Charts of US Government Debt & Doom: Descent and Reaction

The US Government has been growing rapidly for well over 60 years. National debt has grown rapidly along with the size and power of government agencies. The embedded presentation below provides a graphical representation of many of these changes, and suggests some implications of this trend for the future.

50 Charts From Marc Faber
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Most citizens may submit to an overbearing government, but others -- who worked hard, sacrificed, and saved all their lives only to see governments confiscate and diminish their assets -- may consider other actions and reactions.

The recent popularity of "secession from the union" petitions in the US demonstrate that some citizens are unhappy with the growth of government power & debt, and the consequent curtailment of individual rights and opportunity.

Another reaction to the recent explosion in government arrogance toward productive citizens, is the movement to acquire personal weapons and other survival tools and materials.

Several weeks ago, there was much excitement over the demonstrated ability to "print" a gun -- actually the receiver of a firearm -- with a 3D printer. But it has been possible for individuals to make their own firearms for several centuries. And with modern machine shops, it has become much easier. And in the US, it is also legal.

Dmitri Harris runs the Ares Armor store, along with his buddies, some Marine Corps infantry veterans. The shop is busy because more people are finding out about the chance to build your own gun without having to go through any registration or government signups of any kind.

It is possible because of the Gun Control Act of 1968. It reads, "an unlicensed individual may make a firearm," but also says it has to be for personal use and cannot be for sale or distribution.

...Team 10 purchased a piece of aluminum and watched as it was turned into a receiver for an AR-15. It can take four or five hours to do this, depending on how busy the shop is. Inside that machine shop is a computer-controlled milling machine that cuts out the aluminum.

What Team 10 ended up with was a receiver that can have parts added to it, such as the trigger, the barrel, the stock and the magazine. Team 10 fired the AR-15 at a nearby range when the receiver was finished and it worked just fine.

... _Untraceable Firearms

Not all the economic news for the US is bad. Several state and local governments are benefiting enormously from the boom in shale oil & gas -- and the boom's secondary benefits within US industry. US President Obama probably owes part of his re-selection to the shale booms in Ohio and Pennsylvania -- although many inside of Obama's administration would have gleefully shut down shale fracking and its economic benefits if they were given a free hand. Watch them very closely.

The economic effects of Obamacare were cleverly deferred until after the Obama Outfit's re-selection. But now, US employment is likely to take a severe hit from the many provisions of the Obama - Pelosi - Reid health care plan from hell. And that is just the beginning of the economic problems that will be exacerbated by the progressive enforcement of Obama era policies.

Without an amazing level of organisation, the Obama Outfit -- comprising organised labour, organised community actists, organised academics, organised news media, organised faux environmentalists, organised vote "handlers" ( and of course elements of organised crime ;-) etc. -- Obama would be hiring a moving van in the near future.

There is nothing preventing US citizens from organising themselves. While government possesses a monopoly on the organised use of force, the US Constitution has provisions for the private use of force for self defense etc.

But organisation is far more useful for other things than the use of force. In fact, as new technologies are developed which will allow citizens to make many of the things they need to survive at home -- cheaply and with little effort -- the need to support an oppressive and deeply indebted government will appear less and less necessary to growing numbers of citizens.

Organising to provide for the needs of one's family and community -- apart from official government -- is the type of organisation which US citizens should be contemplating, very seriously.

Not all citizens possess the aptitudes or competencies for working along those lines, of course. But that has always been the case. 10% of people at the most, do 90% of the work at the least. In some areas it seems closer to 5% / 95%.

The smart fraction -- better known as the competent fraction -- is incredibly important to the present, and to the future. Perhaps it is time for the competent fraction to learn how to be truly dangerous, in a peaceful but efficacious way.

It is never too late to have a dangerous childhood.

More:

Heiner Rindermann's paper on the impact of smart fractions on social development (PDF)

Steve Sailer's analysis of Rindermann's paper

Debt and Demographic Decline Breed Global Instability

...leading economies, the U.S., Japan, and the E.U. are declining. That is, about one-sixth of the world's population is losing ground. These big economies are the ones that lead the rest of the world, including China. Countries like China, India, and Brazil, depend on the health of the big economies to keep buying their products and commodities so they can grow and generate wealth for their citizens. _ZeroHedge

Who will be the last man standing? In the coming clash over debt, both within and between nations, what country -- or portion of a country -- will survive and prosper? Difficult to say, given the ubiquity of the deadly duo: debt and demographic decline.

In Europe, one can locate particular problem points, where endebted nations are reaching the end of their borrowing capacity. These nations are coming flashpoints for a fire of unrest that could explode out of control with incomprehensible haste.

