Tags: Stanley Druckenmiller | barack | obama | wall | street | bonds

US Faces Financial Armageddon

Tuesday, 17 May 2011 08:26 AM Current | Bio | Archive

The news media in this country are in a stupor. Either out of ignorance, or complete leftist bias to protect their socialist hero President Barack Obama, they have turned a blind eye toward the enormous disaster facing our economy.

The greatest Ponzi scheme in world history is coming to an end, leaving America on the precipice of economic Armageddon.

Legendary Wall Street investor Stanley Druckenmiller is calling the Fed’s bond purchases a fraud and a Ponzi scheme. Druckenmiller says, “There is a phony buyer of $19 billion per week of Treasury Bonds.” The phony buyer he refers to is the U.S. government. Druckenmiller knows that when a country resorts to buying its own debt, we are seeing the last days of the Roman Empire. Stanley Druckenmiller, barack, obama, wall, street, bonds

Another Wall Street legend, Jim Rogers, spoke out at a business conference last week. He said he plans to short sell (bet against) U.S. bonds with both hands. Rogers added, “If any of you have bonds, I would urge you to go home and sell them. If any of you are bond portfolio managers, I would get another job . . . if I were you, I would think about becoming a farmer.”

Finally, we have the opinion of municipal bond expert Meredith Whitney, named by Fortune magazine as “one of the 50 most powerful women in business,” and by Time magazine as “one of the 100 most influential people.” She sees America in financial ruin with 50 to 100 cities defaulting on their debt in the next year.

What do these financial legends know that the rest of us do not?

First of all, reality is catching up to America. The Ponzi scheme of printing fake money to pay real bills is coming to an end. The jig is up- there is no way to sustain America’s massive welfare state anymore. When the stimulus runs out, states will face disaster.

The federal government currently pays for 30 percent of the states’ bills. Without that welfare from the feds, the game is over for the states.

But that is just the start. The states pay 40 percent of the bills of their cities. As soon as that welfare ends, look for mounting numbers of municipalities to declare bankruptcy and default on their debts. The vicious cycle is only getting started.

On the federal level, the trustees of both Social Security and Medicare admitted just this past week that their massive Ponzi schemes are running on empty. Both funds are running out of money far sooner than projected. Social Security will now run a permanent deficit. It is also important to remember there is no money in the “lock box.”

All that is in the lock box is worthless paper IOUs. It has all been spent.

The list goes on. The country’s annual deficit approaches $2 trillion. The national debt approaches a staggering $15 trillion. The debt plus unfunded liabilities approaches an unimaginable $100 trillion. The debt-to-GDP ratio approaches 90 percent — a figure that few countries have ever recovered from. One of every 7 Americans is on food stamps. We are fighting three expensive wars with no purpose, and no end in sight.

Every economic recovery in modern history has been led by a residential real estate boom. Yet today, the real estate crash is accelerating. The current real estate implosion is now worse than the Great Depression.

But I have saved the worst for last. The two scourges of any economy are unemployment and inflation. That is why those two statistics make up the entire “misery index.” The only expert I trust to give the true figures is John Williams of ShadowStats.com. He calculates those numbers the way our own government did until 1990, when they decided to rig the system to prevent panic and unrest.

Based on pre-1990 calculations, today’s CPI inflation is now over 10 percent and unemployment is 15 percent. This 25 percent misery index is, by far, the highest in modern history.

Even more foreboding, 10 percent inflation is a leading indicator of hyperinflation on the way. Any rise in inflation would force dramatic raises in interest rates, which would eat up the entire budget. Game over for America.

History always repeats. This vicious cycle of misery will force massive layoffs of government employees, and massive cuts in entitlements and social services. This will result in Greece-like levels of protests, government employee union strikes, unrest, and riots.

The ancient Chinese proverb says, "May you live in interesting times." We are all watching history.

Wayne Allyn Root is a former libertarian vice presidential nominee. He now serves as chairman of the Libertarian National Congressional Committee. He is the best-selling author of "The Conscience of a Libertarian: Empowering the Citizen Revolution with God, Guns, Gold & Tax Cuts." His website: www.ROOTforAmerica.com

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The news media in this country are in a stupor. Either out of ignorance, or complete leftist bias to protect their socialist hero President Barack Obama, they have turned a blind eye toward the enormous disaster facing our economy. The greatest Ponzi scheme in world...
Stanley Druckenmiller,barack,obama,wall,street,bonds
Tuesday, 17 May 2011 08:26 AM
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