The Greatest depression is coming, are you ready?
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Credit card balances spiked in the third quarter to a $1.08 trillion record. Here’s how we got here
PUBLISHED TUE, NOV 7 202311:11 AM ESTUPDATED TUE, NOV 7 202312:19 PM EST
This is an increase of about 33% over the last 3 years.
https://www.cnbc.com/2023/11/07/cre...1point08-trillion-record-how-we-got-here.html
Car payment defaults hit 29-year high as borrowing costs surge
https://nypost.com/2023/10/23/busin...ts-hit-29-year-high-as-borrowing-costs-surge/
PUBLISHED TUE, NOV 7 202311:11 AM ESTUPDATED TUE, NOV 7 202312:19 PM EST
This is an increase of about 33% over the last 3 years.
https://www.cnbc.com/2023/11/07/cre...1point08-trillion-record-how-we-got-here.html
Car payment defaults hit 29-year high as borrowing costs surge
https://nypost.com/2023/10/23/busin...ts-hit-29-year-high-as-borrowing-costs-surge/
What do we need to do to prevent the collapse of the US dollar
When you have a manufacturing plant in the US, say they are making cars, 40% of the money they make goes straight back to the government (between the taxes the workers pay and the taxes the factory pays). The other 60% goes straight back into the US economy, the workers buy their groceries, cars, and houses in the US, and the factory buys parts in the US, pay for electricity and other expenses in the US. So the money gets plowed back into the US economy.
So when we removed the factories from the US we didn't just get rid of the "good jobs", we got rid of 100% of that money. All the workers are in other countries, the factories in other countries, the taxes they pay, the groceries they buy, all in another country.
We have a "service economy", but who are we serving? All the workers in the service economy only make enough to live on for the moment. We are serving the owners of these multinational corporations that are hollowing out the US. They are parasites. Since 1990 there has been a disconnect between the GDP per capita and the GDP. It used to be that if the US got richer we all got richer, but not anymore. The US population as a whole is getting poorer. Take out the wealthiest 10% and the other 90% are becoming very poor very quickly.
So let's answer the question. The US economy is like an airplane flying high in the sky because of what we used to be, but since NAFTA we have lost both our engines. The only way this plane doesn't crash and burn is if we can get both of those engines (manufacturing -- cars and houses) operating at full power again. That is not about to happen. Instead our repos are skyrocketing and our commercial real estate market is crashing.
When you have a manufacturing plant in the US, say they are making cars, 40% of the money they make goes straight back to the government (between the taxes the workers pay and the taxes the factory pays). The other 60% goes straight back into the US economy, the workers buy their groceries, cars, and houses in the US, and the factory buys parts in the US, pay for electricity and other expenses in the US. So the money gets plowed back into the US economy.
So when we removed the factories from the US we didn't just get rid of the "good jobs", we got rid of 100% of that money. All the workers are in other countries, the factories in other countries, the taxes they pay, the groceries they buy, all in another country.
We have a "service economy", but who are we serving? All the workers in the service economy only make enough to live on for the moment. We are serving the owners of these multinational corporations that are hollowing out the US. They are parasites. Since 1990 there has been a disconnect between the GDP per capita and the GDP. It used to be that if the US got richer we all got richer, but not anymore. The US population as a whole is getting poorer. Take out the wealthiest 10% and the other 90% are becoming very poor very quickly.
So let's answer the question. The US economy is like an airplane flying high in the sky because of what we used to be, but since NAFTA we have lost both our engines. The only way this plane doesn't crash and burn is if we can get both of those engines (manufacturing -- cars and houses) operating at full power again. That is not about to happen. Instead our repos are skyrocketing and our commercial real estate market is crashing.
There is a solution to this debt
You can look at this as a simple mathematical formula and we have seen this work out this way millions of times in human history whether we are talking about individuals, companies, cities, or countries. If you are broke they sell you off. It is called bankruptcy court. Your creditors like China will come in and take what they want. They plunder, loot, and take all the assets that have value and then they sell the people off as slaves. By slave I mean your worth is based on whether or not you can work hard enough to pay off your debt, you live as long as you are worth more alive than dead.
