Episode-501- The Real State of the Economy

I haven’t really discussed the economy in quite a while much less the current state.  I know these shows are not everyone’s cup of tea but if you are concerned with your future you really do need to be informed about the current risks.

Join me today as we discuss…

  • Forget left and right – conservative and liberal, this is about math!
  • Social Security not takes in less money than it pays out – insolvency has begun
  • Is Alan Sloan right, is a social security bail out next
  • The economic geniuses say screw the deficit grow the economy – WTF!
  • What the hell is going on the Dow should go under 10K today
  • The U.S. Debt Clock and the numbers we never look at
  • Peter Schiff says the bond market is the “mother of all bubbles”
  • Where is the recovery?  China and India
  • What does it mean for us?

Additional Resources for Today’s Show

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21 Responses to Episode-501- The Real State of the Economy

  1. Pingback: Survival Podcast – Episode-501- The Real State of the Economy | Survival Collective

  2. Alfonso Crawford

    Here’s a little something for the younger end of the audience-spectrum, from a member of the same demographic:

    http://images.memegenerator.net/Joseph-Ducreux/ImageMacro/2375382/DISREGARD-DEFECIT-GROW-ECONOMY.jpg

  3. As someone with degrees in math and economics, working in finance/accounting, and getting a 23% and 20% positive total portfolio rate of return for the years 2008 & 2009. I say …. Amen!

    Here are additional thoughts. As Treasuries are the biggest bubble in the world, and as the US has a chronic trade deficit, the US Dollar is the next biggest bubble. This means that eventually imports prices will drastically rise.

    The 3 most obvious portable barter-money investments are gold, silver, and ammo, but unfortunately, all three could very likely be made illegal, as survivalists will be blamed for “hoarding and causing the collapse”. To branch out, we should think of high quality durable imported final or intermediate goods. Not sure what in particular might be best in this class. We need to think about it.

    Next separate thought. You might look at the “Hindenburg Omen” which is now officially expecting a market decline within 40 days: 90+% chance of 5% or more decline and 25% chance of a full blown crash.

  4. It’s a balance between US interest rates, Foreign exchange rates, monetary expansion and contraction, corporate profits and stock prices(tax rates,business growth and expectations)spread between low, mid and high income wealth distribution. It’s totally interactive and each component affects all the others. You’ve got to have confidence in the Fed (all Wall Street Bankers)and the billionaires in our economy. What you’re seeing now is a political push by billionaires to increase their wealth–both stock value and reduced taxes. Everyday people are being tricked into giving up their income by increased taxes to “solve problems”. In the long run, Middle East billionaires are still buying US stocks and treasury securities. China is still buying US securities so they can balance selling stuff to us with maintaining their exchange rates.

    It’s only a discussion of whose getting screwed in the short term versus who is really getting the wealth in the long run.

    I’m middle income on social security and I don’t see much good happening for me.

    Social security will be “monetized” by the FED and the debt will passed on in a increase in deficits. This will be OK until we run into inflation–totally unlikely in the next 10-15 years. Debt doesn’t matter until someone wants to cash out. Nobody wants this. Political power, international relations, and employment / unemployment among nations will affect this.

    As long as nobody “Screws Up” the system by becoming bloody afraid, everything will be ok going forward.

    The real problem with Medicare/Medicate/Social security are the “GOD DAMN” pharmaceutical companies—they are getting the biggest $ of the SS/Medicare deficit.

    If you want to discuss this, contact me at my email address

  5. I’m sorry that my post was so long. Taking care of the Billionaires–Koch Industries, Perry Home Builders, Beal Bank, Wyly Brothers will screw the middle and lower income people. The scream over expenditures is immaterial–Who gets the jobs and income is what counts–How many Billionaires need another $ million dollars?

  6. Well Jack, looks like your hat is safe.
    The Dow dropped below 10k twice today.
    8~)

  7. Modern Survival

    @HoC, I wasn’t worried about the hat, trying to swallow it though, that I will admit was worrying me after I mouthed off about it. LOL

  8. To give you some perspective, when social security first started paying out in 1940 for those 65 and over the life expectancy was 62.9. That means the realistic retirement age is now 80.

    Man dad points out that while people may be living that long the social attitude towards people working that long needs to change.

  9. Wow, what a downer show; but necessary. We need to know what is happening and why we should prepare. Very well explained Jack, thank you.

    @graydon: “G-D” is most offensive. There must be other ways to express your displeasure without taking the Lords name in vain.

  10. I apologize for using the Lord’s name and most particularly for the emphasis. Please forgive me.

  11. I do not want to know how this ends. Bad for us, and they get away with it all. Where is my 401k gone, into god damn thin air!!! I want answers.

    Thank god there are people that bring truth, not lies. I like the FFT guy.

