people don’t understand that. The brokers never explain that to you because they make money off of buying and selling or the commission they received to make the trade.

There was a Treasury bond collapse around 1980 when Jimmy Carter was president. I was following politics and the economy very closely but I was not directly involved in the bond market or the stock market at that time. I can’t tell you much about that T-bill crash. I was too busy running my own business and watching its demise right along with the rest of the economy. The losses in that collapse of the bond market was said to be $2 trillion and that was 30 years ago. The bond market is many times larger now than it was in 1980.

The general public thinks the stock market is like a lottery with a pool of money just sitting there waiting to pay off your winnings, but it’s not. There are not billions of dollars sitting there to cash in your positions. But whether an investor is short or long on the market there has to be someone to take the other end of each position and if there’s not, you’re not going to get your money out. Even If you outright own the stock and want to sell it there has to be a buyer or else you’re stuck with it. You can lose it all if you’re highly leveraged or buying on a margin. I learned that the hard way and I didn’t lose all my money but it was enough to teach me not to be involved when these things happen. You may get lucky and be able to get out of market with a profit, but you can also lose more than half the money you had in the market as wildly fluctuating prices force your position from a profit to a loss. So my recommendation is stay away from all paper trades in any of these markets. If you do buy gold or silver don’t buy certificates or allow anyone to hold it for you and above all do not play the commodities market you’re almost guaranteed to lose your money there. Take delivery of the physical precious metal and keep it close to home.

Now comes inflation and hyperinflation or on more personal level that affects you and every citizen every time they go to buy food or gasoline you will see price increases weekly that will make your head spin. Every week when you go to buy food or gas you could see the price of gasoline increased by $.50 to one dollar a week. You could see food prices go up by 10% a week. Do I have to tell you how quickly this will destroy what’s left of the economy? It is at this point that we only have a few months left until total collapse af the economy. The average citizen can only afford inflation on these items in small amounts each year but not every week. The higher price of gasoline affects everything we buy as everything gets shipped to a store by truck. There is also petroleum in almost every product we buy. The farmers use a waste product from petroleum for fertilizer and this is one aspect of what pushes groceries up when petroleum prices increase.

As the cost of food and gas goes up dramatically other sectors of the economy will shrink for every dollar we spend on these two weekly expenses. Currently with crude oil at around $90 a barrel, gasoline at three dollars a gallon and food prices being what they are. We spend about 9% of the total economic output a year on these two commodities. (GDP) One way to do simple math and keep it easy to understand is that if these prices double then the additional 9% of the money we spend on food and gasoline will be diverted from other sectors of the economy. This will have the exact same effect on other sectors of the economy shrinking by 9% from their current levels when the money is diverted to the higher prices of food and gas.

The gross domestic product may increase just slightly to 3% or more, all of that growth will be from money diverted from other sectors of our economy. So while the government is telling us the economy is growing because they believe their own phony baloney headline numbers. The economy will actually be losing jobs at the rate of several hundred thousand each month from all the money being diverted to higher food and gasoline prices.

As our dollar devalues against all major currencies around the world they will demand more money on whatever they are selling us. We import about 70% of the products that are on the shelves of all stores in the United States. So what that means is almost everything we buy prices will increase dramatically. There is only so much money in the economy at a given time. The Federal Reserve is not going to rain trillions of dollars into our households like they did with the banking system. So what will happen is an any and all industry will be very negatively affected by all this diverted money being spent on higher food and gasoline prices. Like the services sector for example which makes up 80% of the economy will shrink and millions of jobs will be lost. So now we get the higher unemployment that comes along with higher food and gas prices as this money is diverted from all the other sectors of the economy.

This has the effect because of unemployment compensation of pushing deficits of both the states and the federal government even higher. Federal budgets and state budgets will collect even less in taxes month over month than they anticipate. This is very much like the scenario is playing out right now but the one I’m talking about will be much worse and a lot faster than our current slow decline. This would translate into either higher taxes or huge layoffs for state workers making things much worse than the current economic conditions.

This leads to the second big collapse of the world banking system. There will be millions more homes mortgages going into default on top of the 300,000 per month we have now. There’s also the effect in addition to all this, the treasury bonds that banks hold as their reserve requirements will have diminished greatly as the face value drops dramatically and this will put much the banking industry into an insolvent condition.

This almost complete collapse of the banking system will force the government to take over almost 100% of the banking system. Considering the faith that people have in their government right now I would say this will cause a physical run on the banks much like in the 1930s Great Depression. Here comes the biggest problem of all, if these physical runs take place there is nowhere as near enough paper money or cash in our system to cover the withdrawals. If just 10% percent of the people with bank accounts try to get their money out, all the banks and all at once the banking system will run out of money and collapse in two or three days. Banks are only required to keep about 7% of their total deposits in cash. A lot of this so-called cash reserve is invested in treasury bills. Just like back in the 1930s most of the money was loaned out and does not exist anymore. As soon as the paper money or digitized money runs out and it will only take a few days, all the banks will close. There was a run like this on a bank in California in 2008 with lines outside the door and around the building. I believe the banks name was indie Mac.there was also the unseen run on the banks using computers to transfer money from money market funds into other accounts at local banks. This has been directly attributed to the actual collapse of the credit default swaps that created a $60 trillion loss in the banking system.