You can look at this as a simple mathematical formula and we have seen this work out this way millions of times in human history whether we are talking about individuals, companies, cities, or countries. If you are broke they sell you off. It is called bankruptcy court. Your creditors like China will come in and take what they want. They plunder, loot, and take all the assets that have value and then they sell the people off as slaves. By slave I mean your worth is based on whether or not you can work hard enough to pay off your debt, you live as long as you are worth more alive than dead.
There is a simple solution to our financial problems.
All we need to do is decrease our annual government budget by $1.5 trillion. If they can produce a budget that cuts funding by 33% we will be right there. Actually that isn't true because the biggest ticket items like interest on the debt and Social Security cannot be decreased. Also I don't think they will be decreasing the budget to the military at this time. However, it is not all doom and gloom, our discretionary spending on our 2020 budget was $1.6 trillion. So if we simply eliminate all discretionary spending for the next ten years we probably could get our budget back under control. Now I use the word "probably" because all it will take is a war or pandemic or recession or some other catastrophe to change the math.
All we need to do is decrease our annual government budget by $1.5 trillion. If they can produce a budget that cuts funding by 33% we will be right there. Actually that isn't true because the biggest ticket items like interest on the debt and Social Security cannot be decreased. Also I don't think they will be decreasing the budget to the military at this time. However, it is not all doom and gloom, our discretionary spending on our 2020 budget was $1.6 trillion. So if we simply eliminate all discretionary spending for the next ten years we probably could get our budget back under control. Now I use the word "probably" because all it will take is a war or pandemic or recession or some other catastrophe to change the math.
Bad news, it is not possible to balance the checkbook for the US
Yes, our deficit is $1.7 trillion in the last budget and we have $1.6 trillion in discretionary spending so theoretically they could cut $1.6 trillion in spending (they won't) but even if they did it wouldn't balance the budget. First, that $1.6 trillion is paid to people and companies that pay taxes and so you can estimate that at least 25% of that would come back as taxes. So this would cause our tax revenue to decrease by 400 billion, but the other 75% would be spent in the economy with businesses that would also pay taxes. So 500 billion in lost tax revenue would be a conservative guess. So even if we did cut 100% of our discretionary spending we would still be $500 - 600 billion deficit and so our nearly $34 trillion debt would continue growing. However, we have a second bigger problem. No one is buying our bonds. When that happens you have to raise interest rates. Generally in an honest system you could raise the rates by half a percent, but this is not an honest system. They used Social Security and then all the US banks to buy up the US bonds. That kept the interest rates we pay artificially low. They have used up all the Social Security and all the Banks, the only way to buy up the bonds now is to either raise rates dramatically which would cause a complete and total bank failure in this country or print the money. If they print the money you get inflation which is why no one will buy the bonds. Why by a bond paying 4.5% when inflation is well over 8%? You would probably have to raise the rates by 5% to actually sell bonds again to real investors. A 5% rise in a $34 trillion debt is $1.5 trillion. So you can see we passed the point of no return a long time ago.
But it gets worse. The only way to do this without causing a total collapse is to print money. But guess what, BRICS goes into effect in one month. China and 40% of the world's GDP could just dump their bonds on the market causing a collapse of our currency and propelling their BRICS currency to reserve status. I expect that the bonds will be dumped in the next month.
