Economic collapse is inevitable, here’s why…

economic collapse

America is quickly approaching a catastrophic economic collapse. Before you dismiss this as hype or paranoia, take a few minutes to review the facts outlined on this page. The numbers don’t lie. At this point, the dollar crash is unavoidable… far from an exaggeration this is a mathematical certainty. As repelling as that sounds, it’s in your own best interest to learn just how bad the situation is.

According to the talking heads of mainstream press the economy is slowly recovering and the financial crisis is all but behind us. But we need a reality check. It’s time to stop being naive and start being more discerning. Instead of more false hope, we need the truth as bitter as it might sound… and the truth is, from our local municipalities, to our states to our federal government, we are broke… the truth is we can’t payback our debt without getting into even more debt… the truth is the housing crash of 2008 was just a small preview of what’s to come.

America is drowning in debt. The government’s liabilities are now growing at an exponential rate. Our national debt is on a vicious downward spiral.

To our detriment, our government continues to pretend that we can borrow our way out of debt and only a handful of our politicians are willing to admit that our nation is now bankrupt.

Contrary to rhetoric coming out of Washington, no tax hike or budget cut will get us out of this mess. The kinds of measures that would actually bring about meaningful change to curb the financial collapse are deemed too severe to be even considered.

Examine the evidence outlined below. Connect the dots and think for yourself.

Arthur Schopenhauer

“All truth passes through three stages.

First, it is ridiculed.
Second, it is violently opposed.
Third, it is accepted as being self-evident.”

— Arthur Schopenhauer

What does the “national debt” even mean?

Let’s cover the basics first. When the government can not cover its spending using the collected revenues from corporate and income taxes and other fees it imposes, it goes into debt. The U.S. national debt is the sum of all outstanding debt owed by the federal government. It includes the money the government borrowed, plus the interest it must pay on this debt.


Let’s also clear up the difference between debt and deficit. The deficit is the budget shortfall we have in any one year. If you take in $100 billion and spend $130 billion, you get a deficit of $30 billion. Now at the end of that year, you’ve got to do something with that $30 billion you owe, so you move it over to your long-term shortfall – which is the national debt.

Obviously, like any other debt, the national debt must be paid back to the holders. Of course, having a little debt is just fine as long as it’s manageable. On the other hand, if a country borrows too much it can drown in its debt, like Greece did.

So how bad is our situation? Numbers don’t lie, so let’s compare our debt and deficit to 1974 just to get a feel for our path and pace (later on we’ll look at national debt chart spanning 1940-2011).

In 1974 the deficit (annual shortfall) was $4 billion and the total debt was $484 billion. It had taken us 200 years from the start of the republic until 1974 to create that debt of $484 billion.

However, since 1974, our deficit has gone from $4 billion to a shocking $1.33 trillion… stop and think about that for a second… this means that our current annual budget shortfall is roughly triple the size of the total U.S. debt in 1974. Our national debt in 1974 was $484 billion. It is now over $16 trillion!

How is that possible? How did we go through World War I, World War II, the Korean War, Vietnam War – and have only $484 billion debt, then skyrocket past 16 trillion in such a short time?! The answer to this question has to do with a key event in 1971 that we’ll go over in a moment. For now, let’s stick with the national debt, so we can understand why it is no longer sustainable.

john adams

In a letter to Thomas Jefferson, 1787

“All of the perplexities, confusion, and distress in America arises,
not from the defects of the Constitution or Confederation, not from want of honor
or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.”

— John Adams, Founding Father

Sixteen trillion dollars, so what?

national debt

Sixteen trillion dollars is certainly a lot of money, but most people usually don’t deal with that many zeros in their life. It’s hard to really appreciate this almost unfathomable sum and the dire consequences it represents for us. But to understand how deep of a hole the government is in, we need to grasp the enormity of this dollar amount.

So, how big is one trillion? Here are a few helpful illustrations.

Imagine you decided to count to one million out loud. How long do you think it would take you at a pace of one number per second? If you do it non-stop, it would take about 12 DAYS. Now, how long would it take you to count to one trillion?.. The answer?.. 32,000 YEARS!!!

Here’s another illustration.

If you were alive when Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.

Last one… If you had a trillion $10 bills and you taped them all end to end. Your money ribbon will become so long that you would actually be able to wrap it around planet Earth more than 380 times!!! But, that amount of money would still not be enough to pay off the U.S. national debt.

Are you getting the picture yet?

On the right is an illustration of our federal debt that might help you get a better idea visually. You can click on the image to see a larger size.