If we get a panic like this and there is a physical runs like this, in three days the federal government would have close all the banks and this is exactly what happened in the 1930s Great Depression. Once this occurs and all the banks are closed, the whole economy stops dead in its tracks. This would mean the distribution system would collapse in just a few days and this is probably the worst thing that could take place in all of the things I have discussed.

If the distribution system collapses what does that mean? That would mean that all the gas stations would not have any gas. All the grocery stores would run out of food within a few days and very possibly within a few hours of something like this happening. No jobs will exist anywhere and the unemployment rate would be 100%. This all would be much worse than what happened on the Great Depression of the 1930s. Think about it for a minute; if all the banks were closed and you had a pay check to cash, where would you go to cash it if all the banks were closed. Your pay check would be worthless.

In the Great Depression of the 1930s most people were farmers or self-employed. The country was much more self-reliant back then. The situation we have today with 308 million people in the latest census of 2010 is that more than 50% of the population lives in or around cities and that means over 150 million people will have to migrate to where there is food and water. With large concentrations of huge numbers of people who live in cities and no food in the grocery stores and no farms nearby to get food from. No gasoline to put in your car to go to a farm to buy food or to hunt for your food. This will be much worse than just an economic collapse. With the collapse of the distribution system and closing of the banking system there will be no coal for the power plants and electricity will shortly afterwards just go off-line. This means no television and no entertainment centers in your house will work and no lights or anything else that runs off electricity would completely stop working.

There will be no government of any kind. There will be no police departments, fire departments or emergency services. All the hospitals would be closed. Everything that exists right now will stop if all the banks are closed.

We would literally within 2 to 3 weeks be living in the Stone Age. Every single piece of technology we have would no longer exist. This also means no fresh water supply as it stops with the electricity going off. People cannot live without fresh water to drink for more than three or four days. For survival city dwellers will have to leave the cities in huge numbers, by the tens of millions nationwide. This will be a disaster like mankind has never seen before. This will also be the situation in Europe as well as any developed country that uses large amounts of technology and is dependent upon the world distribution system.

This is all self-created and is primarily due to our politician’s lack of action going back to 2001. It is not George Bush’s fault as he and others like Alan Greenspan warned about this potential for a bank collapse like we finally did have in 2008. This was all self-inflicted and Due to a lack of regulation of the two mortgage banks Freddie and Fannie which are the two biggest mortgage lenders in United States and which are both partially government-owned. This is in fact were all the mortgage-backed securities originated from that caused the collapse of all the worlds banks in 2008. I have a video dated from 2001 it shows Alan Greenspan warning Barney Frank of a problem with Freddie and Fannie and nothing was done from 2001 and even up to now in 2011 these banks have not been regulate.

From what I’ve observed of the Federal Reserve and other government entities reporting on the economy for over 30 years of adjusting interest rates and regulations they are almost always wrong. Could it be that their numbers are so deluded or delusional that decisions based upon their phony baloney headline numbers is why they always overshoot when raising or lowering interest rates in the past? These bad decisions can directly be attributed to all our recessions over the past 30 years that I have been watching the Federal Reserve actions. I seem to know exactly when they’re going too far the day they go too far one way or the other.

The deflation or decrease in price in real estate will be zero help in this scenario as is not any help right now. Unless you’re buying a house the lower prices do not help you at all and should not even be counted in the equation of inflation or deflation under the current economic conditions. Under the current conditions of the housing market banks are requiring large down payments because the value of real estate is still dropping. This isn’t helping anyone.

The banks are also more reluctant to lend to people unless they have very high credit scores. Most activity going on right now in real estate that is being reported in the total housing sales numbers is just people refinancing their existing mortgages, it’s called a short sale. These refinancing numbers are included in the total number of houses being sold. This creates an allusion that things are better than they are. I just talk my buddy who’s been a real estate broker for over 30 years and he told me just what I told you here.

This is not old news it’s been going on for last three years and it’s still the same. If you really want to know what’s really going on in the economy you have to ask the business people on the streets. You cannot believe the propaganda of the news media like MSNBC business Channel who are actually spending all day long trying to get you to invest your money in the stock market. Their advertising base is almost all commodities and stock market brokerage firms and they make money off your money in the form of commissions on trades. Just like a salesman they have an interest in telling you everything you want to hear and everything is great so you will take your money and give it to them so they can make money off your money. If you shake the hand of these sales people you better count your fingers because you’re liable to be missing at least one if not a few.

Summary

Panic selloff in municipal bond markets

Causes panic selloff in U.S. Treasury bond markets

Causes panic selloff in world markets of all kinds

Causes second downturn in collapse of real estate market values

Causes second collapse of the banking system due to even more mortgage defaults

Causes collapse in real estate market due to higher interest rates and lack of affordability

All the above Causes huge layoffs and dramatically higher unemployment.

Higher unemployment causes further mortgage defaults and pushes Banks further into bankruptcy and insolvency.

Severe devaluation in the currency due to a lack of confidence in the government to bring its massive trillion-dollar deficits under control considering their now in excess of $2 trillion a year and growing.

This causes severe devaluation of the currency and much higher prices on commodities imported from overseas and in country. This means the price of gas and food could double or triple.

