Understanding the Coming Financial Crash

I think history will show that America has been in a financial depression since 2008. I believe we’re in a depression right now but its hard to see on the surface. 1 in 7 people in this country depend on the government to eat. We’ve all seen pictures of the long soup lines in the Great Depression era. That’s our reality now, but instead of waiting in lines, folks receive their food stamps by mail. The current depression though is masked over with a flood of fiat money and questionable government statistics. The debt bubble can no longer hide its impending fate. Even the central bank, which caused this debt disaster, is finally coming to grip with this reality. Kind of.

Main stream media and the highly misguided economists have been informing us lately that the so-called “recovery” is slowing. What they seem to misunderstand is that the “recovery” was created by printing money and running up an insane amount of debt. This works for a little bit. Just enough time to get politicians re-elected.  But right now we’re entering the stage of the inevitable bust. It cannot be stopped no matter what the experts are telling the public.

The artificially stimulation of the economy is what the government has been doing ever since the recession hit after September 11th. The housing boom was created by the Fed’s policies and the assumption that everyone should own their own home, even if they couldn’t afford it. Cheap money, low-interest rates and reduced lending standards all contributed to the boom and bust of the housing market. Now the Fed is doing the same exact thing to try to help the economy again. But the fundamental problems are still lingering. The artificial high that the fed injected into the economy is finally coming down. The “recovery” bust is lurking.

As the economically ignorant, from the President down to the news pundits, regurgitate some feel good rhetoric about the economy recovering, the reality is quite different. In the US, 6 million people are living in poverty. 76% of all Americans believe we’re still in a recession. Only 23% of US businesses plan on hiring in the near future. US retail as been on a steady decline for the past few months, along with manufacturing.  For the first time ever, Canadian households are wealthier than Americans. We as a nation don’t produce anything anymore. We live off borrowed money and consume more than we save. This is unsustainable for the future and the day of reckoning is near.

During the nearly 20 year Great Depression that was kicked off with the October market crash of 1929, there were times when the stock market and unemployment recovered for a bit, just to drop off again. As of writing this right now the stock market is down over 220 points. The media pundits inform me that the reason for the sell off is due to fear in Europe. But what they seem to neglect to tell their viewers is that the stock market is highly over inflated due to the Bernanke’s cheap money and artificial low-interest rates. It is sad to see that the stock market, which is what most Americans depend on for their retirement, is dictated on what the Federal Reserve is possible going to do. Are they going to unleash QE3 or are they not? The US media talks about how bad Greece is financially and are totally clueless that their own country is just as bad. Central bankers think they can manipulate the system,as they have been for years, and inflate their way out of the crisis. Printing money has worked artificially for a long time. It can’t last forever as we’ve seen in in 1923 Germany. A 15 trillion-dollar national debt cannot be paid, especially with a 1.2 trillion dollar deficit.

Understanding why the economy is in shambles is the first step to a recovery. If most people misplace blame and call for more of the medicine that made them sick in the first place, the economy has no chance. We have to understand that the Federal Reserve cannot inflate its way out of the mess. Printing money and setting interest rates artificially low is punishing anyone who wants to save. This act devalues the currency that Americans work so hard for. I can see nothing more immoral than cheapening one’s earnings…deliberately.

The only thing I can advise is that anyone who wants a better way of life for their kids must gain as much knowledge as you can about history and economics. Once you know what is happening and why it’s happening, you can prepare for the upcoming crises. Europe is the window to our foreseeable future.

Here are a list of books that will help you understand the crash of 2008 and how we can prepare for the next one.

  1. Meltdown by Thomas Woods Jr. This is by far the best book written on why the 2008 crash happened, who was responsible for it, and why bailouts will not work.
  2. The Real Crash by Peter Schiff. The author of this book was one of the economists trying to vehemently warn Americans of the housing crash only to be laughed at by news pundits. This new book warns of the upcoming crash and what we can do to prepare. We ignored him the first time; let’s not make that mistake again.
  3.  How and Economy Grows and Why It Crashes by Peter Schiff. Mr. Schiff offers a very readable explanation of how the economy is supposed to grow and what triggers the boom/bust cycle. A must read.
  4. Economics in One Lesson by Henry Hazlitt. One of the most important books I’ve read on economics. Hazlitt brings the most logical explanation of the fallacies of government intervention into the voluntary exchange of free and willing individuals.
  5. The Law by Frederic Bastiat. Published in 1850, this book is just as relevant today as back then. If every politician read and understood this book we’d eliminate most of the ills plaguing our once great country. The greatest case for liberty is written in this small and very readable book. Plus, it’s only .99 cents on kindle.
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