Yes, our deficit is $1.7 trillion in the last budget and we have $1.6 trillion in discretionary spending so theoretically they could cut $1.6 trillion in spending (they won't) but even if they did it wouldn't balance the budget. First, that $1.6 trillion is paid to people and companies that pay taxes and so you can estimate that at least 25% of that would come back as taxes. So this would cause our tax revenue to decrease by 400 billion, but the other 75% would be spent in the economy with businesses that would also pay taxes. So 500 billion in lost tax revenue would be a conservative guess. So even if we did cut 100% of our discretionary spending we would still be $500 - 600 billion deficit and so our nearly $34 trillion debt would continue growing. However, we have a second bigger problem. No one is buying our bonds. When that happens you have to raise interest rates. Generally in an honest system you could raise the rates by half a percent, but this is not an honest system. They used Social Security and then all the US banks to buy up the US bonds. That kept the interest rates we pay artificially low. They have used up all the Social Security and all the Banks, the only way to buy up the bonds now is to either raise rates dramatically which would cause a complete and total bank failure in this country or print the money. If they print the money you get inflation which is why no one will buy the bonds. Why by a bond paying 4.5% when inflation is well over 8%? You would probably have to raise the rates by 5% to actually sell bonds again to real investors. A 5% rise in a $34 trillion debt is $1.5 trillion. So you can see we passed the point of no return a long time ago.
But it gets worse. The only way to do this without causing a total collapse is to print money. But guess what, BRICS goes into effect in one month. China and 40% of the world's GDP could just dump their bonds on the market causing a collapse of our currency and propelling their BRICS currency to reserve status. I expect that the bonds will be dumped in the next month.
How America racked up a $1 trillion credit card bill
Americans have accumulated a record-breaking $1 trillion in credit card debt.
This comes as the Federal Reserve’s interest rate hikes have caused average interest rates for credit cards to spike to more than 22%. Rates on retail credit cards are even higher, nearing 29% on average.
“Even if you’re working and your wages are up, your rent costs more, your groceries cost more, your gas costs more, everything costs more,” said Tedd Rossman, senior industry analyst at Bankrate.com. “So people don’t feel like they’re getting ahead.“
Despite rising costs and higher borrowing rates, a record number of consumers shopped over the Thanksgiving holiday weekend. The National Retail Federation found that more than 200 million consumers hit the stores that weekend, a few more million than the 196.7 million shoppers who turned out in 2022.
However, big box retailers like Macy’s and Nordstrom have issued warnings about a slowdown in repayments on their credit cards over the summer, highlighting a potential risk to retail revenue this holiday season. The resilience of the American consumer will continue to be tested by the still-rising costs of groceries, gas and housing. And, not to mention, the return of student debt payments.
https://www.cnbc.com/2023/12/03/how-america-racked-up-a-1-trillion-credit-card-bill.html
Americans have accumulated a record-breaking $1 trillion in credit card debt.
This comes as the Federal Reserve’s interest rate hikes have caused average interest rates for credit cards to spike to more than 22%. Rates on retail credit cards are even higher, nearing 29% on average.
“Even if you’re working and your wages are up, your rent costs more, your groceries cost more, your gas costs more, everything costs more,” said Tedd Rossman, senior industry analyst at Bankrate.com. “So people don’t feel like they’re getting ahead.“
Despite rising costs and higher borrowing rates, a record number of consumers shopped over the Thanksgiving holiday weekend. The National Retail Federation found that more than 200 million consumers hit the stores that weekend, a few more million than the 196.7 million shoppers who turned out in 2022.
However, big box retailers like Macy’s and Nordstrom have issued warnings about a slowdown in repayments on their credit cards over the summer, highlighting a potential risk to retail revenue this holiday season. The resilience of the American consumer will continue to be tested by the still-rising costs of groceries, gas and housing. And, not to mention, the return of student debt payments.
https://www.cnbc.com/2023/12/03/how-america-racked-up-a-1-trillion-credit-card-bill.html
How do we resolve the debt crisis?
There are two ways to resolve a debt crisis, you can earn more money or you can spend less money. The US has about $1.6 trillion in discretionary spending in our national budget and our yearly deficit is also about $1.6 trillion. So, if we were to eliminate all discretionary spending to 0 we would come close to balancing the budget, but it would not be balanced because that spending results in about $0.5 trillion in Tax revenue. Not only so but cutting that budget would put more people on unemployment and government assistance, so it is probably more accurate to say for every dollar we cut in spending we will cut $0.50 of deficit. That means cutting $1.6 trillion only cuts $800 billion from our deficit.