The doubling of the price of gasoline one which is currently three dollars a gallon and going to six dollars a gallon will by itself destroy what’s left of the economy.

The beginnings of the municipal bond market collapsing could be weeks or just a few months away as the state’s are seeking the right to file bankruptcies just like the cities already have. I believe this municipal bond crash could be the trigger that starts the whole of modern society to collapse. I wonder if the Republicans will be blamed for it. I’ll bet they do. I knew the liberal fringe lame stream news media better than they know themselves. I know what they’re going to do before they even know why they’re going to do it.

Just a little reminder for everyone to date this, today is January 25, 2011. The Democrats took office in January of 2007 and had control of Congress for four years. Everything that is going on right now with huge trillion dollars federal deficits can be very easily traced as 100% the result of the Democrats taking control of Congress in 2007. The banking system collapse of 2008 was from a lack of action from the two banking oversight committees that did nothing about a problem they were warned about at least 17 times starting at the very beginning of the Bush ministration in 2001. . These two banking committees were both chaired by Barney Frank and Chris Dodd. They are both Democrats and legislation to bring things under control and regulate the banks were brought up many times and these two Democrats stopped that legislation from even getting to the floor of Congress to be voted on.

I also believe that the huge deficit spending that the Democrats were orchestrating in 2007 and 2008 as soon as they took control of Congress was sucking all the money out of the banking system worldwide finance there deficit spending. If you look at the record of interest rates you can see how the Federal Reserve was steadily increasing the interest rate just six months after the Democrats took control in 2007 that was to attract the money to finance the runaway spending of the liberal progressive Democratic controlled Congress.

Doing just a little investigation on your own can prove what I’m telling you is the truth. It doesn’t take a genius to figure all this out. On this webpage you can research just about anything to do with government spending and it’s all based on government numbers it’s not my website, it all directly from the Congressional budget office and it supplies the actual downloads of the PDF for federal government spending.

http://www.usgovernmentspending.com/federal_deficit_chart.html

I made a chart that just shows the total numbers of federal government deficits and in this chart you can see how the Democrats went absolutely crazy and I mean absolutely ballistic crazy on spending as soon as they took control of Congress in 2007. The liberal progressive Democrats grew the federal debt by $900 billion the first year they had control of Congress. It is my conclusion that all this was intentional to bring the country to the point of economic collapse and that’s why you need to buy my book and find out what I have observed from the liberal, progressive Democratic Party for over 30 years. This isn’t something I read in a book this is something I experienced in my life as a person who is self-employed and employer since 1978. I didn’t get this from Glenn Beck he was still a teenager when I was experiencing all this stuff as a business owner Glenn Beck was still in school. But Glenn is 100% corect in everything he says about the economy. I think he read my book 2012.

Go look at the chart I made which is a summary made from the prior webpage given or the Congressional budget office numbers. By 1980 when Jimmy Carter was president and the Democrats had control both houses and the Senate and at that time I had already made conclusion that democrats wanted to destroy the country economically and that was 30 years ago. These people have not changed their goal as it is the same now as it was then. They may be different people but I believe they have the same goal as the Democrats that were in office back then in 1980. Jimmy Carter was president from 1977 to 1981 with a democratically controlled Congress they brought this country to its knees. It was as intentional then as it is now from 2007 to 2011. It is just a repeat of history and history always seems to repeat itself.

See my chart here federal deficit spending from 2001 to 2012.

https://jamesgarrett42.wordpress.com/2011/01/18/will-america-survive/

You won’t even be able to paper your walls with the worthless paper money because most of the money only resides on computer hard drives as digital money. This means you can’t even joke about papering your wall with the worthless paper dollars. Maybe you can gather up all the hard drives and make something out of them.

2012 What's really going to happen in 2012

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Hyperinflation is a condition in which prices increase rapidly as a currency loses its value. Formal definitions vary from a cumulative inflation rate over three years approaching 100% to “inflation exceeding 50% a month.” In informal usage the term is often applied to much lower rates. As a rule of thumb, normal inflation is reported per year, but hyperinflation is often reported for much shorter intervals, often per month.

The definition used by most economists is “an inflationary cycle without any tendency toward equilibrium.” A vicious circle is created in which more and more inflation is created with each iteration of the cycle. Although there is a great deal of debate about the root causes of hyperinflation, it becomes visible when there is an unchecked increase in the money supply or drastic debasement of coinage, and is often associated with wars (or their aftermath), economic depressions, and political or social upheavals.

The main cause of hyperinflation is a massive and rapid increase in the amount of money, which is not supported by growth in the output of goods and services. This results in an imbalance between the supply and demand for the money including currency and bank deposits accompanied by a complete loss of confidence in the money, similar to a bank run. Enactment of legal tender laws and price controls to prevent discounting the value of paper money relative to gold, silver, hard currency, or commodities, fails to force acceptance of a paper money which lacks intrinsic value. If the entity responsible for printing a currency promotes excessive money printing, with other factors contributing a reinforcing effect, hyperinflation usually continues. Often the body responsible for printing the currency cannot physically print paper currency faster than the rate at which it is devaluing, thus neutralizing their attempts to stimulate the economy.

Hyperinflation is generally associated with paper money because this can easily be used to increase the money supply: add more zeros to the plates and print, or even stamp old notes with new numbers. Historically there have been numerous episodes of hyperinflation in various countries, followed by a return to “hard money”. Older economies would revert to hard currency and barter when the circulating medium became excessively devalued, generally following a “run” on the store of value.

