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10 Ways the War on Drugs is an Incredible Success

10 Ways the War on Drugs is a Wild Success

Eric Blair

For all the evidence of how the War on Drugs has failed society, there’s equally as much evidence of how it is a great success to those who continue to support it. The drug war has many advantages if you wish to control society and expand your empire. It also enriches several industries that would otherwise have a very difficult time staying solvent without it.

Here are ten ways the War on Drugs is a wild success:

Military-Industrial Profits:
As the Vietnam War came to an end, it struck fear into the military-industrial machine that enjoyed great profits from that conflict. In a world where contrived enemies were needed to keep a constant funding of weapons, Richard Nixon declared drugs “Public Enemy Number 1”. Thus, domestic armies were erected to combat the illegal drug trade, delivering consistent cash flow to weapons manufacturers. These companies make money, not just from the needs of the DEA, border patrol, and local police forces, but also from drug traffickers. Win-win and profits all around.

Huge Boon to Private Prisons:
The private prison industry thrives off long sentences for drug offenders. At least 25% of their profits come from these nonviolent criminals. A great number more are held on “drug related” charges that may have resulted in drug violence. However, the current trend shows that three-quarters of new inmates admitted to state prisons are nonviolent offenders. Private prisons clearly depend on arresting pot smokers and addicts of more severe drugs.


Prevents Higher Unemployment Rates:
Imagine if the millions of American currently jailed on drug charges were released into a job market already suffering from real unemployment numbers over 20%. Additionally, if it wasn’t for drugs being illegal, countless people like DEA agents, court staff, prison guards, parole officers, drug dealers, etc would otherwise be unemployed. Thank goodness for the war on drugs, or the U.S. economy would look even worse.

Suppresses Minority Populations:
It’s often said that the drug war is a war on minorities: “According to the ACLU, African Americans make up an estimated 15% of drug users, but they account for 37% of those arrested on drug charges, 59% of those convicted and 74% of all drug offenders sentenced to prison. Or consider this: The U.S. has 260,000 people in state prisons on nonviolent drug charges; 183,200 (more than 70%) of them are black or Latino.” So it is a huge success for those who wish to suppress minority populations.

Drives Up Prices:
Making any substance illegal will result in much higher prices than a free market would dictate. Especially when there’s a high demand for that substance. In the case of the cannabis plant, which grows like a weed and requires very little value added, the dried flower would virtually be free if it wasn’t for the harsh restrictions and dangers involved in producing and distributing it. These high prices are terrific for drug dealers and even medical marijuana growers opposed legalization in California because it threatened their profits.

Drug Violence Justifies Tough Gun Laws: The violence generated from the prohibition of drugs is reminiscent of the extreme mob violence during the prohibition of alcohol. Prohibition of anything will always create black markets which require firearms to protect banned products. Recently, the U.S. government itself was caught red-handed supplying guns to Mexican drug cartels in their “Fast and Furious” scandal. It’s now proven that the ATF plotted to use Fast and Furious to push for new gun control regulations. Indeed, most street violence is due to turf wars over the drug trade, and tougher gun laws are proposed as the war escalates. It’s wonderful for those who blame violence on guns and wish to restrict them from law-abiding citizens.

Protects Big Pharma Monopolies: No one is happier about the war on drugs than Big Pharma. Their control over the FDA and monopoly of “controlled substances” would be threatened if all drugs were legalized. They want you addicted to their FDA-approved versions of heroin and cocaine, not something you can get on the black market. In turn, they also benefit greatly when the prices of street drugs increase, as they can then inflate the cost of their products. They love the drug war so much they’ve lobbied to extend it to vitamins and supplements.

Allows Proxy Armies: If you want to create an empire by force, but it’s politically disadvantageous to base your army in certain countries, then the global war on drugs is your ticket to supplying troops or creating proxy armies. One of the most recent examples is Costa Rica, a peaceful country in Central America without an army, where the U.S. bribed the government to allow the Navy and Marines to be stationed off the Caribbean coast to fight the war on drugs. In other nations where even this won’t be allowed, the CIA funds and arms one of the drug cartels who then act as their hired enforcers, or they’re used as an excuse for governments to accept U.S. help to combat the enemy they created. In either case, the U.S. sells more arms and trains soldiers to be used upon command.