A visit to Spain the prior week demonstrated that Greece's financial woes were just the tip of an iceberg on a continent of debt -- the Greek national debt crisis seemed like the first card in a flimsy house. To be in a nation as it is unraveling has an eerie, surreal, mostly indescribable feeling. The storefronts in Athens outside of the tourist areas looked like they'd been through several rounds of a boxing fight, and were just waiting for the knockout punch. Other than the lights being on, the difference between shops closed indefinitely and those currently operating were hard to distinguish. Unless they were pushing merchandise, people wore saddened expressions as they walked by decaying and graffiti-covered buildings. _thetyee

In such environemnts, deadly, destructive riots are always just a spark away. There is no telling where the next upsurge of violence and mayhem would end.

The situation can only get worse, since nobody's interests align. The Greeks want more time to meet their budget targets without having to make more cuts that would cause more public angst. The Germans, whose opinions arguably matter the most since they have the financial ammo, are already in a huff with German Chancellor Angela Merkel about expanding the eurozone's bailout fund. More pushback from Greece about meeting its current austerity measures only fuels the fire. _Time

Towards the end of the last decade, it was popular to proclaim Europe as an example of what we in North America could achieve. This notion was led by books such as Jeremy Rifkin's The European Dream, which described the difference between North American and European values. He argued that on the other side of the Atlantic, citizens found security not through individual accumulations of wealth but through connectedness, respect for human rights and sustainability. _the tyee

But now, as Europe's demographics collapses in on itself, we can see that not even utopia can escape the twin demons of debt and demographic decline and collapse. Europe's states are like teetering dominos, as long as they are coupled together economically. But even if Europe is smart enough to decouple, only select portions of the continent can survive the coming wildfire.

In the third world, we will have "The Coming Anarchy." In the developed world, the anarchy will focus on the third world enclaves, the multicultural cities and non-assimilating banlieus, and spread out from there.

Consider the relative places of safety, where you might find a place for yourself and your families. Hope for the best, prepare for the worst.

Previously published on abu al-fin

No Way to Pretend that this Mangy Dog is a Beautiful Princess

More... FinancialArmageddon: Not a sense of recovery wherever you turn

The global economy remains devastated, despite all popular claims to the contrary. And it is not just Greece, Ireland, Spain, and Portugal which are in trouble. The US is beginning to feel the hurt from ludicrous fiscal and monetary policies which date back to the 1970s -- but which have reached particularly destructive levels under the Obama-Reid regime. The global economy still pivots around the US economy. And that is bad news all around.

1) Existing home sales for April were down 0.5% to 5.05 million as compared to 7.2 million at the peak. Inventories of homes for sale increased to a 9.2 months, the highest since December while prices were down 5% from a year earlier.

2) April housing starts dropped 10.2% to 523,000, barely above the recession lows, and below any level prior to 2008. According to the National Association of Home Builders (NAHB) traffic of potential buyers was still extremely low. Keep in mind that this is an organization that usually puts a positive spin on any results.

3) While weekly initial claims for unemployment insurance declined to 409,000 from the prior week, the number has now been over 400,000 for six straight weeks after a period of coming in below that level.

4) The Philadelphia Fed Index for May fell sharply to 3.9, losing 39.5 points in the last two months. This is also well below the 1st quarter average of 32.9. Both new and unfilled orders dropped significantly while inventories also declined, indicating that the inventory buildup that helped support the recovery may be moving back in line with demand, which has been growing less than production.

5) Consistent with the above, April industrial production was flat. It is likely that production, which had consistently been running ahead of demand, is being reduced as inventories that were depleted during the recession have now caught up. This also may explain the higher level of initial claims.

6) The Empire State Manufacturing Survey was also down 9.8 points to 11.9, the lowest level since December. This index therefore confirms the Philly index and suggests similar lower results from the ISM manufacturing index.

7) The April index of leading indicators declined 0.3%. While one month does not make a trend it was the first monthly drop since last June, and fits in with what other indicators seem to be telling us.

8) Similarly, the ECRI Weekly leading indictor has been down for three of the last five weeks and has been about flat since mid-December after rising steadily from the recession lows. This is indicative of at least a pause in coming economic growth, and perhaps something worse.

9) April core retail sales increased only 0.2%, and were probably flat to slightly down when adjusted for inflation. Higher income from reduced social security withholding was more than offset by higher gasoline prices, tepid wage increases, high unemployment, lower home prices and recessionary levels of consumer confidence. And this is happening even before the end of QE2, which has been keeping the economy afloat since November.

10) The April Small Business Survey, after rising weakly from recession lows, has now dropped 3.1 points in the last two months. Even at its most recent high it was below any level in its history prior to 2008. Key segments that declined were plans to increase employment and capital expenditures. In addition the number expecting sales to rise also dropped.

11) In addition to the domestic concerns cited above, the global picture is also not looking too rosy. ECRI's long leading indicator of global industrial growth peaked last August at 0.7 and stood at 0.1 in March. ECRI managing director Lakshman Achuthan stated "There's a downturn in global industrial growth in clear sight". EU production fell in March and retail sales have been flat for six months. In the UK there's been no GDP growth for six months. Japanese GDP dropped 3.7% annualized in the 1st quarter and 3.0% in the 4th. Note that the earthquake occurred on March 11th, toward the end of the quarter, so cannot be fully blamed for the 1st quarter and not at all for the 4th. Industrial output in all of the BRIC nations seems to be slowing, and current monetary and fiscal policies suggest more to come.