Hyperinflation effectively wipes out the purchasing power of private and public savings, distorts the economy in favor of extreme consumption and hoarding of real assets, causes the monetary base, whether specie or hard currency, to flee the country, and makes the afflicted area anathema to investment. Hyperinflation is met with drastic remedies, such as imposing the shock therapy of slashing government expenditures or altering the currency basis. An example of the latter occurred in Bosnia-Herzegovina in 2005, when the central bank was only allowed to print as much money as it had in foreign currency reserves. Another example was the dollarization in Ecuador, initiated in September 2000 in response to a massive 75% loss of value of the Sucre currency in early January 2000. Dollarization is the use of a foreign currency (not necessarily the U.S. dollar) as a national unit of currency.

The aftermath of hyperinflation is equally complex. As hyperinflation has always been a traumatic experience for the area which suffers it, the next policy regime almost always enacts policies to prevent its recurrence. Often this means making the central bank very aggressive about maintaining price stability, as is the case with the German Bundesbank, or moving to some hard basis of currency such as a currency board. Many governments have enacted extremely stiff wage and price controls in the wake of hyperinflation, which is, in effect, a form of forced savings. Because it allows them to hide their spending and avoid an obvious tax increase, governments have frequently resorted to printing money to meet their expenses. However, during hyperinflation, the monetary authorities fail to fund government expenses from taxes or by other means, because:

(1) during the time between recording or levying taxable transactions and collecting the taxes due, the value of the taxes collected falls in real value to a small fraction of the original taxes receivable; (2) government debt issues fail to find buyers except at very deep discounts

Theories of hyperinflation generally look for a relationship between seigniorage and the inflation tax. In both Cagan’s model and the neo-classical models, a crucial point is when the increase in money supply or the drop in basic money stock makes it impossible for a government to improve its financial position. Thus when fiat money is printed, government obligations that are not denominated in money increase in cost by more than the value of the money created.

From this, it might be wondered why any rational government would engage in actions that cause or continue hyperinflation. One reason for such actions is that often the alternative to hyperinflation is either depression or military defeat. In late 2001, the Argentine peso collapsed in value. Rather than printing sufficient cash for the public to carry, which they feared would start a run on the banks, the government took the peso off its dollar peg. Many international economists predicted that they would have to get a new loan from the IMF and impose shock therapy in order to avoid hyperinflation. Currency controls were imposed, tariffs were instituted, and the economy was allowed to fall into a severe recession during which unemployment hit 25%, homelessness and crime spiraled upwards, and the poverty rate peaked at over 50%.

The root cause is a matter of more disputes. In both classical economics and monetarism, it is always the result of the monetary authority irresponsibly borrowing money to pay all its expenses. These models focus on the unrestrained seigniorage of the monetary authority, and the gains from the inflation tax. In Neoliberalism, hyperinflation is considered to be the result of a crisis of confidence. The monetary base of the country flees, producing widespread fear that individuals will not be able to convert local currency to some more transportable form, such as gold or an internationally recognized hard currency. This is a quantity theory of hyperinflation.

In neo-classical economic theory, hyperinflation is rooted in a deterioration of the monetary base that is the confidence that there is a store of value which the currency will be able to command later. In this model, the perceived risk of holding currency rises dramatically, and sellers demand increasingly high premiums to accept the currency. This in turn leads to a greater fear that the currency will collapse, causing even higher premiums. One example of this is during periods of warfare, civil war, or intense internal conflict of other kinds: governments need to do whatever is necessary to continue fighting, since the alternative is defeat. Expenses cannot be cut significantly since the main outlay is armaments. Further, a civil war may make it difficult to raise taxes or to collect existing taxes. While in peacetime the deficit is financed by selling bonds, during a war it is typically difficult and expensive to borrow, especially if the war is going poorly for the government in question. The banking authorities, whether central or not, “monetize” the deficit, printing money to pay for the government’s efforts to survive. The hyperinflation under the Chinese Nationalists from 1939-1945 is a classic example of a government printing money to pay civil war costs. By the end, currency was flown in over the Himalaya, and then old currency was flown out to be destroyed.

Hyperinflation is regarded as a complex phenomenon and one explanation may not be applicable to all cases. However, in both of these models, whether loss of confidence comes first, or central bank seigniorage, the other phase is ignited. In the case of rapid expansion of the money supply, prices rise rapidly in response to the increased supply of money relative to the supply of goods and services, and in the case of loss of confidence, the monetary authority responds to the risk premiums it has to pay by “running the printing presses.”

In the United States of America, hyperinflation was seen during the Revolutionary War and during the Civil War, especially on the Confederate side. Many other cases of extreme social conflict encouraging hyperinflation can be seen, as in Germany after World War I, Hungary at the end of World War II and in Yugoslavia in the late 1980s just before breakup of the country.

Less commonly, inflation may occur when there is debasement of the coinage — wherein coins are consistently shaved of some of their silver and gold, increasing the circulating medium and reducing the value of the currency. The “shaved” specie is then often restruck into coins with lower weight of gold or silver. Historical examples include Ancient Rome, China during the Song Dynasty, and the United States beginning in 1933. When “token” coins begin circulating, it is possible for the minting authority to engage in fiat creation of currency.