Keeps Big Banks Flush with Cash:
It has long been known that big banks happily launder money for the big drug cartels. According to The United Nations Office on Drugs and Crime (UNODC) and the International Monetary Fund (IMF), “Up to 1.5 trillion dollars in drug money are laundered through legal enterprises, accounting for 5% of global GDP.” Take just this year and one bank, Wachovia; who had to pay a slap-on-the-wrist fine for laundering more than $420 billion for Mexican drug cartels. Imagine where the big banks would be without this money, given that they also needed a bailout of over $23 trillion for lack of sufficient deposits to pay for their gambling habits.

Funds CIA Black Ops: Do you ever wonder where the U.S. government gets all that money for their secret “Black Ops” like underground bases, secret wars, corporate takeovers and seed money, etc? It’s been proven over and over that the CIA (and Pentagon) controls a large majority of the illicit drug trade either directly or indirectly through proxies mentioned above. They’ve been caught in the act of shipping in massive amounts of cocaine, while the CIA now openly admits to protecting and facilitating the opium trade in Afghanistan. If it wasn’t for this tremendous profit, the CIA would not be able to build their secret shadow government.

So, as you can see, there are great benefits to the War on Drugs depending what side of the coin you’re on. If you’re a poor pot smoker, well, you’re out of luck. But if you’re the biggest heroin and cocaine dealer in the world and desire a monopoly . . . well, you’ve got the world right where you want it.

SOURCE

10 Banks Own 77 Percent Of All U.S. Banking Assets: Too Big To Fail?

Too Big To Fail?: 10 Banks Own 77 Percent Of All U.S. Banking Assets

Courtesy of The Economic Collapse Blog

Back during the financial crisis of 2008, the American people were told that the largest banks in the United States were “too big to fail” and that was why it was necessary for the federal government to step in and bail them out. The idea was that if several of our biggest banks collapsed at the same time the financial system would not be strong enough to keep things going and economic activity all across America would simply come to a standstill. Congress was told that if the “too big to fail” banks did not receive bailouts that there would be chaos in the streets and this country would plunge into another Great Depression. Since that time, however, essentially no efforts have been made to decentralize the U.S. banking system. Instead, the “too big to fail” banks just keep getting larger and larger and larger. Back in 2002, the top 10 banks controlled 55 percent of all U.S. banking assets. Today, the top 10 banks control 77 percent of all U.S. banking assets. Unfortunately, these giant banks are also colossal mountains of risk, debt and leverage. They are incredibly unstable and they could start coming apart again at any time. None of the major problems that caused the crash of 2008 have been fixed. In fact, the U.S. banking system is more centralized and more vulnerable today than it ever has been before.

It really is difficult for ordinary Americans to get a handle on just how large these financial institutions are. For example, the “big six” U.S. banks (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets equivalent to approximately 60 percent of America’s gross national product.

These huge banks are giant financial vacuum cleaners. Over the past couple of decades we have witnessed a financial consolidation in this country that is absolutely unprecedented.

This trend accelerated during the recent financial crisis. While the big boys were receiving massive bailouts, the hundreds of small banks that were failing were either allowed to collapse or they were told that they should find a big bank that was willing to buy them.

As a group, Citigroup, JPMorgan Chase, Bank of America and Wells Fargo held approximately 22 percent of all banking deposits in FDIC-insured institutions back in 2000.

By the middle of 2009 that figure was up to 39 percent.

That is not just a trend – that is a landslide.

Sadly, smaller banks continue to fail in large numbers and the big banks just keep growing and getting more power.

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Today, there are more than 1,000 U.S. banks that are on the “unofficial list” of problem banking institutions.

In the absence of fundamental changes, the consolidation of the banking industry is going to continue.

Meanwhile, the “too big to fail” banks are flush with cash and they are getting serious about expanding. The Federal Reserve has been extremely good to the big boys and they are eager to grow.

For example, Citigroup is becoming extremely aggressive about expanding….

Citigroup has been hiring dozens of investment bankers, dialing up advertising and drawing up plans to add several hundred branches worldwide, including more than 200 in major cities across the United States.

Hopefully the big banks will start lending again. The whole idea behind the bailouts and all of the “quantitative easing” that the Federal Reserve did was to get money into the hands of the big banks so that they would lend it out to ordinary Americans and get the economy rolling again.

Well, a funny thing happened. The big banks just sat on a lot of that money.

In particular, what they did was they deposited much of it at the Fed and drew interest on it.

Since 2008, excess reserves parked at the Fed have grown by nearly 1.7 trillion dollars. Just check out the chart posted below….

The American people were promised that TARP and all of the other bailouts would enable the big banks to lend out lots of money which would help get the economy going for ordinary Americans again.

