In the last few years the world has seen one economy grow like never in world history—China has exploded on the world scene. A few years ago China made no laptops and now makes more than 40% of them that are sold worldwide. They produce about 40% of the world’s cell phones and half the shoes of the world! The Chinese make the television sets and Americans watch them. Chinese peasants are saving 40% of their meager incomes and Americans are saving none! Of course, since we spend 10% more than we make, it is impossible to save.

China’s economy has slowed and they have sold 520 billion dollars in U.S. Treasury Bills in the past 15 months! They are dumping their U.S. debt; moreover, this month China announced that they purchased 600 tons of gold in one month! What does China know that others don’t know? Furthermore, economists believe that China is not dumping dollars because of retaliation against the U.S. but because of massive internal problems.

Millions of U.S. jobs have been lost to Mexico, India, and the rest of the world. Bankruptcies, personal and corporate, are at an all-time high. Detroit; Jefferson City, AL; Orange County, CA; Stockton, CA; and San Bernardino, CA have gone bankrupt to the tune of billions of dollars. And note that three of the five are located in California ruled by “Moonbeam” Brown.

Montgomery Ward, a solid fixture in America’s past, has been long dead and not even known by many Americans. Gone is Enron, Pacific Gas and Electric, Radio Shack and others! A & P is gasping for breath and will be dead in a few months; a sickly Kmart (who bought sickly Sears) and J.C. Penny are in their death throes; Abercrombie & Fitch is dying for which no one should mourn; even IBM is valiantly struggling to stay alive. GM and Chrysler are still breathing only because U.S. taxpayers (Obama) bailed them out of deep water. The clock is ticking and Americans are sleeping. But “after all, this is America” and “it can never be like it was during the Great Depression.” Can it?

However, financial experts like James Cook say otherwise: “In a country where savings are negligible, spoiled and pampered people are commonplace, millions of people enjoy subsidies and half the people can’t scrape a thousand bucks together, you have the formula for national bankruptcy,… and confiscatory government.”

Michael O’Higgins, Money Manager answers, “When you say it can’t be like 1929 through 1931 [when stocks lost 89 percent of their value], you’re right. It could be worse.” Fear mongering? No, just the facts.

Dr. Kurt Richebacher, financial wizard was asked: What’s the nature of this recession you predict? He answered: “It will prove unusually severe and long.”

Bill Buckler, wrote, “Asian Central Banks alone hold $US 1.4 TRILLION in liquid U.S. ‘paper.’ If just a part of this immense stock of funds lent to the U.S. were to start to run for the exits, the entire U.S. financial system would be forced up against a wall and then off a cliff.” The stampede has started. In the January 23, 2004 issue of the Asian Times they opined: “All Beijing has to do is to mention the possibility of a sell order going down the wires. It would devastate the U.S. economy more than any nuclear strike.”

We are told by the talking heads on television that the stock market will bounce back, but they don’t tell viewers that the market also bounced back following the crash in 1929 only to crash later! Besides there is more to the economy than the stock market.

While I am by no means a financial expert I can read graphs and make comparisons. I would not be in the stock market except for gold and silver stocks or unless the funds I invested in had some kind of insurance guarantee. But then if the whole economy goes down the tubes, most “guarantees” would be worthless. I would use any “bounce” in the market to get out especially if I could make a profit. Then I would put that money in rental property. In most areas you can purchase doublewide mobile homes for a very reasonable amount and rent them for $600 or more per month. Before making a commitment you should check all local ordinances to make sure there are no prohibitions regarding mobile homes.

Try to scale down your lifestyle in preparation for difficult times ahead. Do you (or your adult children) really need such an expensive home? Or automobile? Why not purchase a smaller home or smaller car? It is incredible that so many homeowners are paying $1000 and $1,200 per month for a home when they can hardly make the payments. Many have second mortgages having been told to “take your cash value” in your home; however, your home isn’t a life insurance policy. It is your home. And home prices fluctuate. Very foolish people take a second mortgage on their home to purchase other items or to pay monthly bills! That is a scenario for disaster. You can’t borrow yourself into financial freedom just as you can’t fornicate your way back to virginity.

