Sep 272011
 
Historic data of the 3 months US treasury bills

Here is a list of the most worrying signs indicating an imminent escalation of the financial situation in the US and Europe. As, again, nothing has been solved during the 2008 recession the coming economic collapse could be the worst in 100 years.

The economic system that most of the world relied on since the second world war is based on fiat money and never-ending increase of consumption and production. It failed to address and regulate the requirement that in order to keep businesses growing the purchase power of the many (99%) needs to grow -  not the few (1%).

For decades, we were not living in a world of free trade but large-scale / accelerating corporatism and artificially enhanced consumerism peppered with planned obsolescence.

The concept of free trade does not work for the people (“the many”) anymore  when the people are effectively manipulated into their needs (not only via marketing but also by the profit maximizing media and general education).

 

List of information indicating an imminent economic collapse (not the usual regular recession) in Europe and the US

The following lists is a compilation of some of the most worrying data in my opinion:

  1. Three months US treasury bills show less confidence in the market than at anytime since 1943 – see chart 1. This also means that the federal bank (FED) will find it very hard to keep the gold price low to temporarily stabilize its fiat currency with the e.g. gold carrying trade – even with the current highly unusual negative gold lease rates. [update dec 2011: more gold lease manipulation]
  2. The applied economic model has been based on ever-increasing consumption and debt for nearly a century in the US. Growing businesses rely on the increasing purchase power of the many not the few which has not been followed. Inequality in income has been increased for 3 decades in the US and UK – see Gini index
  3. The number of trades i.e. volume in the share market has been a small fraction compared to the years before 2008 see chart 2.
  4. US mainstream media are not even pretending anymore to be objective or democratic even in presidential election campaigns. Also last year’s freedom smashing legislation and population control bills are also hinting the government is preparing for major civil unrest and a collapse.
  5. The US does not even try to solve the debt crises seriously (they only cut increases in spending or tiny cuts over many years) but instead focuses on attempts to bring down the European economy first by aligning themselves with China and convince  everyone to buy US treasury bills. It seems the US is hoping to use their 900 military bases and military dominance to force oil exporting country to keep trading in dollars.
  6. When Barack Obama first took office, the official U.S. unemployment rate was 7.6 percent.  Today it is 9.1 percent. Chart 6 shows the spiking mean duration of unemployment in the US.
  7. The number of bets against the S&P 500 for the month of October is absolutely astounding.  Somebody is going to make a large amount of money if there is a stock market crash this October.
  8. Investors are pulling a huge amount of money out of stocks right now.  Do they know something that we don’t?  The following is from a report in the Financial Post….Investors have pulled more money from U.S. equity funds since the end of April than in the five months after the collapse of Lehman Brothers Holdings Inc., adding to the $2.1 trillion rout in American stocks.
  9. An increasing number of unemployed Americans have become so desperate that they have started to look for work overseas.  For example, the number of Americans that are submitting applications for temporary work visas in Canada has approximately doubled since 2008.  Other Americans are even willing to learn foreign languages and travel to the other side of the world if that is what it takes to land a decent job.
  10. Siemens has pulled more than half a billion euros out of two major French banks and has moved that money to the European Central Bank.  Do they know something or are they just getting nervous?
  11. The Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan and the Swiss National Bank have announced that they are going to make available an “unlimited” amount of money to European commercial banks in October, November and December.
  12. So far this year, the largest bank in Italy has lost over half of its value and the second largest bank in Italy is down 44 percent.
  13. After the US, Standard & Poor cuts Italy’s credit rating from A+ to A.
  14. European central banks are now buying more gold than they are selling.  This is the first time that has happened in more than 20 years.
  15. The chief economist at the IMF says that the global economy has entered a “dangerous new phase“.
  16. Israel has dumped 46 percent of its U.S. Treasuries and Russia has dumped 95 percent of its U.S. Treasuries.  Do they know something that we don’t?
  17. The middle class in most developed countries has been reduced and indebted too much to squeeze more debt out of it
  18. Both the European and the US economies are bound to collapse independently or together as both have similar exploding world record debts. According to pioneer investor, Jim Rogers, the US is in deeper trouble though.

 

Charts indicating an economic collapse in Europe and the US

The below charts underline (and are referenced by) some of the points listed above. Note: a few charts have been added since the first publication.