But there is a second much bigger problem and that is the interest rate on the debt we pay. It is about 3%. Now why would anyone want to buy a bond that is paying 3% when inflation is at least 8%? Personally I think the 8% number is way too low an estimate, but let's assume for the sake of simplicity that we had to start paying 10% on our debt. That would increase the cost to service our debt from $1 trillion to $3.4 trillion and increase our budget by $2.4 trillion. That of course would be catastrophic, so my question is:
why is the interest rate that we are paying so low?
The answer is that foolish investors have been buying our debt. Who are these "fools"? It is us! They used Social Security to buy up US debt and then they used bank deposits to buy up US debt. 98% of the money in the bank is invested in US debt. Our "easy money" is gone. That is why in the last 18 months the average interest rate we pay has virtually doubled from a little more than 1.5% to 3%.
But let's not give up yet. We have to cut spending in a way that for every dollar we cut we cut our deficit by a dollar. We are going to need to cut $3 trillion more, after cutting all discretionary spending to get to a balanced budget. We spend $4 trillion on Social Security, Medicare, Medicaid and other government retirement programs. Now suppose 75% of our elderly who are receiving benefits were to die, that would go a long way to making the US solvent. But imagine that the same shot that accomplishes this goal also brings in billions of dollars of revenue to the company that makes and sells the shot.
This is how the US can both cut spending and increase revenue!
There you go, problem solved. All you need is a worldwide pandemic that kills old people and makes the rest of the world pay billions to the company selling a drug to protect you from the pandemic. In fact eliminating pension funds would help States and corporations also become solvent. Everyone wins (except those that die).
But instead of stopping at a "balanced budget" lets push forward for "robust growth". AI and robotics offers a tremendous opportunity for growth. A self checkout machine costs $25,000 and can work four shifts a week, so it is like 4 cashiers working for $6,000 a year that don't need benefits. It pays for itself in 3 months. With AI and robotics we can replace 50% of the world's workforce at a fraction of the cost. This will result in tremendous savings all the way down the line (as long as you don't put the people replaced by the machines on the dole).
This is clearly the solution that the US and other governments across the globe have latched onto. This is being brought to you by the same people who said that having a baby is too expensive, better to just kill it with an abortion.
There are two ways to resolve a debt crisis, you can earn more money or you can spend less money. The US has about $1.6 trillion in discretionary spending in our national budget and our yearly deficit is also about $1.6 trillion. So, if we were to eliminate all discretionary spending to 0 we would come close to balancing the budget, but it would not be balanced because that spending results in about $0.5 trillion in Tax revenue. Not only so but cutting that budget would put more people on unemployment and government assistance, so it is probably more accurate to say for every dollar we cut in spending we will cut $0.50 of deficit. That means cutting $1.6 trillion only cuts $800 billion from our deficit.
But there is a second much bigger problem and that is the interest rate on the debt we pay. It is about 3%. Now why would anyone want to buy a bond that is paying 3% when inflation is at least 8%? Personally I think the 8% number is way too low an estimate, but let's assume for the sake of simplicity that we had to start paying 10% on our debt. That would increase the cost to service our debt from $1 trillion to $3.4 trillion and increase our budget by $2.4 trillion. That of course would be catastrophic, so my question is:
why is the interest rate that we are paying so low?
The answer is that foolish investors have been buying our debt. Who are these "fools"? It is us! They used Social Security to buy up US debt and then they used bank deposits to buy up US debt. 98% of the money in the bank is invested in US debt. Our "easy money" is gone. That is why in the last 18 months the average interest rate we pay has virtually doubled from a little more than 1.5% to 3%.
But let's not give up yet. We have to cut spending in a way that for every dollar we cut we cut our deficit by a dollar. We are going to need to cut $3 trillion more, after cutting all discretionary spending to get to a balanced budget. We spend $4 trillion on Social Security, Medicare, Medicaid and other government retirement programs. Now suppose 75% of our elderly who are receiving benefits were to die, that would go a long way to making the US solvent. But imagine that the same shot that accomplishes this goal also brings in billions of dollars of revenue to the company that makes and sells the shot.