Well, it turns out that in 2009 (the first full year after Congress passed the bailout legislation) U.S. banks posted their sharpest decline in lending since 1942.

Lending has never fully recovered since the crash of 2008. The big financial institutions like Goldman Sachs, Morgan Stanley and JPMorgan Chase have been able to get all the cash that they need, but they have not passed that generosity along to ordinary Americans.

In fact, the biggest U.S. banks have actually reduced small business lending by about 50 percent since the crash of 2008.

That doesn’t sound like what we were promised.

These “too big to fail” banks have been able to borrow gigantic amounts of money from the Fed for next to nothing and yet they still refuse to let credit flow to local communities. Instead, the big banks have found other purposes for all of the super cheap money that they have been getting from the Fed as Ellen Brown recently explained….

It can be very profitable indeed for the big Wall Street banks, but the purpose of the near-zero interest rates was supposed to be to get banks to lend again. Instead, they are, indeed, paying “outrageous bonuses to their top executives;” using the money to engage in the same sort of unregulated speculation that nearly brought down the economy in 2008; buying up smaller banks; or investing this virtually interest-free money in risk-free government bonds, on which taxpayers are paying 2.5 percent interest (more for longer-term securities).

What makes things even worse is that these big banks often pay next to nothing in taxes.

For example, between 2008 and 2010, Wells Fargo made a total profit of 49.37 billion dollars.

Over that same time period, their tax bill was negative 681 million dollars.

Do you understand what that means? Over that 3 year time period, Wells Fargo actually got 681 million dollars back from the U.S. government.

Isn’t that just peachy?

Meanwhile, the big financial giants have not learned their lessons and they continue to do business pretty much as they did it prior to 2008.

The big banks continue to roll up massive amounts of risk, debt and leverage.

Today, Wall Street has become one giant financial casino. More money is made on Wall Street by making side bets (commonly referred to as “derivatives”) than on the investments themselves.

If the bets pay off for the big financial institutions, mind blowing profits can be made. But if the bets go against the big financial institutions (as we saw in 2008), firms can collapse almost overnight.

In fact, it was derivatives that almost brought down AIG. The biggest insurance company in the world almost folded in 2008 because of a whole bunch of really bad bets.

The danger from derivatives is so great that Warren Buffet once called them “financial weapons of mass destruction”. It has been estimated that the notional value of the worldwide derivatives market is somewhere in the neighborhood of a quadrillion dollars.

The largest banks have tens of trillions of dollars of exposure to derivatives. When the next great financial collapse happens, derivatives will almost certainly be at the center of it once again. These side bets do not create anything real for the economy – they just make and lose huge amounts of money. We never know when the next great derivatives crisis will strike. Derivatives are essentially like a “sword of Damocles” that perpetually hangs over the U.S. financial system.

When I start talking about derivatives I get a lot of people in the financial community mad at me. On Wall Street today you can bet on just about anything you can imagine. Almost everyone in the financial world has gotten so used to making wild bets that they couldn’t even imagine a world without them. If anyone even tried to put significant limits on futures, options and swaps it would cause Wall Street to throw a hissy fit.

But someday the dominoes are going to start to fall and the house of cards is going to come crashing down. It is an open secret that our financial system is fundamentally unsound. Even a lot of people working on Wall Street will admit that. It is just that people are so busy making such big piles of money that nobody wants the party to stop.

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It is only a matter of time until some of these big banks get into a huge amount of trouble again. When that happens, we might really find out whether they are “too big to fail” or whether we could get along just fine without them.

SOURCE

40 Facts That Prove The Working Class Is Being Systematically Wiped Out

40 Facts That Prove The Working Class Is Being Systematically Wiped Out

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Courtesy The Economic Collapse Blog

Without an abundance of good jobs, the middle class in the United States is going to shrivel up and die. Right now, rampant unemployment is absolutely killing communities all over America. Hopelessness and poverty are exploding and many are now wondering if we are actually witnessing the slow death of the middle class. There simply are not nearly enough “good jobs” to go around anymore, and even many in the mainstream media are referring to this as a “long-term structural problem” with the economy. The only thing that most working class Americans have to offer in the marketplace is their labor. If nobody will hire them they do not have any other ways to provide for their families. Well, there is a problem. Today wealth has become incredibly centralized. The big corporations and the big banks dominate everything. Thanks to incredible advances in technology and thanks to the globalization of our economic system, the people with all the money don’t have to hire as many ordinary Americans anymore. They can hire all the labor they want on the other side of the globe for a fraction of the cost. So the rich don’t really have that much use for the working class in America anymore. The only thing of value that the working class had to offer has now been tremendously devalued. The wealthy don’t have to pay a lot for physical labor anymore. Thousands of our factories and millions of our jobs have been shipped overseas and they aren’t coming back. The big corporations are thriving while tens of millions of ordinary Americans are deeply suffering. Almost all of the wealth being produced by our economy is going to a very centralized group of people at the very top of the food chain. The rich are getting richer and the working class is being systematically wiped out.