For example, let's say you buy a 13-week T-bill priced at $9,800. Essentially, the U.S. government writes you an IOU for $10,000 that it agrees to pay back in three months. In this case, the T-bill pays a 2.04% interest rate ($200/$9,800 = 2.04%) over a three-month period.

Chart 1: The y axis, the discount rate, can be seen as a measure of confidence in the ability of the US government to create some profit over 3 months. Notice the steep drops at recessions in 2008 and 2001 etc. The rate has stayed below 0.5% since 2009  as of Sept 2011.

 

Dow Jones Index showing dramatically reduced volume during "recovery" in 2009-2011

Chart 2 a: Dow Jones Index showing dramatically reduced volume during “recovery” in 2009-2011 indicating a severe lack of confidence that the recovery is “real” rather than perceived or created by relatively few traders. Red volume bars indicate most trades are on price reduction in other words selling pressure.

Dow Jones Index showing consistently decreasing volume since 2007

Chart 2b – added 7 Dec 2011 : Dow Jones Index showing consistently decreasing volume since 2007 even better than chart 2A. Blue line is “On Balance Volume” representing a running total of shares traded. Yellow is the long term moving average for comparison.

Dow Jones Industrial Average (DJIA) measured in gold 2000-2011

Chart 2C – added dec 17, 2011: Dow Jones Industrial Average (DJIA) measured in gold 2000-2011 shows a steady fast decline. This Chart and more indices measured in gold are at http://www.munknee.com/2011/12/investing-in-the-stock-market-is-for-losers-heres-why/

Public and gross debt in the US 2011

Chart 3A: Historical chart. Public and gross debt in the US 1940-2011. More debt was created after the recessions 2001 and 2008 while the second world war allowed for reduction of US debt. source Wikipedia

 

Chart 3B (added Dec 21 2011): Official GDP measured in commodity prices, and later (after it began to trade freely) gold. A standard commodity index (the CRB) is used up to 1975 and gold post-1975. GDP is usually seen as a proxy for standard of living. In 1971 the US abandoned the gold standard completely.

 

 

Monetary base US dollar 2011 - historic chart. The total amount of a currency that is either circulated in the hands of the public or in the  commercial bank deposits held in the central bank's reserves.

Chart 4: Monetary base, M0. US dollar 1917-2009 – historic chart. The total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank’s reserves. This can be seen as a measure of inflation but there is disagreement amongst economists.

 

Monetary base in US dollars 2011

Chart 5: Monetary base, M0 in US dollars 2006-2011. The printing of money continues.

 

USA: Mean duration of unemployment from 1948-2010

Chart 6: United States mean duration of unemployment 1948-2010. Data source: Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; U.S. Department of Labor: Bureau of Labor Statistics.

Videos of experts warning of an economic collapse in the US and Europe

 

Here is presidential candidate and bestselling author of books about economics and US foreign policy, Ron Paul‘s warning that an economic collapse in the US and / or Europe is near and high inflation and social unrest and political chaos will take place. Video from July 2011:

BBC speechless as professional trader, Alessio Rastani, talks openly about the unavoidable collapse of the economy and that investment bank Goldman Sachs rules the worldnot governments (Sept 26, 2011):

[replaced with new link on Sept 1, 2012, as original video was removed from YouTube]

William Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980, reveals shocking examples of large scale fraud within the financial industry and its regulators. He describes how the financial meltdown is driven by fraud, little of which has been legally persecuted or stopped but keeps on going. From April 2009:

In my opinion the most specific threats of an economic collapse in both the US and Europe are (probably in this order):

  • high and accelerating inflation (10-40% a year)
  • high and increasing unemployment rates (10-50%)
  • savings and other assets in banks may become inaccessible or lost
  • temporary shortages of food and water, fuel and electricity
  • reduction and losses of benefits, pension and other government payments
  • civil unrest

 

The currently highest risk countries in Europe according to their public debt/GDP ratio based on IMF information from 2010: Greece (130%), Italy (118), Iceland (116%), Belgium (100%), Ireland (94%), France (84%), Portugal (83%).