As noted, in countries experiencing hyperinflation, the central bank often prints money in larger and larger denominations as the smaller denomination notes become worthless. This can result in the production of some interesting banknotes, including those denominated in amounts of 1,000,000,000 or more.

* By late 1923, the Weimar Republic of Germany was issuing fifty-million Mark banknotes and postage stamps with a face value of fifty billion Mark. The highest value banknote issued by the Weimar government’s Reichsbank had a face value of 100 trillion Mark (100,000,000,000,000; 100 billion on the long scale).One of the firms printing these notes submitted an invoice for the work to the Reichsbank for 32,776,899,763,734,490,417.05 (3.28×1019, or 33 quintillion) Marks.

* The largest denomination banknote ever officially issued for circulation was in 1946 by the Hungarian National Bank for the amount of 100 quintillion pengo (100,000,000,000,000,000,000, or 1020; 100 trillion on the long scale). image (There was even a banknote worth 10 times more, i.e. 1021 pengo, printed, but not issued image.) The banknotes however didn’t depict the number, making the 500,000,000,000 Yugoslav dinar banknote the world’s leader when it comes to depicted zeros on banknotes.

* The Z$100 billion agro cheque, issued in Zimbabwe on July 21, 2008, shares the record for depicted zeroes (11) with the 500 billion Yugoslav dinar banknote.

* The Post-WWII hyperinflation of Hungary holds the record for the most extreme monthly inflation rate ever — 41,900,000,000,000,000% (4.19 × 1016%) for July, 1946, amounting to prices doubling every fifteen hours.

One way to avoid the use of large numbers is by declaring a new unit of currency (an example being, instead of 10,000,000,000 Dollars, a bank might set 1 new dollar = 1,000,000,000 old dollars, so the new note would read “10 new dollars”.) An example of this would be Turkey’s revaluation of the Lira on January 1, 2005, when the old Turkish lira (TRL) was converted to the New Turkish lira (YTL) at a rate of 1,000,000 old to 1 new Turkish Lira. While this does not lessen the actual value of a currency, it is called redenomination or revaluation and also happens over time in countries with standard inflation levels. During hyper inflation, currency inflation happens so quickly that bills reach large numbers before revaluation.

Some banknotes were stamped to indicate changes of denomination. This is because it would take too long to print new notes. By time the new notes would be printed, they would be obsolete (that is, they would be of too low a denomination to be useful).

Metallic coins were rapid casualties of hyperinflation, as the scrap value of metal enormously exceeded the face value. Massive amounts of coinage were melted down, usually illicitly, and exported for hard currency. Governments will often try to disguise the true rate of inflation through a variety of techniques. These can include the following:

* Outright lying in official statistics such as money supply, inflation or reserves.

* Suppression of publication of money supply statistics, or inflation indices.

* Price and wage controls.

* Forced savings schemes, designed to suck up excess liquidity. These savings schemes may be described as pensions schemes, emergency funds, war funds, or something similar.

* Adjusting the components of the Consumer price index, to remove those items whose prices are rising the fastest.

None of these actions address the root causes of inflation, and in fact, if discovered, tend to further undermine trust in the currency, causing further increases in inflation. Price controls will generally result in hoarding and extremely high demand for the controlled goods, resulting in shortages and disruptions of the supply chain. Products available to consumers may diminish or disappear as businesses no longer find it sufficiently profitable (or may be operating at a loss) to continue producing and/or distributing such goods, further exacerbating the problem.
 
Hyperinflation chart gold to mark in 1919 to 1923

The chart shows set price for German marks to buy one ounce of gold. Lets do the math to figure the percentage of hyperinflation and to see how quickly once it starts how fast money can devalue. From January of 1919 to September of 1919 the paper currency had an inflation rate of 293%. This is in just 9 months; just imagine that happening to the Dollar. The price of a gallon of gasoline is now at $2.80 with a 293% inflation rate would go up to $8.20 a gallon.

From September of 1919 to January of 1920 or just three months later the hyperinflation for that one year period of 1919 was 788%. The price of a gallon of gasoline now in April of 2010 at $2.80 with a 788% hyperinflation rate would go up to $22.40 a gallon. To put 20 gallons of gas in your truck would cost $448.00. That’s probably your entire take home pay. What about food? Let’s do the math on that if you now spend $150.00 a week with a 788% hyperinflation rate it will cost you $1,182.00 to buy one week’s worth of food. It should be obvious that except for the wealthiest people in the country or the top 10% of the wage earners. No one can afford this kind of hyperinflation and wages will not be able to adjust fast enough to save anyone from this scenario. Also what about all you’re other bills like rent, electricity and credit cards? They will go unpaid and the financial system will collapse very quickly as we are talking about 90% of the population will not be able to pay their bills.

We as a people can’t afford even a 100% inflation in a 12 month period. My purpose here is to show the public how quickly things can go wrong. I believe this is exactly what will happen in 2012. Allow me to explain further why this happens so quickly once it starts. First it’s our foreign trading partners where we get 70% of all our products and commodities from and they lose confidence in our paper currency. Our foreign trading partners demand more paper for their products. This forces prices up and inflation rises by that amount and very soon they start charging at an anticipated inflation rate above its current value for holding the currency until they can spend it. It’s that expectation of future inflation that forces the inflation to accelerate. Take any calculator and hit the keys 2 x 2 a few times and see how fast it gets to one thousand. Hyperinflation works just like that. Once hyperinflation starts its impossible to stop until the currency becomes worthless. This is what Americans have to prepare for. I could show ten other examples but they all work the same way for the same reasons.