Keep in mind that what you are looking at are pallets of $100 bills stacked on top of each other. To give you an idea of the size and height of these pallets, in the center is standing the Statue of Liberty in proper scale relative to the money towers. The cash surrounding and dwarfing the Stature of Liberty taken together amounts to 16.394 trillion which represents the last debt ceiling.

It’s interesting to note that when we hit a debt ceiling, our government just moves the ceiling up to allow for the debt to grow. Now ask yourself, what is the point of a movable ceiling? A movable ceiling is an oxymoron. If you can move your debt limit on demand, why bother pretending that you have a debt limit in the first place?

“I see in the near future a crisis approaching that unnerves me
and causes me to tremble for the safety of my country. Corporations
have been enthroned, an era of corruption will follow, and the money power
of the country will endeavor to prolong its reign by working upon the prejudices
of the people, until the wealth is aggregated in a few hands, and the republic destroyed.”

— Abraham Lincoln, 16th President of the United States

Statistics the government would rather you didn’t know

Now that you have somewhat of an idea of how big a trillion is, consider the chart on the right (U.S. national debt from 1940 to 2011 in trillions of dollars) and look at the mind-boggling statistics below:

  • The U.S. government spent over 454 billion dollars just on interest on the national debt during fiscal 2011.
  • In 2011, the government borrowed $41,000 every second.
  • Currently, the government’s burden is growing by $10 million per each passing minute
  • During the Obama administration alone, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.
  • Currently the U.S. monetary base is sitting somewhere around 2.7 trillion dollars. So if you went out and gathered all of that paper money up it would only make a small dent in our national debt. And, afterward there would be no currency for anyone to use.
  • The United States government is responsible for more than a third of all the government debt on the entire planet.
  • Mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011. That was not anticipated to happen until 50 years from now.
  • If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion each and every year.
  • The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was created back in 1913.

Hopefully at this point you’re starting to realize how big our debt is and how fast it’s growing. Shockingly, our government’s biggest liabilities are not even shown here, so this is just the tip of the iceberg.

Another 54 trillion excluded from the national debt figures

The short video on the left was broadcast by CNN in 2007 featuring the head government accountant David Walker.

According to David Walker who served as United States Comptroller General in the Government Accountability Office from 1998 to 2008, the U.S. government’s real financial burden is close to 70 trillion dollars.

This is because the national debt of 16 trillion does not account for obligations like Social Security, Medicare, Public Employee Pensions and other liabilities which the government is already committed to.

These liabilities are ticking time bombs, primed to explode with each new wave of retiring baby boomers. On top of this, medical costs continue to rise across the board driving Medicare expenses through the roof.

Keep in mind that at the time this video was broadcast our national debt was “only” around 9 trillion dollars and it is now close to 16 trillion. The catastrophic economic problems predicted by our government’s head accountant are playing themselves out right now.

What’s most disheartening is that David Walker was forced to accept that admonishing Washington about its unsustainable debt was a wasted of effort. His warnings of the impending financial collapse fell on deaf ears as both administrations simply ignored him. In desperation, Mr. Walker quit his job as the federal government’s chief auditor to travel around the country to find ways to deliver his message directly to the public.

Father of the Constitution and The Bill of Rights, James Madison is quoted saying:

“History records that the money changers have used every form
of abuse, intrigue, deceit, and violent means possible
to maintain their control over governments
by controlling money and its issuance.”

— James Madison, Founding Father and 4th President of the United States

How did we get in so much debt?

To outline all the events that lead us to this mess would take a separate article. But here’s a quick summary.

In 1913, Congress passed the “Federal Reserve Act” relinquishing the power to create and control money to the Federal Reserve Corporation, a private company owned and controlled by bankers. Over time, more and more legislation was passed to expand the Federal Reserve’s functions. The FED (short for Federal Reserve) was granted two extremely critical powers: the ability to purchase U.S. treasury securities and capability to manipulate the interest rates. Interest rate manipulation and quantitative easing (pumping money into the economy) by the FED, are the two driving forces behind the boom/bust cycles and economic bubbles.

The FED was supposed to be the guardian of U.S. currency. In reality, it turned out to be a debt and bubble machine, ran for profit by greedy bankers.

Our founding fathers understood the danger of putting the power to control the currency of a nation in the hands of a few individuals in the form of a monopolistic central bank and were vehemently opposed to such a system.

In 1944, as World War II was drawing closer to its end, representatives of 44 allied nations met in Brenton Woods, New Hampshire, where the dollar (backed by gold at $35 per ounce) was accepted as the world reserve currency.

