Friday, January 18, 2013

Economic Outlook for 2013

Jeff Berwick, Contributor
Activist Post

In the December issue of The Dollar Vigilante we took a brief look back at 2012. What a year. From the NDAA, to SOPA (which was defeated by one man in particular, anarchist, Aaron Swartz, who killed himself last week after being hounded by the US government and being extorted with threats of a million dollars and 30 years in a cage) to claims by media propaganda mouthpiece, Paul Krugman, of the US needing to fake an alien attack to get the economy on track. And then, in an encore, recently, coming up with a plan, Robert Mugabe style, to coin a platinum coin with a $1 trillion value to help pay off the US government debt… it was, and continues to be, a year of absolute insanity.

This is how systems fail. Especially, violent, thieving systems that are based on confidence.

As we look forward, in this January issue of TDV, to the year ahead we will start with some charts from the past that still hold true today and update a few charts to show the continuing death spiral that the US and most Western governments are in.

First, a chart we have used in the past but it needs to be re-asserted. This chart, all by itself, all but explains how out of control are the US government’s financial affairs.

Things appear to have gotten a little bit out of control since August 15, 1971 when the last vestige of gold backing was removed from the dollar and the US government defaulted on its obligations.

This chart of US government deficits shows the extremity of the situation relative to the past as well.

Worse than that, though, is that most of the actual money owed by the US government is not properly accounted for. As just one example, Socialist Insecurity extortion payments are taken off of US subject’s cheques and included as income of the US government. Then, part of that money is paid out to current pensioners and the surplus is immediately absconded and spent on other things with an IOU left in the Socialist Insecurity dropbox. Besides being a Ponzi scheme, this, obviously, if done by any private company, would be obviously fraudulent. Taking money from employees, telling them it is for their retirement, including that income as revenue and profit on your financial statements and spending it all on other things would be the height of fraud.

When done by the government, however, it is fine. It does many things like this. If the US government were to actually properly account for its criminal activities and adhere to Generally Accepted Accounting Principles (GAAP), something that every company in the US must adhere to, then the fiscal situation looks much worse.

We updated this chart this year, which we’ve been doing since 2009 and total GAAP debt and obligations in 2011 added up to approximately $5 trillion (data provided by

Assuming that the trajectory continued in 2012, which it almost certainly did as there was a recorded $1.1 trillion deficit in 2012 while Socialist Insecurity and other government Ponzi scheme payouts likely continued at the same rate or higher, then for 2012 the total debt and liabilities of the US government is approximately $85 trillion.

Divided by the population of 305 million, that is $278,688 for every US subject or well over $1 million per family of four in money that has already been borrowed and spent by the US government.

And, even that is in doubt and likely higher as once again, the Government Accounting Office (GAO) stated in 2011 that they could not render an opinion on the consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations.

To quote the GAO:
As was the case in 2010, the main obstacles to a GAO opinion on the accrual- based consolidated financial statements were: (1) serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.

The Department of Offense has been totally unaccounted for since at least September 10, 2001, when Donald Rumsfeld announced that $2.3 trillion had gone missing. The next day a cruise missile hit the accounting office of the Pentagon and no one has asked any questions since.

Forgetting for the moment whether or not the US government’s financial statements are even real or not, and assuming they are, the recent “fiscal cliff” debacle shows that the US government is working itself into a corner more by the day.

[Editor's Note: In order to read the rest of Jeff Berwick's investing advice for 2013 and beyond, please subscribe to TDV here.]


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Anonymous said...

It's going to be rough. We need to get rid of the "Fed" and issue our own money. Even though it would be worthless, we wouldn't be paying the parasitic "Fed" interest on MULTI TRILLIONS of what they issue out of thin air and getting ourselves in worse shape every day.

Anonymous said...

Ron Paul tried to do this years ago and all of his silver and gold backed coins were stolen by the FBI compliments of the Federal Reserve.

Why not just trade services and labor? "I will give you 2 hours of hard physical work for a twelve pack of your finely brewed beer. Deal?" We could operate like that, and a man's word and reputation would mean something again.

What's that? You don't have a house? Let's get 50 people who dont have houses and we will all build 50 houses. Deal? It's like a barn raising party. Maybe we need to get back to those types of basics.

Anonymous said...

A little more time and the curve it is up side down and crashing in our heads.

Anonymous said...

We could get rid of the fed and create our own money BUT that still isnt the way we humans should be living imo.

RE: ZEITGEIST movingfoward thats the world we need.

Good read tho thx.

canobs said...

All the mentions in this article are and will be normal and going worse as long as the Fed will be privatized and under the control of the BIS(bank for international settlements)__Ref: - -

Hide Behind said...

Here is a hint, live as if you do not depend upon a false economy.
It is not self indulgant to place your economy ahead of nations, and to start out by saying that while you may be employed by someone else it is "You and Yours are who you realy work for.
the depression of the 30s was bad but I met and knew more that had come out of it better than when it began in fact more of themthan endedup failures. Or no more than cogs in the wheel.
For everything you fear there are partial remedies already near at hand, but you fo not want to wait for SHTF time.
Got expendable cash on hand that is drawing almost no interest, what wpuld be uour return if you bought enough extra non perishables now that you could begin using 6 months from now.
Stop concentrating on just SHTF scenarios( don't ignore them) you have to begin thinking in ways that carried many of your folks and mine through depression times while all around them people and families fell apart.
There is almost nothing you can do about inflation or whatever those who run this FUBAH called government, but one thing only, defend you and yours.
If you have never seen children women and men digging in rubbish piles in order to survive just hope you never do.

Anonymous said...

Not only should the Federal Reserve be audited, the gold that suppose to be stored at Fort Knox should be audited as well. And I have my doubts whether there is any gold left there at all. I assume that it has been cleaned out year ago. And what about the gold that is in the Federal Reserve Bank in New York? Who owns most of that?
Or has have the bankers abscounded with the national treasury and usurped the people wealth? There is absolutely no transparency at the Federal Reserve.

Anonymous said...

It's all gone, just like any chance of American culture. We have so many forigners here that haven't become Americans, but are just from other countries living in America. Nobody refers to me as an Irish American, because I am just an American....and DAMN proud of it!!
Well until a man from Kenya took office, and started gutting my country of everything that matters. Get the hell out of the USA Hussain Obama!!!! You would be considered a traitor, if you were really from America.

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