Here is the bigger problem this hyperinflation will cause all our governments to collapse, both the federal government and the states local governments as they both use the same worthless currency. This is the part that the liberal progressives never bothered to figure out once they collapse the economic system. We have a $1.6 trillion federal deficit for the year 2010 and in 2011 it’s supposed to be $1.3 trillion. At just a 100% inflation rate that $1.3 trillion goes to $2.6 trillion and if hyperinflation is higher than the $2.6 trillion deficits number just gets that much bigger. Government spending is not immune to inflation. Government collects more in taxes but they get 25 % while everything costs 100% more. This is part of what forces the acceleration of money creation and its the cause of higher and higher hyperinflation to sustain the governments and the countries needs of fuel and other necessary products.

The big question is where would we get $2.6 trillion from? We will not be able to barrow one cent of it. No one will be willing to lend us money under these circumstances and only a complete idiot would even think about it. This is the current situation in April of 2010. So we will just print up the paper money. This is what we are doing now but there not telling you. This is exactly what makes it even worse month by month. This is what will collapse our currency and the government and this will take a lot of explaining of exactly how it will happen. For that you will have to buy the book 2012 what’s really going to happen in 2012.
2012 What's really going to happen in 2012

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In the next 18 months there will be many very obvious signs that everyone will be able to see and follow our currencies demise. The evidence will be found in the two most noticeable commodities we purchase every week and that’s the price of Gasoline and food. While the governments’ bureau of labor and statistics is telling us we have no inflation reported to be 1.1% the cost of Gasoline and food will be skyrocketing upward.

 In the last report out December 15, 2010 the headline number on inflation came out at .8% or 8/10 of one percent. These numbers are calculated on a monthly bases and it seems no one ever looks at what’s in the reports. Here is the increased cost of the two most important items in America. The CPI report shows the last 12 month gasoline has increased 9.5%. Then if we look at food over the 12 month period we get 1.4% increase in price. The total of all items in all categories clams’ inflation is running at 1.1% per year. I think we all know that something is not right with these numbers. The cost of gasoline in just the last 3 months is up 20% where I live and I have seen that in other areas of the country is a lot higher.

 But the November Producer Price Index (PPI) for finished goods surged 0.8 percent is doubles most economists’ estimates. Moreover, the inflation is not stemming just from rising energy prices. Overall, the cost of food rose 1 full percentage point in November, which is equivalent to 12 percent annual inflation rate. Egg prices led the way higher, jumping 23 percent in November, while the price of fruit jumped an astounding 14 percent. Think these are one-time, freak price jumps? Think again, because since the first of this month… the price of corn is up more than 3 percent … coffee is up more than 8 percent … sugar is up 8.49 percent … oats are up nearly 6 percent … while cotton prices are up more than 16 percent — all of this in just 15 days!

 The consumer price index hasn’t started jumping yet. But just like night follows day, it will as companies pass on higher wholesale costs. The Fed SAID it would continue its QE2 policy, saying it would “promote a stronger pace of economic recovery” … But that reckless policy is driving interest rates skyward! In fact, two-year Treasury yields have doubled in 29 trading days. Five-year yields have surged 102 basis points, or 1.02 percentage points, while 10-year yields just hit a seven-month high. Thirty-year municipal bond yields soared to a 16-month high, as thirty-year mortgage rates jumped to the highest since the tail end of the spring home buying season.

 So not only is the Fed failing to promote recovery by driving borrowing costs down It’s actually hindering the recovery by driving costs up. Yet in the Fed’s fantasy world, everything is peachy keen! With interest rates rising and the Fed continuing to print money and buy bonds, despite a zero percent success rate so far, here comes hyperinflation!

 The price of gasoline has gone from under $2.50 a gallon to $3.00 that is a 20% increase in just 3 months. I do my own shopping and I believe food has gone up more than 1.4% in the last year. Any way my point is what we really need to buy every week is climbing at a much greater rate than the reports show. This is nothing new as I have notice this to be the case all my years of running a business. But in the following months because of the intentional devaluation of the dollar, the cost of petroleum products and food will increase as the dollar devalues against all other currencies. This is what happens when a country intentionally devalues its currency. Ben Bernanke has said we need to create some inflation because it’s to low at 1.1%.

 So here is what’s taking place right now and it’s the truth. I will explain how this will get out of control real fast. We will start with what the news media is referring to as QE-2 which translated means quantitative easing. The amount of money they are going to print or digitize is $600 Billion. Bernanke claims the purpose is to create liquidity in the banking system. The true reason is to finance the federal deficit of $110 billion a month. There are just moving digits from one Colum of a computer program and moving the digits to another Colum, there not even printing the money anymore. This has to be added to the federal deficit spending for all of 2008 and up to the end of 2010 and that dollar amount is around $3.9 trillion. Now we are adding $600 Billion for a total of $4.5 trillion. The money is getting into the streets with monthly government spending on entitlement programs.