America was granted unprecedented benefits as the issuer of the dollar. However, the gold standard restricted the Federal Reserve from printing money unless it had the gold to backup new currency. Even though this ensured the stability of the dollar and a strong economy, such restrictions would not be tolerated by the Fed for very long.

In 1971, under president Nixon, U.S. moved away from a gold-backed monetary system to a fiat paper debt-based monetary system, which allowed the FED to print dollars out of thin air.

fiat currency

This opened the door for unrestricted spending and borrowing. Once we moved away from a “gold standard” to a “debt-currency system” it was only a matter of time before America transformed from the world’s biggest creditor to the world’s biggest debtor.

If you look at the national debt chart by scrolling up, you can see a direct parallel between the explosion of debt and U.S. switching to fiat currency in 1971. Once the Fed could create dollars out of nothing, it took only a few years for the government debt to gain an exponential climb rate.

Now, on the surface, the Federal Reserve’s ability to print money with no restrictions might sound great since you can just create new currency on demand… but it carries with it two very grave consequences that we’re paying for now.

The first consequence is inflation. Each time the FED issues new dollars, it increases the money supply, which in turn diminishes the value of the rest of the dollars already in circulation. Basically, that means the more dollars are printed, the less they are worth. As the inflation rises, so do the prices and cost of living. Inflation also encourages spending and debt, and discourages saving and capital formation. In the long run, currency inflation wipes out the wealth of the middle class and wrecks the economy. By the way, the dollar has lost 95% of its value since the Federal Reserve took over in 1913.

The second consequence is that we (the people) go into debt every time new money is created. When the government needs extra money, beyond what it collects in taxes, it issues U.S. treasury bonds, which are interest-bearing IOUs guaranteed by the government. These bonds are exchanged with the Federal Reserve for currency. This process is called “monetizing the debt”, hence “debt-currency” system. The Federal Reserve collects the interest and the tax payers collect the debt. The bankers prosper and people get enslaved.

Besides debasing the dollar and binding America into debt, the Fed manipulates the interest rates, overriding market self regulation. These manipulations create bubbles resulting in devastating consequences for the economy and the average American.

andrew jackson

President Andrew Jackson refused to renew the charter (a grant of monopoly) of the Second Bank of the United States. In 1836 Jackson said to the bankers trying to persuade him to renew their charter (so they could continue their harmful monopoly)

“You are a den of vipers. I intend to rout you out and by the Eternal God I will rout you out. If the people only understood the rank injustice of our money and banking system, there would be a revolution before morning.”

-– Andrew Jackson, 7th President of the United States

How is the U.S. government going to finance 70 trillion in liabilities?

If you have been paying attention so far, you should be able to guess correctly… by borrowing. The U.S. government is planning to finance 70 trillion in obligations by selling treasury securities (interest bearing IOUs), putting America into even more debt.

Since our national debt is exploding and our annual deficit keeps growing every year, we’re forced to admit an obvious fact: our government cannot pay its debt without taking on more debt.

This is, by definition, a Ponzi scheme. To keep the Ponzi scheme going you must have a constant and ever expanding flow of investors. If the flow stops or even slows down, the whole thing starts to collapse. This is why the government must continuously raise the official debt ceiling.

All Ponzi schemes eventually collapse and our debt-currency system has the same fatal flaw by design.

The video on the left was broadcast on CNBC, May 24, 2012:

Peter Schiff, CEO of Euro Pacific Capital, who not only famously predicted the 2008 housing bubble, but also predicted the specific banks that would go under, as well as the government’s exact response to the 2008 crisis, makes the following statements about U.S. treasuries (short for U.S. treasury securities… again these are interest bearing IOU’s the government must sell to pay for obligations)

There’s no safety in U.S. treasuries. When interest rates go up, we’ve got to default on those treasuries. We can’t pay a market rate of interest, let alone retire the principal. Most of the treasuries that are being bought have very short maturities. We have 5 or 6 trillions coming due in the next year, we can’t pay that back. We’re counting on our creditors to loan us back the money to repay the debt. This is a Ponzi scheme.

It’s the same situation as I said Greece was in. They had no problem selling their bonds when the rates were low. But the minute people figured out that the Greeks couldn’t repay the debt, they didn’t want to buy them anymore. The same thing is going to happen. You have a false perception of safety in the Treasury market. It’s not safe at all. It’s a trap. And it’s being set by Central Banks, the Fed is the biggest buyer, they’re buying like 90% of long term treasuries…

How long can we keep borrowing?