The money managers in the U.S. Government have kept interest rates down so that young couples find it difficult to resist borrowing to finance their high standard of living, but such decisions are insane. Thus far, it has worked. In fact, that has probably been what has kept our nation from going bankrupt but Ludwig von Mises was right when he advised: “Expansion of credit does lead to a boom at first, it is true, but sooner or later this boom is bound to crash and bring about a new depression.”

Those of you who are in your 60s should look very closely at your finances. If you have a choice of taking a lump sum retirement or monthly payments, I would go with the lump sum. Many pension plans are billions of dollars underfunded. I don’t mean to scare you but some funds may not survive the next two years. Washington insiders are very concerned about pension plans, and the federal insurer undergirding 31,000 U.S. pension plans confessed that there are “multi-faceted and profound challenges” ahead for Americans.

It is time to reevaluate your financial position, and make decisions to cover various contingencies whenever possible. Simplify your life, scale down your lifestyle, and get out of debt.

The party is almost over.

http://bit.ly/1iMLVfY Watch these 8 minute videos of my lecture at the University of North Dakota: “A Christian Challenges New Atheists to Put Up or Shut Up!”

One portentous indication of trouble just surfaced on Jan. 3 when it was revealed in a headline: “Billionaires Dumping Stocks.” The article on Newsmax website reported that Warren Buffet is “dumping shares at an alarming rate.” In fact, he sold 19 million (no misprint) shares of Johnson & Johnson and he is very disappointed in Procter & Gamble, Kraft Foods, and others.

Billionaire John Paulson also dumped 14 million shares of JPMorgan Chase, and all of his shares in Family Dollar and Sara Lee.

Then there’s billionaire George Soros, the radical leftist that conservatives love to hate, who sold almost all his shares of JPMorgan Chase, Citigroup, and Goldman Sachs. Obviously, George doesn’t have any confidence in financial stocks. Humm, wonder what he and his fellow billionaires know that we don’t know?

Maybe these wealthy elite know that a massive correction is coming on Wall Street. Highly revered economist Robert Wiedemer, author of the best seller Aftershock, says that the stock market could fall 90%! Wiedemer predicted the collapse of the housing market in an earlier book.

Standard and Poor’s suggested that Wiedemer’s prediction “demands our attention,” while Philip Gross, founding CFO of American Online said the book was “A compelling argument for a chilling conclusion.”

CNN reported that about half of Americans agree with the doomsday predictions: “48% [of Americans] see a second Great Depression.” I think it will be called, “the Greatest Depression.”

We must remember that our government is $17 trillion in debt, almost $150,000 per taxpayer! But then we must take our pencil from behind our ear and add Social Security obligations, Medicare, etc., totaling more than $100 trillion!

The average American needs to look at the facts, analyze his personal financial condition, and make some difficult decisions. Does he believe Obama who said, “The private sector is doing fine,” or does he consider that statement like Obama’s assurance that “You can keep your doctor, period.”? Or maybe he believes the Washington Post that assured us with a headline: “No Housing Bubble to Pop” or the Washington Times’ headline, “No Housing Trouble,” or the conservative National Review’s article, “Hate to Burst Your (Housing) Bubble, But There Isn’t One.” Or the revered Wall Street Journal: “Housing Bubble? The Market Won’t Pop.” Pop, pop, pop. They were all wrong!

Or the average American could believe the financial wizards on the television shows who never said a word about the imminent massive collapse of Enron in December of 2001. The financial experts were telling us to buy right up to the collapse! And they never apologized!

Everyone knows that those experts and many others were wrong about the housing bubble as they have been wrong about many things.