 This QE-2 money will run out buy April of 2011, so what happens next? QE-3 will be another $600 billion and Ben Bernanke said this would be the case if needed and it will be needed. There’s no end in sight with the federal budget deficits of 1.55 trillion for 2011. That’s $129 billion on average added each month to finance the gap between government revenue and government spending. The QE-3 will run out by September 2011. So what comes next? QE-4, 5 and 6 there is no end in sight.

 Why does this matter and why should you care? As the Federal Reserve keeps propping up federal spending deficits over the short period of the next 18 months we will destroy what confidence is left in our paper currency. This means the prices of crude oil from were ever we do import it from will continue to rise with the continued intentional devaluation of the dollar. We import 72% of all the crude oil we use and we are not in control of the price. American oil companies only control 3% of the world oil supplies. Well why does this matter? For every dollar a gallon the price goes up it takes $27 billion each month out of Americans pockets they would otherwise spend on something else. We are not buying additional product we are just paying a lot more for it. $4.00 a gallon gasoline by July of 2008 is part of what caused the last recession or the one we are still in that lead to a worldwide bank collapse. That recession started in December of 2007. If you find a chart of the price of gasoline and a chart for unemployment as the cost of gas went up so did unemployment. They move in lockstep for the following reasons.

 On a yearly base $1 in additional cost to a gallon of gas is about $300 billion that goes missing for other purchases. I believe the threshold for decline in other economic activity due to the price of gas is $2.50 a gallon and once we get above that we start to lose jobs because all that money goes missing. There is also the secondary affect the higher price of crude pushes up the cost of food and all other energy related categories. There is also another problem and its ethanol that is added to the gasoline. This comes from corn and corn is also the main food use for cattle chickens and all farm animals. As we burn ethanol up we are forcing the cost up for farmers to feed their animals and this has a direct affect on the cost of all our food supply on top of the higher price from the higher cost of crude oil.

 In 2011 we can look for much higher Gasoline prices and much higher food prices. It will look like this by the end of 2011, gasoline will double to $5.00 a gallon and food will be up about 30%. The Bureau of labor and statistics will be telling us we have just 5% inflation. This is exactly what they were telling us in July of 2008 when gasoline was $4.00 a gallon in most parts of the country and in Crazy left coast California gasoline was over $5.00 a gallon. Most of the price increase in 2008 was from January to July or in just 7 months. That was all from speculation in the commodities market, not from the intentional devaluation of the dollar.

 The inflation of the currency has a quantitative number of jobs losses that will come from the money gone missing from the higher gas prices. Based on my numbers and numbers from the department of labor, I have calculated that for every $1.00 a gallon or $27 billion each month the job cost is 183,828 jobs that disappear with the money. On yearly bases that is 2,205,936 lost jobs and this doesn’t count all the income lost from the jobs incomes that no longer exist that will forces even more job losses. This is already happening in October and November of 2010 the last two unemployment reports have shown in the body of the report not the headline number, we have lost 503,000 jobs from the total number of jobs in the economic system. This coincides with the rising price of crude oil as it has crept up for the last three months. The headline numbers were positive, but just like all government reports they have diluted them in such a way the true state of the economy doesn’t show up until 3 to 6 months later, if it shows up at all. The interior of the reports show a decline in the number of people with jobs was negative 330,000 for October and 173,000 for November. So get ready for a wild ride as prices go back to $4.00 and then to $5.00 by the end of 2011

 The higher cost of food has the same results as the higher price of gas. Food has to be replenished on weekly bases we eat it and it disappears and if it cost more for the same amount of product the money just disappears. The money doesn’t exist anymore to purchase other products and the economy slows even more and even more jobs are lost. Currently the unemployment rate is at 9.8 % for November 2010. I expect at the very least we will lose at least another 6 million jobs by the end of 2011 if the above scenario plays out. This will put the unemployment rate at around 13% to 14% by early 2012, which will be catastrophic. The value of the dollar will have its ups and downs because of Europe’s economic problems but the long term direction over the next 18 months will be the same, a severe devaluation of the dollar. So what happens next?

 If you want to know the whole story on how we got into this position and were all this will take us and our country you have to buy my book called 2012: what’s really going to happen in 2012. There are no prophecies in the book, it’s not about wizards or any hocus pocus codes. It’s about sound economic practices that we have ignored within our own governments policies and how the very government we expect to protect the country has planned our demise and why. I show the proof based on simple math, a little common sense and the current history of the last 10 years to get us right where we are. 

http://tiny.cc/ns56s

2012 What's really going to happen in 2012

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I knew for the last 30 years the democrats wanted to do what they are doing today. Little by little liberal, progressive democrats over the very long period of time of 100 years have been changing the country slowly to socialism. I watch Glenn because he affirms what I already know to be true, but he teaches a lot more in detail and it’s like going back to school when he gets out his black boards. I hear he has three now.

 I wrote a book 20 years ago that predicted what is going on today in our politics and our economy. We are making the final changes to a proven failed political and economic system of socialism. Anyone who says that Europe’s doing OK needs to take a better look. Europe’s economy has been in a constant state of recession for over 40 years. Their normal unemployment rate is always above 10%. There’s very little industry because of supper high taxes on business. In France their two biggest industries are wine and cheese and that’s not a joke, those are the facts. The people who do work in the private sector are taxes at 70% when adding their payroll taxes and there sales taxes on products. For example they have a $5.00 a gallon gasoline tax to pay for there socialized healthcare system.