Some economists like to imagine that we can just grow our debt endlessly, because we have the ability to print dollars out of thin air. These “experts” allege that the treasury market is as strong as ever and we can just keep borrowing endlessly. These are the same “experts” that insisted that real estate prices will continue to rise perpetually, right up to the 2008 crash. According to them, we just need to raise the debt ceiling and keep growing that debt evermore.

But even though we can raise our debt ceiling time after time, there is still a natural debt limit we cannot cross. The notion that our government can keep growing our debt without end is preposterous.

First, it’s based on a foolish assumption that the rest of the world is willing to lend us money that they know we can’t pay back. Second, it ignores a mathematical consequence: exponential growth due to interest alone. Third, it presumes that the U.S. dollar will forever remain the world reserve currency.


We’ve been able to get away with borrowing so much up until now mainly because the dollar is the world reserve currency secured by the petrodollar paradigm. But this privilege has its limits. It’s also a privilege we’re going to lose because we have been shamelessly abusing it.

The Federal Reserve has been keeping the interest artificially low to help the government keep borrowing. Of course this is no favor on the FED’s part because the end result is debt enslavement. Since whatever the government owes is inherited by the people, it’s the people who get screwed in the end. If the interest was allowed to return to market rates, it would help prevent the government from borrowing beyond its means.

However, at this point our lenders are realizing that our debt has long passed a sustainable level. If you have ever applied for a loan, you should be familiar with the following universal rule. When the borrower is in too much debt, the loan becomes high-risk and so the lender demands a higher interest to make the reward worthy of the risk. With every passing day, America plunges into a deeper debt pit and this makes lending to the U.S. (by buying treasury securities) a more and more risky investment.

To make things worse, the FED is devaluing the dollar at an increasing pace by issuing bailouts, stimulus packages, quantitative easing, etc… and our lenders are realizing this too. This means that the dollars that our creditors are loaning to us now are worth less when they get them back.

For these two reasons, the U.S. treasury securities (government IOU’s) are now high-risk, low-return investments. What was once considered the safest investment is now a Ponzi scheme at the point of collapse.

Who will bail out America when it runs out of lenders?

Our pool of willing lenders is starting to shrink as our creditors are waking up to the fact that treasuries are now a high-risk, low-return investment. To compensate for this the Fed is forced to buy up all the long term U.S. treasuries in an effort to artificially stimulate demand, to keep up the smokescreen. Of course this only inflates the U.S. bond bubble even more.

When the pool of willing lenders dries up, the scheme will reach its end and the final bubble will explode. Without lenders, the U.S. government has only two appalling choices, default on debt or hyper-inflate the dollar.


Option one is to default on all debt. Essentially declaring bankruptcy to renegotiate all obligations. This would create a severe financial shock as the dollar collapses and loses its status as reserve currency. This would lead to a sharp increase in the cost of nearly everything, as more US dollars would be needed to pay for imports, resulting in a catastrophic economic impact for every American. The government will be forced to cut spending dramatically. A broad range of government payments would have to be stopped, including military salaries, Social Security and Medicare payments, unemployment benefits, tax refunds, etc. Companies would be crushed by a US consumer that would no longer have any buying power. In addition, credit would dry up virtually overnight, which would force untold numbers of companies to shut their doors. Unemployment in the country would spike to obscene levels. Interest rates would rise significantly forcing millions of families with adjustable mortgages to go into foreclosures.

Option two is to have the Federal Reserve create trillions upon trillions of dollars out of thin air. This creates an illusion that the debt is being paid back, but in reality the dollars issued to pay the debt would become increasingly worthless, turning rapid inflation into hyperinflation. This would actually create a much worse scenario then the first option as hyperinflation will be even more economically destructive for the average American. Prices would soar to unimaginable levels, unemployment would skyrocket. The average American would be forced to work overtime just to put food on the table, that is if he or she is lucky enough to still have a job.

It’s worth mentioning that it is highly unlikely that the U.S. will choose default (option one). Even though hyper-inflation is by far more destructive for the American people in the long term, the government will most likely try to print its way out.

Either way the economy will collapse. Economically, the first option would feel like a heart attack and the second option like terminal cancer.

The ripple effects of either scenario would be unprecedented. It would not be the end of the world, but you can expect massive social unrest, protests, riots, looting, arson, etc., basic supply disruptions on all levels, utility failures and infrastructure decay, rampant violent crimes, especially in metropolitan areas, followed eventually by a long and very painful period of readjustment of living standards for most Americans.

What if we cut spending, raise taxes and balance the budget?

It’s amazing, that even now you hear the same old catch phrases like, “recovering economy”, “budget cuts” and “responsible spending”, thrown around by politicians on all the major news shows. But, anyone out there that insists that this crisis can be fixed under our current system is lying.