So the fact that we are facing rampant unemployment that never seems to go away should not be a surprise to anyone. Today, the “official” unemployment rate went up to 9.2 percent even though a whopping 272,000 Americans “dropped out of the labor force” in June. The government unemployment figure that includes “discouraged workers” went up from 15.8% to 16.2%. The mainstream media is proclaiming that this was “a horrific report” because most economists were expecting much better news.

Well, guess what?

Things are going to get a whole lot worse.

More job cuts are coming. One recently released report found that the number of job cuts being planned by U.S. employers increased by 11.6% in June.

It is also being projected that state and local governments across the U.S. will slash nearly half a million more jobs by the end of next year.

Needless to say, things don’t look good.

Most people that still have jobs are desperately trying to hold on to them.

Employers know that most workers are easily replaceable these days, so wages are not moving up even though the cost of living is.

We are right in the middle of the worst employment downturn since World War 2. Jay-Z recently summed up the situation this way….

“Numbers don’t lie. Unemployment is pretty high.”

Jay-Z certainly has a way with words, eh?

If something is not done about the rampant unemployment in this nation, the death of the middle class will accelerate.

Most Americans just assume that the United States will always have a large middle class, but there is no guarantee that is going to happen. In fact, there is a whole lot of evidence that the middle class in America is rapidly shrinking.

Take a few moments to read over the facts compiled below. Taken together, they provide compelling evidence that the working class is being systematically wiped out….

#1 Right now, the U.S. government says that 14.1 million Americans are unemployed.

#2 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million people to the population since then.

#3 The number of Americans that are “not in the labor force” is at an all-time high.

#4 The United States has never had an employment downturn this deep and this prolonged since World War 2 ended.

#5 There are officially 6.3 million Americans that have been unemployed for more than 6 months. That number has risen by more than 3.5 million in just the past two years.

#6 It now takes the average unemployed worker in America about 40 weeks to find a new job. Just check out this chart….

#7 There are now about 7.25 million fewer jobs in America than when the recession began back in 2007.

#8 Back in 2000, the employment to population ratio was over 64 percent. Today, it is sitting at just 58.2%.

#9 Only 66.8% of American men had a job last year. That was the lowest level that has ever been recorded in all of U.S. history.

#10 During this economic downturn, employee compensation in the United States has been the lowest that it has been relative to gross domestic product in over 50 years.

#11 The number of “low income jobs” in the U.S. has risen steadily over the past 30 years and they now account for 41 percent of all jobs in the United States.

#12 Half of all American workers now earn $505 or less per week.

#13 According to a report released in February from the National Employment Law Project, higher wage industries are accounting for 40 percent of the job losses in America but only 14 percent of the job growth. Lower wage industries are accounting for just 23 percent of the job losses but 49 percent of the job growth.

#14 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

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#15 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

#16 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

#17 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe? Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.

#18 In 2010, South Korea exported 12 times as many automobiles, trucks and parts to us as we exported to them.

#19 The United States now spends more than 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#20 Since China entered the WTO in 2001, the U.S. trade deficit with China has grown by an average of 18% per year.

#21 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

#22 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

#23 In 2002, the United States had a trade deficit in “advanced technology products” of $16 billion with the rest of the world. In 2010, that number skyrocketed to $82 billion.

#24 Manufacturing employment in the U.S. computer industry was actually lower in 2010 than it was in 1975.

#25 Since 2001, over 42,000 manufacturing facilities in the United States have been closed.

#26 There were more manufacturing jobs in the United States in 1950 than there are today.

#27 Since the year 2000, we have lost approximately 10% of our middle class jobs. In the year 2000 there were about 72 million middle class jobs in the United States but today there are only about 65 million middle class jobs. Meanwhile, our population has gotten significantly larger.

#28 When you adjust wages for inflation, middle class workers in the United States make less money today than they did back in 1971.

#29 One recent survey found that 9 out of 10 U.S. workers do not expect their wages to keep up with soaring food prices and soaring gas prices over the next 12 months.