 Here is our big problem, we can’t afford anywhere near a 70% taxes and pay our existing bills to. Europe started out as socialist countries after the Second World War. They were rebuilt under the socialist economic model. We are structured under a capitalist model and were charging to hard left socialist. The country is already bankrupt. Where is all the money going to come from to support all these new social programs as we go all the way to a European style of socialism? I have done the math and the moneys just not there, even with the higher taxes included in all these new programs. It’s just not economically sustainable from the start.

We don’t have to wait 4 years to see if it works. The negative economic effects from the new socialized healthcare will be Immediate. In 2011 the new healthcare insurance premiums will have a direct negative effect on the economy. There are 180 million Americans with paid health insurance coverage. Everyone I have talked to has to pay an increased premium of $1,200.00 to $3,600.00 each person on their policy. Takeing the lower amount of $1,200.00 and multiplying that times 180 million Insured people will cost Americans $216 Billion in 2011. We are not getting more of a product or service we are just paying a lot more for the same thing. This is the definition of inflation, when costs go up the money disappears into tin air.

 It’s not so much about the cost of the socialism today as it’s about the confidence of the American people. Even before the jobs are lost and the taxes are taken to support the new socialism. Then we also have to consider the confidence of our foreign trading partners, will they lose confidence in our currency? Will they be able or willing to purchase our debt bonds to finance all our existing and all our new socialism when they know they can’t afford their own? I say no they won’t buy our debt bonds, since China has already dumped $50 Billion back into the market. There is a trick the chinese could use to combat our money printing and your going to love this. I expect if they do continue in the future to purchase our debt they may play the same game we are. The chinese government has a printing press like we do and they can print or digitize their currency to purchase our phony money with their phony money. This could offset their looses in the face value of our debt bonds and at the same time get paid interest on their phony money.

 Everything Glenn Beck says will come true and we only have to wait 2 years and by 2012 we will see it all unfold. Glenn has 10 million followers on the radio and up to 3.5 million on Fox news. That compares to MSNBC 350 to 500 Thousand. For the nut job people say Glen Beck is, he has as many 10 times as many followers as other like kind news programs. MSNBC says it’s because Americans are stupid and that could also be part of why there ratings are so low. I love Glenn Beck’s message.

2012 What's really going to happen in 2012

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 • A new 3.6% tax on all investment income including capital gains. That means that the capital gains tax rate (including California state tax) will rise to 33.9%. The tax on dividend income will rise from 15% today to 53.7% including California tax.

 • Additional Medicare tax on self employment income and wages. This removes the current cap on wages subject to this tax and it will effectively move the top income tax rate from 35% to 43.4% within a couple of years. Add in the California tax again and would then be close to a 54% marginal tax rate. I believe that this is the highest of any major industrialized country. But because spending is so high we would still have $1 trillion-dollar annual deficits even after this tax.

 • There is a 2.9% tax on all medical “devices”, which basically means everything used in a doctor’s office or hospital. Including gowns, syringes, and the like. This will increase health care costs for everyone who does not get free government insurance.

 • The deduction for Medical expenses is currently limited to those expenses that exceed 7.5% or your income. This will be raised to a threshold of 10% of your income. This means that fewer people will get any tax relief from medical expenses they pay for themselves.

 • There are various taxes on anything a person might do to pay for their own medical expenses. Things like Health Savings Accounts, Cafeteria Plans, and Flexible Savings Accounts are ways for people to save their OWN money for their OWN medical care on a pre-tax basis will be limited and taxed. This is all part of the way that President Obama gets to government-run health care by making it illegal or costly to pay for your own care so you have to go to the government.

 • A 10% tax on tanning services. I call this the “Jersey Shore tax”. This one has to be really upsetting to ‘The Situation’, Snookie, and Pauly D.

 • A tax on self-insured health plans. This is another penalty on those who try to pay for their own health care.

 • A new tax on pharmaceutical manufacturers. This will raise the price of drugs for everyone who does not get them from the government for free.

 • A new tax on “Cadillac” health plans. This is an up to 55% tax on any health insurance that costs over about $800 per month including employee and employer contributions. This tax does not apply if you are a union member or your plan is from AARP or Blue Cross Blue Shield of Michigan. These are major Democratic constituencies and they exempted them. For everyone else, this discourages comprehensive health coverage. Isn’t that what the President says he is trying to achieve? Like most of what the President says, his actions are not even close to his words.

  There is a new tax on all ‘for-profit’ health insurance companies (except for a few favored ones). This will also raise the costs of premiums for everyone not getting free care from the government.

 • If you don’t buy health insurance (as dictated acceptable by a new federal czar), you will be fined up to 2.5% of your income even if you pay all of your medical expenses yourself. If your company does not provide said health insurance to all employees, the company will be fined up to $2,000 per employee.

  61% of Americans (including both Democrats and Republicans) are against the bill, those for it the majority have no idea about the taxes included in it. The 2300 page bill was finally released to Republicans TODAY and will be voted on in less than 48 hours.

 2012 What's really going to happen in 2012

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