The spending cuts and tax increases that Congress is talking about are absolutely meaningless when compared to how rapidly our debt is exploding.

Calling those cuts and taxes “pocket change” would be an insult to pocket change.

No bailout, stimulus package or manipulation by the Federal Reserve is going to avoid the massive financial pain that’s coming our way.

So what can our government do to fix the current financial crisis and avoid the dollar crash? What would it take?

It would take the kind of measures that are our government considers too extreme to even discuss and so there’s no chance of them being approved. For starters we would need to abolish the Federal Reserve, go back to the gold standard, shut down overseas military bases, completely reform the tax code, restructure entitlement programs, etc.

Unfortunately, proposing such changes is the fastest way to lose your political funding, become the laughing stock of Washington and be ignored or ridiculed by the mainstream media. Just ask Ron Paul.

Our Congress knows full well that fighting against the system is political suicide. And so no meaningful change that would help lessen the impact of the coming crash will be approved.

As far as the oval office and Congress is concerned, postponing the crash by issuing bailouts and stimulus packages is a more politically favorable approach, even though this ensures an even bigger catastrophe in the end.

The bottom line is this: we’re on a path to an inevitable dollar crash. The ones that run our monetary system and hold the keys to our economy are actually part of the problem instead of the solution. The ones in power that can make the desperately needed changes dare not.

Rather then risk their careers, they will continue to shamelessly distribute our hard earned money among their friends on Wall Street. The handful of our honest politicians that are actually brave enough to stand up for the people are shut out by the system.

At this point, we’re on a run away train without brakes, so you better brace yourself. The good news is there is still time for you to prepare for what’s up ahead. Most people will be completely unprepared when the whole thing comes crashing down.

Don’t be part of that group.

How do I prepare for the coming crisis?

The information outlined above is not based on opinions but on facts. Yet, the majority of people will choose to dismiss this simply because they don’t like the conclusion. It goes without saying that being “willfully ignorant” (see first video at the top of the page) will not safeguard you when the house of cards comes crumbling down.

On the other hand, the people that do understand that it’s foolish to stick your head in the sand, might feel overwhelmed by anxiety, wondering what they should do to prepare for economic collapse.

Get notified when “How to prepare for the coming crisis” goes online.

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To those people, we’d like to make the following three points.

First, the goal of this article is not to make you panic, but to motivate you to prepare for what’s ahead. This is not a doomsday prophesy. It’s a wake up call for you to get off the couch. Channel your anxiety into action by making necessary preparations and by warning others in your family and community.

Second, since you understand the severity of the situation and you’ve decided to do something about it, you’ve already made the first and most important step. Believe it or not, by comparison, you’re miles ahead of most people in this regard.

Third, the situation is not as hopeless as you might think. No matter what your current status is, whether you are broke or wealthy, whether you live in an apartment or a mansion, there ARE specific things you can do to prepare for the impeding dollar crash.

The next article we publish will focus on an easy to follow step by step action plan that will help you minimize the impact of the financial meltdown on you and your family. It will outline practical but critical actions you should take to protect your loved ones from the ensuing chaos, along with financial advice to safeguard whatever savings you might have. CrisisHQ does not sell gold or bunkers or anything else for that matter. Our single mission is to help you be prepared instead of scared.

To be notified when we publish the article on “How to prepare for the coming crisis” please subscribe to our article notification list using the form in the box above. We hate spam just as much as you do, so we don’t sell or share your email or ever send out spam. Your info is kept absolutely private and safe.

Lastly, please share this info with the people you care about by emailing them the link to this page. Warn your family, friends and coworkers and ask them to take a few minutes to read the whole article and not just glance through it.

We need to wake our people up from their entertainment induced comas, so please do your part by sharing this page now.


  1. Taylor Kay

    I have to say that was an excellent, straightforward article you wrote! That is the part of the problem nowadays, too much information with strings attached and too many ignorant citizens who need a wake up call like this. I am a college student right now and the realization of our failing economy is noticeable around campus. I think college student have more time to research and realize for themselves the truth in what lies ahead. It greatly effects almost all the decisions we are currently making for our future. I have heard predictions ranging from May 19 when the debt ceiling has been pushed off till, to 2014…any near predictions on when exactly other countries will begin to drop the dollar and the economy will rapidly fall?

    Thanks Again, Great Work Keep It Up!
    You are truly a leader

  2. MIRV

    Get out of America… NOW!
    Move to a country whose currency isn’t pegged to the Greenback, and then sit back and watch the carnage.
    It will be the best reality TV show in history.