 

Here are some ideas how to prepare for an economic collapse:

  • secure your assets: buy gold, silver and keep cash accessible in a safe place, spread your money across different banks, countries and currencies
  • convert variable interest loans into fixed interest for at least 5 years
  • get rid of high and variable interest debt e.g. credit card debt
  • buy food and water reserves for at least a few days if not weeks
  • keep emergency medicaments and first aid kits
  • try to become somewhat self-sufficient (grow food, keep chicken, invest in solar panels & other electricity generators)
  • community building (get to know your neighbors, you may need to help each other)

 

It seems that those who were prepared in 1929 and had some income/job or assets could live pretty well with low prices and many new business opportunities. Let’s hope that the world will abandon the fiat money idea finally and use the possibly final collapse to launch a more sustainable system – perhaps participatory economics but hopefully not another flavor of corporatism (left or right – wing).

References

  7 Responses to “18 signs, 6 charts, 3 videos predicting a major economic collapse in USA & Europe”

  1. There are 2 kinds of voters in the United States, the ones who voted for Congressman Dr. Ron Paul and, the ones who are going to WISH THAT THEY HAD VOTED FOR RON PAUL! RW

    • I agree Captain Russ.

      However, there is one consolidation. They can not blame a too small government for sinking the ship. Perhaps more people will start re-thinking the role and need of government in general. It should increase the odds to come up with a better solution after everyone has seen the current system collapse.

      On the other side, since Ron Paul did not get a chance to try implement real change, some people may still believe it could still be possible by voting whoever. This is a real bummer as it will be really difficult to get any real changers in power or even to get one into the pre-elections again. Now we are just left to watch the system destroy itself but maybe we can help building a better one next time round.

    • You got it!

  2. Thank you for this info. It’s not surprising that we don’t read or hear about this on any main stream media stations. I imagine that they don’t want any wide spread panic. It is hard to consider that most people have no idea what is coming.

    • Hi Ray,

      Thanks for the comment.
      I believe it is not really the panic the media want to avoid. A moderate panic would actually be good for the business.
      I think they want:

      • avoid awareness of the real issue
      • discussion and search for solution of the real issue(s)
      • implementation of attempts to fix the real issues

      So I don’t think this is necessarily a conspiracy – strictly speaking – since even the media makers nor bankers do not need to be aware of the big deception. Nor do they need to be sociopaths, although that helps. It is sufficient to maxmize profit in an ever increasing competitive market. Many may just do the job they think is best and right – since everyone is doing and appreciated for it.

      However,the result of this behavior is pretty much the same as if it was a carefully planned deception i.e. conspiracy. Unfortunately his can be worse than a large scale conspiracy of a group of powerful people. Powerful people, die or can be replaced, jailed or converted. A powerful abusive global system may survive until it self-destructs and possibly re-emerges.

      The real issue is that in the so called developed countries a countries people are encouraged (by the hijacked economic free trade system = authoritarian/ crony capitalism) to produce more stuff when they already have more than they need. A possible solution in these countries could include

      • lowering consumption
      • lowering production
      • lowering incomes
      • lowering expenses
      • shortening working hours

      Notice that this is the opposite vicious cycle of what is happening now. After entering the good cycle all of us would have more time to do other things than producing stuff that is not really wanted or needed and likely a higher and more meaningful quality of life.

      I think all humans (100%) will need to stand up against the system – not just against the 1% or so who appear to benefit from it. The creation of the 1% may just be a last line of defense by the system itself.

      What do you think?

  3. Gold is money but never functioned as good liquid money on the basis of fixed values such as what we saw during Bretton Woods. The fixed peg’s severance served to set gold free in Real_Time in order to remonetize gold when the market was ready. Is the market ready ? It better be because the circulation of debt-free money is our only way out of this mess and the monetization of bullion CANNOT be a top-down process. The dollar would crash far too quickly in its rate of change. The process must be market driven, organic and bottom-up, while the elite stick to their “prescribed role in the script”, that of “carrying the stick”. It’s a shame that people have such a difficult time responding to carrots. The script could have been written without any necessary evils, if so. Unfortunately, these things must happen.

  4. What needs to be watched out for is Obama and those that are handling him may try to capitulate a collapse right before the election and declare Marshal Law and suspend the elections; to avoid losing the election. People have no idea how dangerous this guy and the people behind him are. America is being brought to its knees because of the 30% of brain dead voters who couldnt find their own butts with both hands if a spotlight was shining on it…

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