All in all it seems to us that the odds are high that a domestic and global economic slowdown is already in place. In the U.S. the slowdown is happening with only six weeks to go before the end of QE2, a program that has been a major prop for even the tepid recovery we've undergone so far. For the stock market nothing seems to matter until, suddenly, it does. _ComstockFunds

Did you imagine that China is ready to take over as the global economy's driving force? Better think again. More here.

via EconomyWatch
Drowning in Debt: Why the economy still cannot seem to recover.

Reading the consequences of debt: The hidden taxes of debts, deficits, and a deflationary : inflationary chaos -- along with dysfunctional government regulations, incentives, corruption, and laws -- combine to crush any nascent recovery in its cradle.

But the disaster is compounded by the effect of demographics: If human capital is not growing and improving, any realistic hope of economic growth and development is delusional.

Japan is the canary in the coal mine, the early warning signal for the rest of the world, on the dangers of debt and demography. The PIIGS of Europe are following closely behind. Russia would be a global economic basket case except for Siberian wealth -- and how much longer can the bear hold on to Siberia in the face of shrinking demographics and evaporating human capital?

Will the people of the west ever wake up to what they are doing -- and allowing to be done -- to themselves? If not, what are the alternatives? Who is John Galt?

When Governments Build On Debt as if on a Foundation

ImageSourceAn economy built upon debt is not nearly as stable as an economy built upon wealth, productivity, responsible behaviour, and a skilled, intelligent, industrious workforce. Debt trends in the US are looking very ominous at this time, with no sign of abatement. A number of other economic factors are also working against a US economic recovery:

1 - Back in the 1930s, tens of millions of Americans lived on farms or knew how to grow their own food. Today the vast majority of Americans are totally dependent on the system for even their most basic needs.

2 - A vast horde of Baby Boomers is expecting to retire, and the "Social Security trust fund" has nothing but 2.5 trillion dollars of government IOUs in it. According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019. This is a financial tsunami the likes of which Americans back in the 1930s could never have even dreamed of.

3 - American workers never had to compete for jobs with workers on the other side of the world back in the 1930s. But today, millions upon millions of our jobs have been "outsourced" to China, India and a vast array of third world nations where desperate workers are more than happy to slave away for big global corporations for less than a dollar an hour. How in the world are American workers supposed to compete with that?

4 - Back in the 1930s, there was nothing like the gigantic derivatives bubble that hangs over us today. The total value of all derivatives worldwide is estimated to be somewhere between 600 trillion and 1.5 quadrillion dollars. The danger that we face from derivatives is so great that Warren Buffet has called them "financial weapons of mass destruction". When this bubble pops there won't be enough money in the entire world to fix it.

5 - During the Great Depression, the United States economy was relatively self-contained. But today we truly do live in a global economy. Unfortunately that means that a severe economic crisis in one part of the world is going to affect us as well. Right now, the United States is far from alone in dealing with a massive debt crisis. Greece, Spain, Italy, Hungary, Portugal and a number of other European nations are in real danger of actually defaulting on their debts. Japan (the third biggest economy in the world) is on the verge of complete and total economic collapse. So what happens to the U.S. economy when the dominoes start to fall?

The truth is that by almost any measure, we are in worse economic condition than we were right before the beginning of the Great Depression. We have been living way beyond our means and the debts we have been piling up are clearly not anywhere close to sustainable.

...The U.S. economy is being driven off a cliff, but America's "ruling class" has insisted all along that they know better than we do.

But the truth is that in the final analysis it is not us that they care about.

...the U.S. economic system is broken. However, considering the fact that America's ruling class has a stranglehold on both major political parties, we are not likely to see any fundamental changes any time soon. _Benzinga

China is experiencing some economic uncertainties of its own at this time. Consider the housing bubble that is threatening to burst in the middle kingdom. What happens to the US and the world economies should the Chinese bubbles start bursting in succession? Most of China's economic bubbles are closely tied to China's corrupt banks and state owned enterprises -- which cut very close to the leadership of the CCP. Things could become very messy, temporarily.

If China were no longer in a position to buy massive quantities of US Treasury instruments -- in fact was forced to sell a substantial quantity -- the current stresses on the US debtor economy could grow to unsustainable levels. China has already downgraded US debt to AA from AAA. When push comes to shove, things could unravel quickly.

Several other large nations are in danger of falling into financial difficulty, largely due to debt and demography. The collapse of Greece or Spain would not have the impact on the world economy as that of the US or China collapsing, but as stress on the EU builds, financial institutions around the world will be pushed to the breaking point.