The debts assumed by the Western democracies will overwhelm their economies and lead to the end of our current Dollar-denominated, global currency regime. This has profound implications for Americans' standard of living and our empire's role in the world.
Yet doing radio interviews and taking call-in questions from people around the United States reminds me why we made the video: People suffer from a shocking lack of knowledge about the serious financial problems facing our country.
For example, the most popular question is: When will the crisis begin? The question assumes we ought to ignore the collapse of the automakers, the complete destruction of America's investment banks, and the receivership of the world's largest mortgage firms (Fannie and Freddie), and the world's biggest insurance company (AIG).
The question implies nothing unusual has taken place with housing prices... or in the markets for strategic commodities like lithium, copper, oil, coal, and corn – all of which are soaring in the face of the moribund US economy. The question assumes nothing is going on with the value of our Dollar, despite silver trading near $30 and gold trading above $1300 – up 100% in only three years.
We respond to the popular question with a question of our own: What will have to happen before you'll say we're in a crisis right now?
How high will gas prices have to get before your neighbors notice something is wrong? How high will Gold Prices have to get? Or silver? How many banks will have to go under? How high will unemployment have to rise? How many cities will have to go bankrupt? Where's your threshold? How bad will things have to be before you begin to see what's really happening?
In addition to raising these questions, I've compiled a list of seven key facts that might spring people into taking action to protect themselves. They are the factors I believe MUST lead to the end of the global US Dollar standard – what we call The End of America.
#1. The Gold Price has gone up 10 years in a row
We can't think of another market that's ever risen for 10 consecutive years. This is a historical anomaly, and it means something has gone badly wrong with the world's reserve currency (the US Dollar). Markets, if left to find their own equilibrium, will naturally fluctuate. Gold isn't fluctuating. Its steady move up proves something strange is happening to our money.
#2. Our government's deficits are out of control
The government's annual deficits now routinely surpass $1 trillion. The first $1 trillion deficit came in 2008 – and the government explained it away as the consequence of the financial crisis. But we racked up another $1 trillion deficit in 2009 and yet another in 2010.
We'll have another in 2011 and so on. Our national debt has doubled since 2005. We've borrowed more money in the last five years than we had in the entire history of our government until then. This isn't sustainable.
#3. The government cannot increase tax revenues enough to cover our spending or repay our debts – ever
Our annual deficits have become completely unlinked to taxes. Total federal income taxes and corporate taxes generate $1.1 trillion a year in revenue, and we still ran a $1.3 trillion federal deficit last year. So even if we increased tax revenues by 100%, we would still have fallen $200 million short. This is totally unsustainable.
#4. Special-interest groups – particularly government unions – are looting our Treasury
Self-serving special-interest groups have completely hijacked government spending. We now spend $200 billion a year on federal pensions. We're spending another $450 billion on welfare. This spending, combined with our defense spending ($700 billion), exceeds total federal tax revenue and leaves nothing to pay the $200 billion in interest on our debt, nothing to pay for actual government services (like roads), and nothing to pay towards the inevitable Social Security/Medicare shortfall.
Remember...most voters do not pay taxes. It's politically impossible to reform this interest group-based spending. These people are robbing the Treasury. They will cause our currency and eventually our government itself to collapse.
#5. We're printing money just like the banana republics we used to mock
To support the government's runaway spending, the Federal Reserve is now continuously buying government debt. This process was commonly called monetizing the debt or, more simply, printing money.
In addition to the inevitable economic consequences of monetizing debt (massive inflation), there's another, even more serious problem: a lack of confidence in the leadership of the Fed. We would support an audit of the Fed. We would support replacing Fed Chairman Ben Bernanke. After all, Bernanke has alternately defended his decision to print massive quantities of new money and denied ever doing it. However, we are certainly aware that as people (rightly) lose confidence in the Fed and in the Dollar, there will be serious consequences for our economy.
#6. We can't repay our debts
Total debt outstanding in the US currently exceeds $55 trillion. That's $681,165 in debt per US family. There is simply no way to repay (or even maintain) debt of this magnitude using the income of the average American family, which is slightly less than $50,000 per family per year. Interest alone on these debts (based on a 5% rate) would total $34,000 per family every year. Total debt in the US economy is unsustainable and can't be financed without printing vast new sums of money.
#7, New debt in the US is soaring, with the lowest-quality debtors borrowing record amounts
Shockingly, and despite all the evidence that the US economy carries far too much debt, both public and private debt issuance soared to new record levels in 2010. Overall, more than $3 trillion in new corporate debt was issued last year – the second record year in a row.
And junk-bond issuance set a new, vastly higher record. In 2010, 509 speculative-grade corporate borrowers sold $287 billion worth of new debt. That compares to the previous record (2009) of $167 billion. Our economy has become so warped by its debt load, it cannot function without ever-larger amounts of debt.
In summary, anyone who carefully looks at these numbers must realize this is not safe and will not last long. That's why I'm telling everyone: Don't ask, When will the crisis begin?
Instead, ask, Where can I get the best deal on gold and Silver Bullion to protect my family's finances?
Porter Stansberry is founder and publisher of Stansberry & Associates Investment Research, a private financial publishing company based in Baltimore, Maryland, and editor of the monthly Porter Stansberry's Investment Advisory.