November 30, 2015

Why the Coming Economic Collapse Will Eclipse the Great Depression

August 28, 2015

By GP Porter

Most are unaware, but the current financial system as we know it is on borrowed time and about to come to an end. The Ponzi scheme and house of cards propped up by the Federal Reserve and U.S. Government are about to come crashing down and things will not be pretty when that happens. The time of reckoning is near and there are multiple reasons as to why this will occur — and soon.

Since the 2008 financial crisis and Great Recession, the Fed has engineered an artificial recovery and managed to magically dig the world out of one of the biggest financial holes we have ever seen. This has not come without a cost.

Money has been printed out of thin air, creating an ever-expanding balloon of debt that is destined to pop. Through quantitative easing, a massive supply of capital has flooded financial institutions in an effort to promote increased lending and liquidity. Even with these efforts, we never have fully recovered from the Great Recession. As a result, things will quickly spiral out of control when these artificial measures to prop up the economy are fully exhausted and the Fed and central banks are “out of bullets.”

National debt is over $18 trillion, with roughly $1.2 trillion of that amount owed to China, which is more debt owned by all American households combined. And now that China’s economy is faltering, this outstanding debt has major implications for the United States. Several years from now when analysts attempt to pinpoint the exact cause of the 2015/2016 financial collapse, China will be cited as the first domino that fell.

Despite banks being relatively healthy and solvent, their assets and reserves will quickly dwindle once the equity markets begin to falter. To put things into perspective, banks that were once deemed “too big to fail” are now twice as large as they were prior to when the Great Recession began. There will be no bailouts or stimulus packages this time around to save them.

The past few weeks of trading have shown precisely the type of behavior that would be expected prior to a major market crash. Volatility has been extreme and one must keep in mind that during every major market downturn in history, there have always been giant waves of momentum just as we are experiencing now. Remember that 6 of the 10 best single-day gains for the Dow Jones occurred during the height of the Great Recession.

With the devaluation of China’s Yuan, a currency war with other countries will inevitably follow. Once the major world currencies collapse, there will be a rapid effort towards building a one-world cashless/electronic currency solution. The banks and governments that are left standing will prefer a cashless financial system anyway because cash cannot be easily controlled, tracked and taxed — an electronic currency can.

As we enter into the notoriously volatile trading months of September and October, expect more fireworks from the stock and commodity markets. The gravity and magnitude of the coming crisis will eclipse anything the world has ever seen and will have the potential to disrupt the infrastructure of basic services, government payments to its citizens (social security, food stamps, etc.) and other things many of us take for granted. At that point, things will get very chaotic, particularly in big city areas. If individuals are capable of rioting and looting when their favorite sports teams win, imagine what will happen when those same people are without basic essentials for survival.

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