#30 Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.

#31 One out of every six elderly Americans now lives below the federal poverty line.

#32 According to one recent study, approximately 21 percent of all children in the United States were living below the poverty line in 2010.

#33 Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid.

#34 As 2007 began, there were 26 million Americans on food stamps. Today, there are more than 44 million Americans on food stamps, which is an all-time record.

#35 Today, one out of every four American children is on food stamps.

#36 59 percent of all Americans now receive money from the federal government in one form or another.

#37 The number of Americans that are going to food pantries and soup kitchens has increased by 46% since 2006.

#38 In the United States today, the richest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

#39 According to Moody’s Analytics, the wealthiest 5% of all households in the United States now account for approximately 37% of all consumer spending.

#40 The poorest 50% of all Americans collectively own just 2.5% of all the wealth in the United States.

The cold, hard reality of the matter is that the United States is experiencing a long-term economic decline.

Every single day, more American families fall out of the middle class and into poverty. There are millions of American families out there tonight that are just barely hanging on by their fingernails.

More Americans than ever are constantly borrowing more money just to stay afloat. Even as rampant unemployment plagues this nation and even as wages remain stagnant, middle class Americans are increasing their use of credit.

A CNBC article noted the increase in consumer borrowing that we have seen recently….

The Federal Reserve says consumer borrowing rose $5.1 billion following a revised gain of $5.7 billion in April. Borrowing in the category that covers credit cards increased, as did borrowing in the category for auto and student loans.

It is very hard to live “the American Dream” without going into huge amounts of debt these days.

But for an increasing number of Americans, “the American Dream” is just a distant memory.

Tonight, there are large numbers of people living in the tunnels under the city of Las Vegas. As the wealthy live the high life in the casinos and hotels above them, an increasing number of desperate “tunnel people” are attempting to carve out an existence in the 200 mile long labyrinth of tunnels that stretches beneath Vegas. It is a nightmarish environment, but it is all those people have left.

Don’t look down on them, because you never know who might be next.

If you lost your current job, how long would you be able to survive?

Unfortunately, as bad as things are now, the reality is that this is just the beginning.

You ain’t seen nothin’ yet.

Do what you can to make sure that you and your family are not totally wiped out by the next wave of the economic collapse.

SOURCE

When it comes to money, Ben Stein doesn’t mess around

Even Ben Stein Is Warning That An Economic Collapse Is Coming

He sure has come a long way since “Ferris Bueller’s Day Off”. During a recent television segment for CBS, Ben Stein declared that “the tea leaves are ominous” and he warned that an economic collapse may be coming. In particular, Ben Stein is deeply concerned about inflation. During his recent appearance on CBS, Stein proclaimed that the Federal Reserve is “just shoving money out the door as fast as it can” and that this could have horrific consequences for the U.S. financial system. Sadly, Ben Stein is exactly right on this point. The Federal Reserve has already injected enough money into the financial system to create an inflationary disaster. Fortunately most of this liquidity is still being held by the banks (this will be further explored below), but once all of that money starts getting released into the financial system it is going to unleash economic chaos.

In the video that you are about to watch, Ben Stein states that “when serious inflation hits, it hits everyone”.

And that is absolutely true. Inflation is a hidden tax on ever single dollar that each one of us holds. Nobody can cheat that hidden tax and nobody can escape from it.

You may have noticed that the price of gas is going up.

In fact, just the other day UPI reported that the price of gas at one station in the Washington D.C. area was up to 5 dollars a gallon.

Can it get much worse?

Well, actually yes it can.

Richard Hastings, a strategist at Global Hunter Securities, recently told CNBC that he believes that we could potentially see $6 gas at some point this summer.

Do you think that a lot of American families will rethink their summer vacations if that happens?

You betcha.

Perhaps Americans will just fly instead.

Well, that is rapidly becoming more expensive as well. Just check out what one recent CNN article had to say about rising airfares….

Late Tuesday, Southwest Airlines raised all of its round-trip fares by $10. Delta (DAL, Fortune 500) initiated this latest round of price increases on Monday, and as of midday Wednesday American Airlines (AMR, Fortune 500), JetBlue (JBLU) and United Airlines (UAL) had matched it.

As Ben Stein also notes in the video below, food prices are soaring as well. Rampant money printing by the Federal Reserve and serious crop problems all over the globe have created a “perfect storm” for agricultural commodities. In the video, Stein sounds downright apocalyptic as he describes crop failures around the world….