So, when the stock market hits bottom, 50% of Americans are out of work, bankruptcies soar skyward, and cities and states go belly-up as is happening as I write, you will know the nation is on the cusp of a shutdown mode. Does that mean riots in the streets accompanied by martial law? Wiedemer thinks not, since “that did not happen in the Great Depression.” However, the astute economist may know finances but he apparently doesn’t know human nature: this disaster will be far worse than the 1930s and Americans today don’t have the character those citizens had. Plan on it: panic, suicides, hunger, food riots, gang violence, etc. A recent British study declared that we were “nine meals from anarchy!” I don’t feel lonely anymore!

How do the optimists in their rosy glasses defend their positive view in light of our massive debt? Today, the U.S. has more government debt than any country in the history of the world! In fact, we have more national debt than all the nations in the European Union put together!

So, what is the Fed’s answer? Well, the Federal Reserve has been printing $85 billion per month; that’s more than a trillion dollars a year! That means the dollars in your pocket are worth less, or is that worthless?

Presently, when a nation wants to purchase a product from us or any other nation they usually make payments in U.S. dollars. They could choose the British pound sterling, the Chinese yuan, or the euro; however, only a few nations bypass the dollar. That is going to end. We have begun to see the “flight from the dollar.” China, Russia, and the United Nations, as well as some Muslim nations are already on record that they want to back off the dollar as the world’s reserve currency.

Why is the U.S. dollar so special and is used by almost 70% of nations as the reserve currency? It is because the market for U.S. Treasury securities is “liquid and deep.” “Liquid” means the dollar can be sold quickly and “deep” means a large amount of dollars can be sold without impacting the price of the currency.

When I have traveled in Europe, Asia, the Middle East, Australia, etc., I never changed dollars into the currency where I was traveling. I always used U.S. dollars but those days have changed. It is now common for the dollar to be refused as I experienced in Africa and Japan.

Sam Zell, the 60th richest man in the U.S., told CNBC: “My single biggest financial concern is the loss of the dollar as the reserve currency. I can’t imagine anything more disastrous to our country…I think you could see a 25% reduction in the standard of living in this country if the U.S. dollar was no longer the world’s reserve currency.”

James Richards wrote in his Currency Wars, “If the currency collapses, everything also goes with it…stocks, bonds, commodities, derivatives and other investments are all priced in a nation’s currency. If you destroy the currency, you destroy all markets and the nation.”

In light of the above facts, it seems we are in the slowdown, and the shutdown or collapse is starring us in the face. So, how will the politicians extricate the U.S. from the bottomless pit– dug by the same politicians? Enter the shakedown phase.

The London Telegraph of January 4, 2014 reported, “Much of the Western world will require defaults, a savings tax and higher inflation to clear the way for recovery as debt levels reach a 200-year high, according to a new report by the International Monetary Fund.” Author Ambrose Evans-Pritchard opined that the debts of many nations are so huge that it “will require a wave of haircuts, either negotiated 1930s-style write-offs or the standard mix of measures used by the IMF in its ‘toolkit’ for emerging market blow-ups.” He says that what debtor nations must and will do is use huge taxes, massive inflation, and debt repudiation to stay afloat. He says we will all get a close-cut financial “haircut.” I think he means a scalping, not a haircut.

That amounts to a shakedown. There will be no other choice. Weary, worn, wrathful citizens will be forced to pay for the failure and corruption of generations of pompous, prissy, profligate politicians.

Slowdown, shutdown, or shakedown? All three are in your future ending with a showdown! I’m afraid that the sky is falling after all.

http://bit.ly/1iMLVfY  Watch these 8 minute videos of my lecture at the University of North Dakota: “A Christian Challenges New Atheists to Put Up or Shut Up!” And pass it on!

Copyright 2014, Don Boys, Ph.D.

It was a fantastic year when the stock market boomed and major U.S. companies made huge profits in domestic and foreign markets. New technology totally changed many industries, and financial pundits told us that we were on the edge of a new level of prosperity. Politicians, business leaders, and economists told us that the future was incredibly bright. No, that was not in recent years but in 1929! From May of 1928 to September of 1929, stocks jumped forty percent! In fact, trading in 1929 was more than twice that of 1928.

