Thursday , 25 July 2024

Washington Faces Possible Armageddon Unlike Any Since Civil War

The U.S. debt crisis represents a unique, unparalleled, and unimaginable convergence of circumstances yet, despite the utter gravity of our plight, nothing is being done to change our course. Washington must either muster the courage — and the support of the people — to accept the pain and make the sacrifices of a lifetime … or face the downfall of America. Words: 898

Lorimer Wilson provides below further reformatted and edited [..] excerpts from Martin Weiss’ ( original article* for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article reposting to avoid copyright infringement. Weiss goes on to say:

The United States government and its agencies have, by far;
1. the largest pile-up of interest-bearing debts,
2. the largest accumulation of unsecured obligations,
3. the largest yearly deficit and
4. the greatest indebtedness to the rest of the world… of any country in the world.

In proportion to the size of its economy, one important country, Japan, does have more debt than the U.S. Unlike Washington’s debts, however, nearly all of Japan’s are financed by its own citizens — loyal, long-term savers who are far less likely to pull out in a storm.

Despite the utter gravity of our plight, nothing is being done to change our course. To whit …

Consequence #1: Higher Interest Rates
Due to the avalanche of government borrowing to finance the deficit, there is no power on Earth that can avert sharply higher interest rates.

Consequence #2: Higher Bond Yields
All long-term bonds — whether issued by other government agencies, corporations, states, or municipalities — will also collapse, driving their yields through the roof because, when Uncle Sam has to pay more to borrow, they inevitably have to pay more as well.

Consequence #3: Higher Mortgage Rates
Rates on mortgages and car loans will surge. Why? For the simple reason that they’re also tied at the hip of long-term Treasury rates. If you want to take out a 30-year fixed mortgage at, say 5 percent, on a median-priced home ($178,300), and you can afford a 10 percent down payment just …
a) a 1 percent rise in rates will drive your monthly payment from $861 to $962 [that’s $1212 a year!] b) a 2 percent increase will drive it to $1,068 [that’s $2,484 a year!!) …
c) and the kinds of rate increases possible in a bond-market collapse could drive it to levels only Midas could afford. Worse, if you go for variable-rate mortgages, balloon mortgages, or other now hard-to-get alternatives, the impact of surging interest rates will be even more traumatic.

Consequence #4: Stagnant Recovery
The fledgling recovery in housing and auto sales — the pride and joy of Washington’s bailout brigades — will be toast.

Consequence #5: Lower Long-term Bond Yields
Institutions and individual investors holding piles of lower yielding long-term bonds will get killed which includes:
a) U.S. households stuck
b) banks and credit unions
c) insurance companies and
d) private pension funds, state and local governments, and even their employees’ retirement funds.

Not all of the [the above] holdings are of the long-term variety, but most are, and investors and institutions who own them, on behalf of millions of retirees, will suffer shocking declines in the market value of their portfolios. [In addition,] they could suffer a chain reaction of defaults, gutting their income stream and, worst of all, they now have some reason to fear the de facto default of the biggest debtor of all — the government of the United States of America. I doubt very much we will see THAT happen but two events are very possible, even likely, [namely]:

1. America will lose its triple-A rating
If the Wall Street rating agencies don’t have the moral fiber to announce downgrades, the marketplace will do it for them.
2. Our leaders will face an Armageddon unlike any since the Civil War.

Like California and Greece … like every household and any company … our government MUST cut back and accept the rest of the consequences:
#6: Declining home values
#7: Falling stock prices
#8: The end of the recovery
#9: And many, many more!

Washington… will no doubt seek every [possible] alternative and try every other trick [to avoid either of the above scenarios] but, alas, no printing press can run faster than our foreign creditors can sell their U.S. bonds. No one will bail out America.

Ultimately, there is NO choice. Washington must either muster the courage — and the support of the people — to accept the pain and make the sacrifices of a lifetime … or face the downfall of America. Yes, we MUST bite the bullet!

* (Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. To view archives or subscribe, visit

Editor’s Note:

  • The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
  • Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.
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  1. Problem (monetary crisis), Reaction (Save us please), Solution ( More laws to take away more liberty).

    This has been a long term calculated ruse to move humanity to unrestrained slavery. The quest is nearly complete.

    Only you can save yourself.

    Turn your back on their system and it will implode around them, leaving you unscathed.

    Should you wish their Roth(sheild), may your dreams be enough to carry your sorrow.

  2. Grab your guns,powder,gold,beans,sugar,grains,hardtack,molasses and head for the hills.

  3. Everybody RELAX!

    I [would] like to ask Dr. M. Weiss how come governments typically all over the world let the local banks entertain a ratio on a first mortgage to gross income of between 300 to 500 % for it’s citizens and at the same time the ratio of any government debt (not deficit ) is alarming if [it] reaches a mere 100 %.

    I understand that under any human philosophy the citizens are the government. In that case I can detect
    not only 100 % owing but close to the debt ratio of it’s citizens ( 300 to 500 %).

    If my opinion is correct I would like an apropriate comment.

  4. Yes, yes, high inflation is bad. For everyday people, it will mostly manifest as increased unemployment (as large employers go under), wiping out of savings accounts and retirement funds, and a sharp decline in imported goods in the short term until foreign exchange stabilizes.

    As always, austerity is not a simple solution. Widespread and drastic cuts in consumer and government spending have consequences, and again most people will see terrible unemployment. Most retirement savings will get ruined too, as common stock from across the economy gets battered by reduced demand. Even people in ‘safe’ investments get hit, as banks start failing again (all the banks are houses of cards – it does not take much reduced demand/economic disruption to set them off) and the government finds itself having to choose between austerity and meeting its commitments on guaranteed balances.

    I respect people like Ron Paul who do their homework and realize the consequences of the radical financial actions they propose. People who point at Obama and Keynes and shout “ENEMY!”, not so much.

  5. If all the debt is owed to bankers who created it from nothing, why not simply stiff the bankers? Just end the Fed and fractional reserve banking, stiff all the bankers and restore the Constitutionally mandated money of silver and gold.

  6. Those who benefit from bloated government handouts will continue to vote for the candidate who feeds them. A leader with the political courage to stop this madness will never get voted in to office. Sad but true. Democracy is simply a way for one man to steal from another – not with a gun – but by his vote.

  7. and how will the parasite class react when all their goodies are cut back or eliminated? Kali-fornia will collapse into third world anarchy.

  8. Our “leaders” should be tried for treason but it will never happen because Americans have lost the American spirit.

  9. you know it would be really fantastic to make the people in office personally responsible for the debts they are so quick to shackle the people in to with out real consent, and no one in their right mind consents to being a slave- that is all done with trickery!!!! Ken- run out of town, you bring the tar I’ll find some feathers…

  10. Those selfish, thieving cowards in D.C. will never have the gonads to do it. They all should be run out of town. The sooner the better.