But now, we are getting serious crop shortfalls in China – an enormously important agricultural producer and consumer. U.S. crop forecasts are also disappointing. There are huge problems in Australia, South America, and Russia. Corn, wheat, rice and other foodstuff prices are just going wild.

And you know what?

Ben Stein is right.

In a recent article about the global food crisis, I detailed some of the agricultural commodity price increases that we have seen….

*According to the World Bank, the global price of food has risen 36% over the past 12 months.

*The commodity price of wheat has approximately doubled since last summer.

*The commodity price of corn has also about doubled since last summer.

*The commodity price of soybeans is up about 50% since last June.

*The commodity price of orange juice has doubled since 2009.

But it isn’t just food and gas that are going up. The value of virtually all “hard assets” is going up.

Investors are running to precious metals such as gold and silver in a desperate attempt to preserve their wealth. Gold and silver have been absolutely skyrocketing. The price of gold set another brand new all-time record high this week. The price of silver hit a 31-year high today.

So why is this happening?

One of the biggest reasons for all of this is that the Federal Reserve has been flooding the system with new money. In the video below, Ben Stein points to quantitative easing as the primary reason why we are seeing so much inflation….

But most important of all, the Fed is just shoving money out the door as fast as it can, creating piles of cash in banks.

The Federal Reserve had hoped that economic growth would be sparked by all of this new cash, but that is only happening to a minimal degree.

Instead, what Ben Stein believes all of this new money is going to bring about is a situation known as “stagflation”.

Do you remember the 1970s and the “misery index”?

Well, we seem to be headed for a repeat of those days.

In a previous article, I defined stagflation….

Stagflation exists when inflation and unemployment are both at high levels at the same time.

Up to this point, we have had high unemployment but relatively low levels of inflation.

But now we are going to get to enjoy high unemployment and high inflation at the same time.

Oh goody!

Video of Ben Stein’s recent appearance on CBS is posted below. You can read a transcript of his remarks here. It is amazing that a mainstream news outlet would allow this much truth to get out….

Look, the reality is that you cannot pump this much money into the financial system without there eventually being very serious consequences.

For decades the Federal Reserve has been systematically debasing the U.S. dollar, but what the Fed has been doing to the money supply over the past couple of years is absolutely unprecedented. Just check out the chart below….

So why hasn’t all of this new cash caused chaos in the economy already?

Well, because most of it is still trapped in the financial system. Banks have been reluctant to loan it out. Instead, they seem content to keep most of it on reserve at the Fed.

But if all of this new money starts leaking out into the economy it is going to drive prices up. When you have lots more money chasing roughly the same number of goods and services it is inevitable that inflation will result.

Robert Wenzel of EconomicPolicyJournal.com believes that more quantitative easing is not even necessary to turn the U.S. economy into a hyperinflationary nightmare. In fact, Wenzel says that there are enough excess reserves at the Fed right now to turn us into another Zimbabwe….

With over $1.4 TRILLION in excess reserves, Bernanke never has to resort to QE style monetary operations ever again, to print money. If those excess reserves leak into the system, Bernanke has enough sitting there to make Zimbabwe look like a model of prudent money management. As per usual, Bernanke has most of the media and Fed watchers looking at the wrong card.

Forget about QE3, keep your eye on excess reserves. Excess reserves are funds that are not in the system bidding up prices, but when they enter the system by banks using them to make loans, have the potential to result in a multiple of their size, when they impact the money supply. Because of this potential for multiple size impact, excess reserve entering the economy are considered high-powered money.

We would have never even been in this position if we had never allowed the Federal Reserve to be created and had never gotten 14 trillion dollars in debt. But now America has a debt problem that can never be solved under the current system. We are locked into a debt spiral from which there is no escape.

Last year, the U.S. government spent more on interest on the national debt than on the following departments combined….

*The Department of Health and Human Services

*The Department of Energy

*The Department of Veterans Affairs

*The Department of Justice

*The Department of Homeland Security

*The Department of Agriculture

*The Treasury Department

*The Department of Labor

Ouch!

But right now the U.S. is still able to borrow tons of money at super low interest rates.

So what happens if interest rates go up?

It could potentially be catastrophic.

That is why the decision by S&P to downgrade its outlook on U.S. government debt was such a big thing the other day. The U.S. still has a “AAA” rating, but S&P is warning that the AAA rating is in danger.

So what would it mean if the U.S. lost the AAA rating that it currently holds?

The Washington Post recently described it this way….