    Check out his latest youtube video warning. Very intresting.
    http://www.youtube.com/watch?v=yMCuSLqd0Gg

  12. @graydon Let me give you something to contemplate on for the long term:
    U.S. JOINT OPERATING ENVIRONMENT REPORT 2010
    http://www.fas.org/man/eprint/joe2010.pdf
    “A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment. To what extent conservation measures, investments in alternative energy production, and efforts to expand petroleum production from tar sands and shale would mitigate such a period of adjustment is difficult to predict. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest…“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day”
    I just so happens that the US consumers about 10 million bbl per day for auto transportation needs. So a shortfall of that much oil in the global market, using an analogy, is going to be like having every US roadway going vacant.

    Dr. Fatih Birol on World Energy Outlook post Copenhagen
    http://www.youtube.com/watch?v=9cUbONgi-5M
    Here’s the jest of that: there is going to be a shortfall in global oil supplies over the next 5 years. We need 4 new Saudi Arabias to come online over the next 20 years (a new one every 5 years) to offset the decline rate. If that production doesn’t materialize current production would be 2/3rds of today’s conventional oil. On the upside there’s going to be a natural gas glut by 2015 of 50% more than today. Oil isn’t just energy it’s commodities like asphalt. There’s 4 million miles of paved roads in the US that require repair and maintenance. The cost of roadwork to states and counties will rise.

    We can keep demand in oil down if we keep GDP from growing, or even declining:
    http://www.youtube.com/watch?v=uanisz6cJ1g&feature=fvst

    http://www.youtube.com/watch?v=QhsMr49AKM8

  13. Jack,
    What a great cast! Boiling the economy down to its truly simple problem – lying politicians spend more of our money than they take (steal) from us.

    I loved the last 4 minutes of the cast when you took the rich investors advice and made it practical for us. I have a 96 year old grandmother who still lives by herself and she tells me frequently of how her family survived the depression in Ohio.

    Doug

  14. Hi Jack,

    Great episode. A good wake up call. I enjoy the financial episodes as well as the preparedness episodes.

    I have a question. Since China is a growing economy and they have their currency artificially peg with the US dollar. Would buying Chinese currency be a good investment / inflation insurance? China has talked about letting their currency rise and I would think that if the dollar devalues a great deal that China would be forced to let their currency float.

    Thanks,
    Vince

  15. Hi Jack,

    I LOVE these types of shows when you do them. It is great information, a good wake up call, and so informative. Also, glad you didn’t have to eat your hat :)

    Thank you for another great podcast!

  16. Never eat your hat… you need it when you are gardening in the HOT Texas sun.. !! :)

  17. texasmufflerman

    Clinton administration did not have a surplus…ever. The closest was fiscal year 2000 with a $17.91 billion deficit.
    http://www.craigsteiner.us/articles/16

  18. ……..so, the gov needs inflation to bail themselves out via this hidden tax, but we are presently in a deflation cycle… so is this making the situation more dire?

    Keep the economic/political stuff on the front burner. I’m okay with it. I think we realize it isn’t about party, it is about power, control. Our system allows us to prevent control via elections. This is why we need to be informed. Great show. I loved it.

  19. I have listened to this pod cast 3 times since I loaded it on my Ipod. It is very thought provoking. One question I do have… What happens when our states and/ or this nation becomes insolvent?
    Anyway, keep up the good work. I have been listening religiously since I found the podcast a month ago.
    Thanks for having our backs

  20. Modern Survival

    @mike If a state goes broke it will end up being the Feds opportunity to bail them out and take over more of their sovereignty. Nothing from the Fed is with out a bigger cost. This is why Texas and some other states told the fed to shove some of the stimulus money up their asses, it came with to many unfunded mandates.

    For the Fed to be insolvent is an extreme, they can always print more money and we get away with shit a small country would not. If full confidence is lost in the dollar, run away inflation would be the result, a complete economic collapse and TEOTWAWKI, what is more likely is an extreme devaluation of the dollar, the US plays second fiddle in the globe along side Russia behind China and India and we see something as bad or worse than the Great Depression.

  21. In 1935, the corporate leaders offered Gen. Smedley Butler to take over the government in the “Business Plot” as it got called. I think we can be certain that somewhere in the cycle of government default and/or hyperinflation, that, Just like the Roman Republic becoming an Empire, the military will take over government.

    A currency collapse is effectively a collapse of a government, so a military take over at that point is not so much a coup as filling the void by lack of government management of assets vs. liabilities. I have no idea how Oathkeepers and such might react. But given the relative size and power of the military and its supporters to the size of the US population, this is unavoidable, and I don’t think it will be anything as utopian as Robert Heinlein’s “Starship Troopers”.

    I’m not sure how to prepare for this. I don’t think there will be enough resistance mindset to resist it either. I assume a military takeover will be a coalition of military elite and corporatocracy elite. Military grunts and civilian peons won’t have the power to fight.