    • The problem is, those are the countries the US invades.

  3. Jom

    This article was written almost 5 months ago on August 10, 2012. Has the article “How to prepare for the coming crisis.” been posted on your site yet?
    It did not show up in the search results.

    • Gary G. (Crisis HQ Admin)

      Hi Jom,

      Not yet. I apologize for the delay, I’ve started writing it, but got sidetracked. I plan to finish and publish this as soon as possible.

      • Harold

        what are you selling?

        • Gary G. (Crisis HQ Admin)

          Nothing. provides free information on why and how to prepare.

  4. Pingback: Impending Dollar Collapse « alternative economics

  5. “Without lenders, the U.S. government has only two appalling choices, default on debt or hyper-inflate the dollar. ”

    You forgot the 3rd, even more appalling choice: Distract the sheeple with a huge war.

  6. Laurie

    Hi Gary,
    Thank you for what you have written. I have been one of those ignorant Americans, completely unprepared. Have you already written steps to being prepared? If so, where are they located? I did sign up for the email notification, but did not receive it yet.

    • Gary G. (Crisis HQ Admin)

      Thank you Laurie!

      I’m still working on the “How To Prepare” guide. It’s taking longer than I anticipated, but I’m hoping to publish the first step in the coming days. Since the economic collapse is going to trigger massive riots and complete destabilization (to say the least) the step by step guide covers a range of issues. I’m doing my best to pack all that info into manageable bits with practical advice and specific to-do action items. It’s quite a challenge for someone with poor writing skills and limited schedule, but I’m trying.

      I did check my list and made sure that your email is on it, so you will get an email as soon it goes online.

  7. shawn

    This crisis is intentional. The goal, control. How? Microchip. It’s coming and its also in prophecy, mark of the beast. Every UPC has 666 in it, this numbering system will now be in the chip, instead of optically read it uses radio waves. What to do w the people who won’t conform to this one world currency? Relax, FEMA already has over 600 death camps built around the US and the Army has been recruiting Internment/Resettlement Specialist. So what’s the agenda? Simple. Rid the world of opposition (the church) let the antichrist reign by enslaving lost souls who will worship him and money until Christ returns and kicks butt. Wether you believe in God or not, you cannot deny evil is controlling our government and shits going down.

  8. Mario8282

    This crisis can be broken down in 2 components:

    (1) The Debt Crisis.

    (2) The Banking Crisis.

    The debt crisis cannot be understood without understanding the actual money ststem: The Monetarism.
    The debt crisis will rage and deepen as long as monetarism will last.

    The banking crisis cannot be understood without understanding the effect of the Glass-Steagall Act and of the Securities Exchange Act.
    The debt crisis will rage and deepen as long as legislation with the effect of the Glass-Steagall Act and the Securities Exchange Act is not fully implemented.

    (1) The Monetarism
    Monetarism is the system where a private entity issues public currency as a debt. If all this debt would be paid back, the monetarist money would be fased out the economy, leaving it without any currency, nor cash nor electronic. And there would be no other money to pay the interest because the currency quantity for interest coverage has never been created. This is the design of the current money system. It is called monetarism, is the actual money system of the West and is mathematically impossible to sustain. The Federal Reserve Act of 1913 gives the Fed the monopoly of creating currency as debt. The ECB does not create currency.

    The system itself cannot survive the very numbers is generating.

    Thus the problem is the system.

    By design this system is crushing the physical economy just like a tumor is killing a living body. The economy is collapsing and is taking the monetarism with it. Just like a tumor killing it’s victim: victim dead, cancer dead.

    Sovereign Currency
    The alternative is sovereign currency. The state (as opposed to a private entity) has the monopoly of issuing the currency. The two crucial conditions:

    * all money mass MUST have coverage in the physical assets of the economy of the nation.

    * Controlled Exchange-Rates: all national currencies MUST be bound by a worldwide foreign currency exchange agreement in order to block speculation.

    In this case the money is not a debt to a private entity, but a CREDIT from the true national bank (100% owned by the nation) to the physical economy of the nation. By law the central government component of the state will be forbidden to be loaded with debt, it will only have credit.

    We need to replace the monetarism with a system of national credit also known as sovereign currency.

    Do your own research: “Secret of Oz”, “Thrive The Movie”, “Money as Debt”, etc.

    (2) Glass-Steagall Act, Securities Exchange Act.