A credit rating downgrade for the United States would spell even more financial trouble for the U.S. government, hampering its ability to borrow money as investors demand higher yields to make up for the increased risk. That would cause its national debt to balloon further and increase the need to hike taxes or make even more painful cuts in spending.

But the U.S. government continues to borrow money like there is no tomorrow and Ben Bernanke and his friends at the Fed continue to recklessly print money.

As bad as things may seem for many of you right now, the truth is that what we are experiencing at the moment is a “false bubble of prosperity”. Things are eventually going to get much, much worse.

Enjoy this time of economic peace and stability while you still can. Our leaders have absolutely destroyed our economic future and we are going to want to have some good memories to hold on to while we are living through economic hell in the years ahead.

Even Ben Stein Is Warning That An Economic Collapse Is Coming

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CT by Bob Sullivan

“Total Checking.” “Value Checking.” “MyAccess Checking.” What do they all have in common? The word “free” is missing from the name.

You are likely painfully aware that big banks like Chase, Wells Fargo, and Bank of America have ended no-strings-attached free checking accounts. But if you had any questions about how restrictive — or expensive — those strings can be, consider Chase bank. Scarcely two years ago, we marveled at banks’ efforts to inch fees up to $3 per withdrawal. Chase bank is now test-piloting $5-per-withdrawal fees for non-customers in Illinois. That’s in addition to fees the consumers’ bank charges. Soon it may cost $10 to grab $20 in a pinch.

Once upon a time, consumers could expect to earn money by leaving their cash sitting in a bank. Today, consumers must worry about their bank slowly bleeding money out of the account. The change is happening swiftly. Chase says it’s converted around 8 million free accounts — many former customers of Washington Mutual — into “follow-our-rules-or-pay-up-to-$144-annually” accounts.

It costs banks about $300 apiece annually to offer checking accounts, according to a recent study by Bretton-Woods. They used to recoup these costs by helping themselves to some $30 billion worth of overdraft fees from consumers. But now that the cash cow has been largely eliminated by new consumer regulations, banks are trying out new techniques to recoup this lost revenue.

Just how far will banks be able to push fee-weary consumers? That’s unclear. Earlier this month, Bankrate.com released a survey showing 75 percent of consumers earning $75,000 or more would rather switch banks than pay higher fees. Overall, 64 percent of customers said they’d bolt.

That ire may not translate into action, however, and banks know it. A J.D. Power study released on March 1 found that, while consumers are switching banks at a slightly higher rate than in the past (8.7 percent last year, compared to 7.7 percent a year earlier), fees and interest rates have almost nothing to do with their choices. “Pricing” impacted only 4 percent of consumers, the study found.

This would not be a surprise to behavioral economists. Consumers almost never consider fees — particularly punitive fees like overdrafts or “your balance fell below $1,000” charges — when making purchase decisions. Nearly everyone suffers from what’s sometimes called “magical thinking” — as in, “I’ll never misbehave and get hit by that fee.”

It’s the shallow things that matter
So what do people consider when switching banks? Big, impressive buildings and billboards seemed to matter most, the survey found. Here’s the depressing quote from the JD Power press release:

“For customers evaluating and ultimately selecting a new bank, the most important factors driving their decision are advertising; branch convenience; products and services; promotional offers; and direct and indirect customer experience,” it said.

That means you can expect higher fees, more buildings and more kooky ads from banks.

There was one positive note in the J.D. Power research. There is evidence consumers do have their limits. About 17 percent of consumers who switched banks said high fees or low interest motivated the breakup.

Banks argue that it’s not fair to say free checking has disappeared. OK. Let’s just say NSA relationships with big banks are dead, replaced It’s by accounts wrapped in red tape. And remember, many of these rules can change at any time. So here’s five Red Tape Traps you’ll find along the way to a free checking account.


1) Soaring ATM fees
We’ve already mentioned Chase’s $5 experiment. Plenty of folks now pay $6 or $7 per withdrawal, when the ATM machine fee is added to their own bank’s fee. These fees are perhaps the best example of magical thinking at work. Most folks think they’ll be good about walking the extra block to access cash at their bank’s ATM. But when there’s a screaming kid in a stroller or an impatient date on the arm, you’re likely to just pay the fee. Even one so-called “foreign” ATM transaction with a $5 hit every month costs $60 annually. Be realistic: If your bank charges for such transactions, you should just budget $100 annually for ATM service. But a much better choice is to find a bank that doesn’t charge you. For those ATM emergencies, you’ll at least cut your ATM fees in half, and some banks — USAA Federal Savings Bank, for example — refund the ATM bank’s fees. There’s no law preventing you from getting a secondary checking account with a new institution that you use primarily for accessing cash on the fly. I recommend this kind of “allowance” account structure in Stop Getting Ripped Off.

