It’s Going To End Badly

GE Christenson / GoldSeek.com

Jim Cramer from CNBC: “We all know it’s going to end badly, but in the meantime we can make some money.” Thank you Mr. Cramer for telling us the truth about QE and our economy.

Stan Druckenmiller, Legendary Hedge Fund Manager, on CNBC 03/05/2013: “I don’t know when it’s going to end. But my guess is it’s going to end very badly.”

The media encourages us to believe that practically everything in our economy is either good or getting better. Another way of stating the media hype is “all of our problems will be solved through the combined efforts of our capable politicians coupled with the wisdom and competent management of The Federal Reserve.”

Seriously? Congress has a miserably low approval rating, for good reason, and the Fed is busy creating and pumping money into banks and the bottomless pit of government spending. Neither has much interest in small businesses or the average American.

What is going wrong? In no particular order, here are a few that come to mind:

• John Mauldin as stated by his friend Juan Carlos: “In Argentina, we have the ability to make the same mistake many times, and nothing happens to change things. Why? Because there is a pervasive belief that the state can provide all that people need: jobs, welfare, everything.” This should sound familiar to Americans and Europeans? Don’t forget that Argentina has inflated their currency to near worthlessness several times in the last 30 years. It also could happen here.

   

• Ellen Brown, February 24, 2013: “Quantitative Easing (QE) is supposed to stimulate the economy by adding money to the money supply, increasing demand. But so far, it hasn’t been working. Why not? Because as practiced for the last two decades, QE does not actually increase the circulating money supply. It merely cleans up the toxic balance sheets of banks. A real ‘helicopter drop’ that puts money into the pockets of consumers and businesses has not yet been tried.”

   

• Official National Debt is approaching $17 Trillion and increasing about 12% per year. Is the economy growing in excess of 12% per year? Clearly not! Maybe debt can increase to infinity without horrible consequences, but I doubt it.

   

• Unfunded liabilities for Social Security, Medicare, Medicaid, government pensions, etc. are estimated at $70 Trillion to well over $200 Trillion, depending on who is counting and what assumptions are used. The actual total does not matter since even the lowest estimate is unpayable. So we have an overwhelming liability that is beyond the capability of the economy to pay, and we continue to spend as if the country had $70 Trillion in excess assets instead of $70 Trillion in unfunded liabilities.

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