Newspaper headlines on Oct. 24, 1929 (Black Thursday) screamed, “Wall Street in Panic as Stocks Crash.” President Hoover (not “President Roosevelt” as our newly elected VP declared!) assured the American public that it was only a little correction, but the prosperous became paupers overnight. The best stock on Wall Street was General Motors, selling for 73 and after the crash, it fell to eight!

Men jumped from skyscrapers when their wealth was wiped out in the market. Powerful men were reduced to selling fruit on the streets for pennies. Bread lines were a block long. U.S. unemployment was 25% and about 10,000 banks failed. In addition, our nation did not come out of that depression until the Second World War, twelve long years! Better keep that fact in mind.

It must be kept in mind that even after the stock market crash, political, business, and financial leaders were telling all who would listen that it wasn’t really that bad! The U.S. Secretary of Commerce reported in early 1930 that business was doing well! He said that 1930 would be a “normal” year and those who predicted prolonged depression were “foolish.” Then, on Dec. 6, 1930, when the market had plunged through its 1929 low, unemployment was rising sharply and business and bank failures were setting records, he said in a radio speech, “We have weathered the storm and signs of stability and recovery are already appearing.” He must have been president of the League of the Willfully Blind!

Treasury Secretary Andrew Mellon assured the nation in early 1930, “I see nothing in the present situation that is either menacing or warrants pessimism.” Mellon must have been vice-president of the League.

The New York Times jumped into the parade in its Jan. 24, 1930 issue with headline blaring,
“TRADE RECOVERY NOW COMPLETE—No Stimulants Needed—PROGRESS IN ALL LINES BY EARLY SPRING IS FORECAST.” Many major leaders gave such false assurances with no solid, sensible, or sane reason to believe them. America was being broken, and our leaders were playing politics to keep everyone from panicking.

We are hearing the same kind of assurances today as the world is brought to its knees. (May not be a bad position!) So get ready for a wild ride that may last for years and be far worse than the hot shots in Washington and New York are telling us. Remember that these are the same people who only now are using the word “Recession” while some of us are using the word “Depression.” It may be that in a few weeks everyone will use the word, “Panic.”

Economist Richard Yamarone said recently, “There is no light at the end of the tunnel, and the outlook is pitch black.” With stocks in a free fall, U.S. jobless number is now at 10 million, major banks and corporations going belly-up, it is almost too late to lash yourself to the mast to keep from being washed overboard. Don’t even open your monthly 401-k statement. It may be worth only $401.00!

While pessimism is not my nature, I see a dark cloud on the horizon. First, a major Depression followed by massive inflation. Informed Americans should make plans for some very difficult years ahead. Because life is so uncertain, every thoughtful person should always be prepared for anything. Another terrorist attack is coming with only the date unknown; a major natural catastrophe totally unforeseeable; a major race war touched off by some religious or racial nut; or a total collapse of the economy resulting in no jobs, no money, no gas, no food, and no silver lining. Get ready today for whatever may come tomorrow.

I have written before that we don’t have to know the future to prepare for the future. So prepare today. The most compelling preparation is spiritual. Do you know Christ in forgiveness of sins? Are you in a good church that helps provide support? Take care of those things immediately.

Then head for the store and purchase what you need to stay alive. Humans need, that is absolutely need, air (can’t do much about that), water, food, and shelter. Everyone should maintain a rotating food pantry of non-perishable foods such as dried beans, rice, salt, honey, and canned foods (which don’t require cooking) to name a few to get you thinking. Also, think about essential personal products and include toilet paper, soap, and medicines.

This is a good time to prepare a garden spot if you have any ground to use so you would need garden tools and other supplies as well as non-hybrid seeds. It would be good to plant some fruit trees.

Simply put: For the storm that is approaching, you need God, groceries, gold, guns, and a garden. Forget about living well because those days are gone for a long time, if not forever. Look for this headline: PANIC ON WALL STREET AND MAIN STREET!

And that’s from an optimist!