A few other creative efforts can cut your ATM fees. Get cash back when you shop at grocery stores with your debit card, although that’s not my favorite way to use debit. Better yet: Find fee-free ATMs. They’re out there. The WaWa convenience store chain offers them, and it recently performed its one billionth fee-free cash withdrawal.

What it costs: Two “foreign” withdrawals per month — $120

2) Keeping your minimum balance
Most account holders are familiar with the idea that they might have to do something — maintain a minimum balance or direct deposit their paychecks — in order to keep some level of service.

But now, a single slip-up, such as a flurry of cashed checks that sink your balance to $998.43 for one afternoon, can be costly. With fees of $12 or more, the experience is not unlike getting hit with an overdraft. The same advice you followed to prevent overdrafts applies here. Some banks let you link your savings and checking accounts to make sure you don’t dip below that minimum. Sign up for text message alerts so you can get early notification of a dangerously low balance, and log on to online banking to check your balance often. Stagger your regular payments so they hit after your paychecks.

The biggest Red Tape Trap of all, however, is the dreaded movable minimum balance. Consumers who once enjoyed fee waivers for keeping $500 in an account can see that minimum raised to $750 or $1,000. It’s easy to miss a warning letter from the bank, and end up with one or two months of $12 fees. The clearest hint a balance change is coming is an account name change (see below).

What it costs: Two slip-ups — $24

3) Overdraft fee marketing
The voracious overdraft fee animal isn’t gone, it’s just been put back in its cage. Until recently, consumers could incur $35 overdraft fees by making small purchases with their debit cards. Today, those transactions are simply declined by the bank, or approved without the fee — unless the bank has received explicit opt-in permission from the account holder. Banks have driven hard to trick consumers into giving up this permission, which is inappropriate for the vast amount of consumers. They’ve given it pleasing sounding names like “courtesy pay,” “Buffer Zone,” or “debit card advance,” and plastered bank windows with pictures of smiling, attractive men and women who say they are relieved to have this peace of mind. If you’ve been tricked into signing up for overdraft protection, un-sign up immediately.

What it costs: Two overdrafts — $70

4) The name has changed
The surest sign a new fee or restriction is coming is a name change — either the name of your bank has changed because of an acquisition (like Washington Mutual becoming Chase) or the name of your account has been changed. Former Washington Mutual customers have seen their account names changed from “WaMu Free Checking” to “Chase Free Extra Checking” to “Chase Total Checking,” which is totally more expensive than free. Ironically, a Google search for Washington Mutual still sends consumers to a Web page at Chase.com with the title “WaMu.com, home of WaMu Free Checking, is now Chase.”

Chase customers can avoid checking fees through a variety of methods — maintaining a minimum daily balance, a high average balance, making at least one large direct deposit, or by paying a bunch of other fees.

The amounts required — at least one $500 deposit — aren’t Draconian, but the rules mean consumers have a lot of new things to keep track of. They will slip up, and pay. And of course, the rules can and will change. Beware the notice that you’ve just been upgraded to “Complete Awesome Checking” or “Value Asset Acquisition Checking.” You almost certainly are about to be hit with a new fee or rule.

What it costs: Two mistakes — $24

5) The hidden cost of no interest
Of course, requiring a minimum balance of $1,500 or so is itself a fee. That’s money you could park in a high-yielding money market account earning interest. Even a 1 percent interest rate would get you a smidge more than $15 on your $1,500, so that kind of minimum requirement amounts to a $15 annual fee.

What it costs: Missed interest — $15

TOTAL TRAP COST: $253 annually.

This entire column has been a not-so-subtle suggestion that you consider banking alternatives. Online banks like ING Direct offer higher interest and fewer fees. Credit unions and small banks still offer really free checking. In fact, BankRate.com just released a survey showing 38 of the 50 largest credit unions have free checking with no strings attached, and about half of them don’t even require a minimum balance. Their ATM fees are, on average, half of traditional bank fees and one-quarter of the large credit unions charge no ATM fees at all.

That means there’s no reason not to open a credit union account, even if it merely serves as a secondary checking account.

http://redtape.msnbc.com/2011/03/total-checking-value-checking-myaccess-checking-what-do-they-all-have-in-common-the-word-free-is-decidedly-missing-from-t.html?GT1=43001