This is how the US can both cut spending and increase revenue!
There you go, problem solved. All you need is a worldwide pandemic that kills old people and makes the rest of the world pay billions to the company selling a drug to protect you from the pandemic. In fact eliminating pension funds would help States and corporations also become solvent. Everyone wins (except those that die).
But instead of stopping at a "balanced budget" lets push forward for "robust growth". AI and robotics offers a tremendous opportunity for growth. A self checkout machine costs $25,000 and can work four shifts a week, so it is like 4 cashiers working for $6,000 a year that don't need benefits. It pays for itself in 3 months. With AI and robotics we can replace 50% of the world's workforce at a fraction of the cost. This will result in tremendous savings all the way down the line (as long as you don't put the people replaced by the machines on the dole).
This is clearly the solution that the US and other governments across the globe have latched onto. This is being brought to you by the same people who said that having a baby is too expensive, better to just kill it with an abortion.
Let us put the current debt crisis into perspective.
Imagine you earned $125,000 a year, our $34 trillion dollar debt would be like you owing $1,000,000 on your credit card. (Do not compare this to a mortgage because there is no asset worth $1 million that you are buying or that is securing the debt. The only thing securing the US debt is that annual tax revenue). But here is the difference, our cost to service the debt is 3%, what credit card charges 3%? No, so this is like some guy who borrows $1 million from his family but now they are out of money. So he is now going to need to go to a bank to get the money. They will probably want a bare minimum of 10% which would be $100,000 a year on a salary of 125k. But it is worse, in the last 12 months our debt increased by $2.5 trillion. That is like this guy who makes 125k a year adding 65k to his debt in the last year.
Let us use a different analogy. Boats will have "ballast tanks" where they can take in water to give the boat weight so it sits in the ocean and doesn't bounce around on the surface. That ballast water is like debt. A little debt is good for your financial health. However, these ships have doors that are water tight. If they start taking in water they can seal off any leak. This would be like having a serious debt, say paying for a war or some other emergency, but you have the ability to seal off that hole so that you don't take on any more water. This is like having health insurance with a $500 deductible. Something happens, you have to pay $500 but the insurance pays the rest. But we have no way to stop the debt from increasing right now (the deficit cannot be cut to 0). This means this ship is taking on water and we cannot seal off the leak. Mathematically there is no way to come up with a way to reduce our deficit to 0. In technical terms this ship is sinking and is going to go down. The last time the US budged was balanced was 2001, so we have been watching this ship sink for the last 22 years. However in 2008 and 2009 with the mortgage meltdown the deficit took off because the revenue to the US from taxes plummeted. It is really the last 14 years when this problem has grown exponentially. Our debt as a percentage of GDP has doubled since then with 2020 being a massive blow, just as 2008 mortgage meltdown was.
So then, if this is the Titanic which is sinking, how does that take place, what will it look like? The average 401k account has shrunk in value (purchasing power) by 25% since Biden took office. Dollar wise it doesn't look that bad, but you have to factor in 20% inflation over that time period. This is scary because Americans are now pulling money out of their retirement accounts to pay bills in emergency withdrawals that include penalties. The Median retirement account is worth $25,000 and if you take the money out you are hit with taxes and penalties. That is bad, but what is worse is that when the money comes out of the banks they have to sell US bonds. Over the last few years the main purchaser of US bonds were banks and 401k accounts. So if they become a net seller who is there to buy the bonds? This is like the rip in the hull of the Titanic becoming larger as the ship takes on water. If you saw the movie about the Titanic you remember the ship tipping over so that one end was up and the other down. In this case the banks will all collapse and go bankrupt, that will be the part of the economy that goes bust first. As people pull money out of the banks they will go bankrupt because their assets are worth far less than the dollar value of the money. When these banks begin to fail there will be a panic and a run on the banks and the entire banking system will collapse. We call this "the ship that God can sink".