    After more than 3 years of economic downturn, President F.D.Roosevelt managed to instate two laws:
    • Glass-Steagall – 1933
    • Securities Exchange Act – 1934
    The provisions of these laws have protected the US and the rest of the world against a new depression… till they were gradually repealed and made fully irrelevant by 1999.
    The most relevant effect of the Glass-Steagall Act was the interdiction to speculate with savings, pensions and insurance funds. The Securities Exchange Act blocked the derivatives. In the absence of this type of risks no bailouts were imposed to the taxpayers by the “too big to fail” speculants.
    See for this the FCIC “Angelides Report”.

  9. Nishith

    Hi Gary. First of all, extremely lucid and simple analysis of such an issue. Really great. I had been looking for this kind of analysis for long.
    Coming to my clarification, if the US government has been pumping up its balance sheet with debt (which is a liability), then the money must have been spent on something, right? Common economic sense dictates that if the cost of financing (in our case, treasury interest rates) is higher than the expected return on assets (in our case, financed by the IOUs), then the value of the entity (in our case, the US government) will fall. The question then arises, that what has the government done with the debt it has taken up, i.e. the utilization of the financing amount. I am not so sure, as I do not follow the US markets very closely. It would be great if you could clarify the utilization of the debt financing. Is there any public record of that available?
    I am tempted to extend the analysis by making assumptions about funds utilization, but that would be throwing darts in the dark, which I am not prepared to do.

  10. Robert

    Bill thinks Elections are Fair and not bought by the very Money Junkies who created this Ponzi scheme ROFLMFAO.

  11. Guido Carlucci

    Not to appear to ignorant, but just how will this economic collapse directly affect home mortgages, food and gasoline prices? I’m also curious how this will affect our ultility infastructure. Will the electric just go off, the natural gas quit flowing, etc.? Sounds like the worst doomsday scenerio imaginable.

    • Gary G. (Crisis HQ Admin)

      Interest rates will increase substantially. If you’re not on a fixed rate mortgage you will probably have a hard time covering your house payments.

      Food and gas costs will skyrocket, so will just about any product and living expense as market prices try to keep up with increasingly worthless dollar.

      Some utilities will fail as infrastructure starts to decay. Think third world country reliability.

      Expect chaos and panic, suicides, high crime, riots, arson and massive social unrest as savings are wiped out and more and more people lose their jobs and houses.

      We will have to go through a period of difficult readjustment of living standards. Imagine the Great Depression, only much worse.

      It’s not going to be a Mad Max scenario as some envision, but it will be extremely difficult for most people because they are completely unprepared.

  12. Rudy Haugeneder, Canada

    For hundreds of years, Alchemy has failed — or appears to have. Let me suggest that the problem of turning base metals into gold was secretly solved several years ago, and select members of the so-called 1% have control of the formula that, when and immediately after the crunch you address becomes reality, means they will flood the planet with gold and the US dollar to again become the all-powerful global reserve currency, with all other money just a mass of meaningless zeros compared to it.
    At least that’s the simple logic that’s applied. Whether it temporarily works is another matter, especially as Climate Change speeds to warp speed and combined with nasty pandemics, alters the human focus.


    By the way great variety of information here will check back frequently. thanks for digging in. I for one am so tired of hearing half truths from national and local media tv stations, cable as well. I am tired of being ignorant too. Yes I confess. Moving on now..



    • Gary G. (Crisis HQ Admin)

      Hi Mark! Step 1, will be released in a few days. Make sure you signup for article notification so you don’t miss it. Use the form at the bottom right of the article.

      • MARK ROSSI


  15. Joe S

    Hi Crisis HQ Admin, I discovered your website today and just wanted to commend you on your fantastic compilation of today’s sad truths in America!! It makes it very easy for me to pass on these same facts I’ve been preaching forever to my head-in-the-sand friends!! KUDOS!!

    BTW, who is behind it all??

    • Gary G. (Crisis HQ Admin)

      Thank you Joe! I hope it helps your friends realize it’s time to stop ignoring reality as disturbing as it is. This is one of my motivating factors for building this site. I’m just an average Joe who wanted to help family, friends and others to understand the real state of affairs and that they need to stop wasting whatever time is left start getting ready for the difficult times ahead. Oh, and if you’re looking for a name, it’s Gary G.

  16. Bill Adkison

    I have been intensely researching the US national financial calamity for several years and I do not totally agree that the American people are being “screwed” by the US government – rather the American people are being “screwed by” the American people. Indeed, the US government and the Federal Reserve cabal control the levers, but it is the American people who continue to elect the same people to office for years on end and enable them to do the “screwing”.