Imagine you earned $125,000 a year, our $34 trillion dollar debt would be like you owing $1,000,000 on your credit card. (Do not compare this to a mortgage because there is no asset worth $1 million that you are buying or that is securing the debt. The only thing securing the US debt is that annual tax revenue). But here is the difference, our cost to service the debt is 3%, what credit card charges 3%? No, so this is like some guy who borrows $1 million from his family but now they are out of money. So he is now going to need to go to a bank to get the money. They will probably want a bare minimum of 10% which would be $100,000 a year on a salary of 125k. But it is worse, in the last 12 months our debt increased by $2.5 trillion. That is like this guy who makes 125k a year adding 65k to his debt in the last year.
Let us use a different analogy. Boats will have "ballast tanks" where they can take in water to give the boat weight so it sits in the ocean and doesn't bounce around on the surface. That ballast water is like debt. A little debt is good for your financial health. However, these ships have doors that are water tight. If they start taking in water they can seal off any leak. This would be like having a serious debt, say paying for a war or some other emergency, but you have the ability to seal off that hole so that you don't take on any more water. This is like having health insurance with a $500 deductible. Something happens, you have to pay $500 but the insurance pays the rest. But we have no way to stop the debt from increasing right now (the deficit cannot be cut to 0). This means this ship is taking on water and we cannot seal off the leak. Mathematically there is no way to come up with a way to reduce our deficit to 0. In technical terms this ship is sinking and is going to go down. The last time the US budged was balanced was 2001, so we have been watching this ship sink for the last 22 years. However in 2008 and 2009 with the mortgage meltdown the deficit took off because the revenue to the US from taxes plummeted. It is really the last 14 years when this problem has grown exponentially. Our debt as a percentage of GDP has doubled since then with 2020 being a massive blow, just as 2008 mortgage meltdown was.
So then, if this is the Titanic which is sinking, how does that take place, what will it look like? The average 401k account has shrunk in value (purchasing power) by 25% since Biden took office. Dollar wise it doesn't look that bad, but you have to factor in 20% inflation over that time period. This is scary because Americans are now pulling money out of their retirement accounts to pay bills in emergency withdrawals that include penalties. The Median retirement account is worth $25,000 and if you take the money out you are hit with taxes and penalties. That is bad, but what is worse is that when the money comes out of the banks they have to sell US bonds. Over the last few years the main purchaser of US bonds were banks and 401k accounts. So if they become a net seller who is there to buy the bonds? This is like the rip in the hull of the Titanic becoming larger as the ship takes on water. If you saw the movie about the Titanic you remember the ship tipping over so that one end was up and the other down. In this case the banks will all collapse and go bankrupt, that will be the part of the economy that goes bust first. As people pull money out of the banks they will go bankrupt because their assets are worth far less than the dollar value of the money. When these banks begin to fail there will be a panic and a run on the banks and the entire banking system will collapse. We call this "the ship that God can sink".
https://eightify.app/summary/financ...epossessions are on,in the auto loan industry.
Rising Car Repossessions: 25,000 REPOs Daily | Auto Loan Industry Trend
Key insights
Rising Car Repossessions: 25,000 REPOs Daily | Auto Loan Industry Trend
Key insights
- 💸
Car repossessions are on the rise as drivers across the country fall behind on car payments, with tens of millions of Americans realizing they owe a lot more on their cars than they're presently worth. - 🚗
"Consumers are realizing the best thing to do is to simply hand the keys back to the lender because they're sitting on a big loss with this vehicle." - 😓
The option of voluntary repossession is becoming a reality for many Americans struggling with car payments and negative equity. - 💸
Defaults on auto loans increased by 4.2% in October from September and were up 31.2% from a year ago, indicating a concerning trend in the industry. - 🚗
"The average car payment right now is crazy, I mean $729 is the average, one out of five people with auto loans is $1,000 per month." - 📈
The average car payment for new cars has jumped almost 40% since 2016, while wages have remained the same, indicating a growing financial disparity. - 💳
"We're going to start seeing this situation where it's going to get harder to get a loan."
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