    The yearly data that is presented in the US National debt chart in the “Statistics the government would rather you didn’t know” section above, on average from 1970 til now (over 40 years), reliably follows a compound growth curve with 9 pct annual rate. With only this simple information, we can make reasonable estimates of future expectations. (Watch This: In 2010, the US National debt was about $13.5T. Multiply $13.5T by 0.09 and get about $1.22 T in debt growth, the estimated deficit number for 2011. Add that to the $13.5T and get $14.72T, the estimated total debt for 2011. Repeat the same calculations and get $1.32T and $16.04T respective estimate for the 2012 deficit and total debt for 2012.)

    Hmm, the media recently reported the US national debt is now $16T! Now. if we predict ahead to 2016, assuming no major changes, we should expect an annual deficit and total debt around $1.9T and $22.6T.

    The key item that We, the people should focus on is the annual deficit. Currently, the annual deficit for each year is 9 pct of the prior year total debt, which is added to the prior year total debt to get the new total debt for each year. That annual deficit must be reduced to zero just to stop the total debt growth, below zero (surplus) to reduce the total debt – plain and simple. So, cutting $1.3T PER YEAR in 2010 would have been a good start, but, by 2016, it will take a $1.9T PER YEAR cut. Again, very simple in concept, but very difficult among the presumed leadership (and WE, the people).

    Another simple concept is the fact that the annual deficit is the difference between national expenses and revenues for each year. My research back in 2010 showed that only 5 expense categories accounted for about 90% of the total – health care (25%), defense (25%), pensions (social security) (25%), welfare (10%) and debt interest (5%). On the revenue side, about 90% of total revenue categories were taxes – personal income tax (50%), payroll tax (social security) (35%) and corporate tax (10%). So, again, it appears that a fairly simple proposition is to look for the biggest sources for deficit reduction under the 8 biggest contributing “rocks”.

    These numbers may have shifted a bit since 2010, but the facts and the simple proposition for possible solutions are still fairly simple –
    we have a good idea about the total dollars that need to be cut and we have a good idea of the 8 most significant categories where the most impact can be made. By the way, it should be obvious that all 8 categories should be addressed in order to distribute the pain without decimating any category.

    So there it is. It is potentially quite simple. We know the annual deficit reduction must be in the trillion dollar PER YEAR range (depending on the amount of tolerable pain), not $1.2T over 10 years. We should reasonable expect to get the biggest benefit from the 8 major category “rocks”, not a lot of bickering over ideological
    issues that have minor economic impact. We should reasonably expect to make appropriate budget adjustments in all 8 categories (tax increases and spending cuts) that provides bearable general pain for all concerns and also provides a rational recession/depression recovery strategy.

    The process is so straightforward and simple. It is similar to an in debt household. We simply must suck it up and do “what is right” to solve the problem without destroying the household. But, then I wake from my simple minded dream, and all I can see are non responsive and ideological politicians elected by disinterested and ideological constituents who seem to be unconcerned about reality.
    Now, I find that simple may not be simple and I am back to the question about whether economic collapse in the US is or is not inevitable.

    • Crisis HQ Admin

      Hi Bill,

      Please remember that most Americans are still ignorant of the facts mentioned in this article. They are kept ignorant because they rely on the mainstream media. This is why we’re trying to spread this information.

      I agree with you that the American people are responsible. This is true. We have become lazy, complacent, naive and just plain dumb. How else would you explain the fact that Obama still has millions of supporters? He accomplished the complete opposite of what he promised and people still tear up when they hear Obama read the teleprompter. How else do you explain that someone like Romney could become the Republican nominee? Out of 300 million possible options we are reduced to a charismatic liar and flip-flopping opportunist to lead the nation. So in part the American people do bear the guilt of electing puppets that represent the interests of banks and corporations. But in part they ARE getting screwed by the government and the media. For example, we had a legitimate candidate in Ron Paul, but the media blacked him out and Republican party blocked him out. The American people never got an opportunity to make a real choice because the media and the government made it for them.

      Please take a look at: 2012 Obama vs Romney: the illusion of choice … and also the RNC Fraud video.

      Thank you for participating Bill!

      • Bill Adkison

        I basically agree that the citizens are getting “screwed” by their elected officials as the article stated. But, I was intending to point out that the situation was dynamic. That is, the citizen has been conditioned to assume the position most suitable for the “screwer” to impose the “screwing”, rather than exercising their legal right to demand rational and equitable resolution of the US national debt crisis.

        I also agree that the government and main stream media tend to limit the critical information that the citizens need for rational decision making. This site is a good alternative.


        • Crisis HQ Admin

          Agreed! Thank you Bill.