Total US debt soars to nearly $60 trn, foreshadows new recession

America – its government, businesses, and people – are nearly $60 trillion in debt, according to the latest economic data from the St. Louis Federal Reserve. And private debt – not government borrowing – is the biggest reason for the huge deficit.

Total US debt at the end of the first quarter of 2014, on March 31 totaled almost $59.4 trillion – up nearly $500 billion from the end of the fourth quarter of 2013, according to the data. Total debt (the combination of government, business, mortgage, and consumer debt) was $2.2 trillion 40 years ago.

“In 50 short years, debt has gone from being a luxury for a few to a convenience for many to an addiction for most to a disease for all,” James Butler wrote in an Independent Voters Network (IVN)op-ed. “It is a virus that has spread to every aspect of our economy, from a consumer using a credit card to buy a $0.75 candy bar in a vending machine to a government borrowing $17 trillion to keep the lights on.”


According to a 2012 study published in the Economist, rapid growth in private debt is a better predictor of recessions than increases in public debt, growth in money supply, or trade imbalances. Consumer credit in the US rose by 22 percent over the last three years, reaching a record-high $3.18 trillion in April, the Fed reported on Friday.

Credit card use (or revolving credit) rose by $8.8 billion, while non-revolving credit like auto loans and student loans made by the government surged up by $18 billion in April. Non-revolving credit jumped by 8.2 percent over the last year, while revolving credit only rose 2.2 percent over the same time period.

“For a while after the recession it was trendy to cut up your credit cards and get out of debt,” Michael Snyder wrote in an InfoWars op-ed. “But that fad wore off rather quickly, didn't it?”

Snyder noted that 56 percent of all Americans have a subprime credit rating, and that the average monthly car payment in the US is $474. He added that 52 percent of homeowners are overextended on their mortgages and “cannot even afford the house that they are living in right now.”

Debt is hurting young adults the most. Millennials say they are spending at least half their monthly paychecks on paying off debt, a recent Wells Fargo survey found. And two years out of college, half of all graduates are still relying on their parents or other family members for some sort of financial help, according to a University of Arizona study, which also found that only 49 percent of graduates are working full-time.

“Whether or not a weak labor market is increasing the need for intergenerational support — a likely driver in today’s economy — our data clearly showed that many young adults today may not be earning enough to make it on their own, even when working full time,” the report stated.

Most of the debt that young adults face is student loan debt, which totals more than $1.2 trillion, according to the Federal Reserve. Of that debt, approximately $124 billion is more than 90 days delinquent.

“What we have done to our young people is shameful. We have encouraged them to sign up for a lifetime of debt slavery before they even understand what life is all about,” Snyder wrote.

More…

James Rickards-Financial Collapse and Massive Shortages in Gold Coming

Financial Collapse and Massive Shortages in Gold Coming 

By Greg Hunter’s USAWatchdog.com

Financial expert and best-selling author James Rickards’ latest book predicts “the coming collapse of the international monetary system.”  One of the sign posts is countries like Russia declaring it will shed the U.S. Dollar as reserve currency in international trade.  Rickards explains, “Putin said he envisions a Eurasian economic zone involving Eastern Europe, central Asia and Russia.  The Russian Ruble is nowhere near ready to be a global reserve currency, but it could be a regional reserve currency.”

Rickards’ latest best-selling book, “The Death of Money,” was released in April.  Even Rickards is surprised at how fast the economic situation is unfolding.  Richards says, “If you ask me what has happened since you finished writing the book that comes as a surprise, I would say a lot of the things I talk about in my book are happening faster than I would have expected.  Things that I thought would happen in the 2015 or 2016 time frame seems to be happening now in some ways.  If anything, the tempo of events is faster than expected.  Therefore, some of these catastrophic outcomes may come sooner than I wrote about.”

Rickards goes on to say, “Right now, we are on the precipice now.  When you are on the precipice, it doesn’t mean you fall off immediately, but you are going to fall off because you can see the forces in play.  What I tell clients and investors is it’s not as if we are going to make some mistakes and some bad things are going to happen.  The mistakes have already been made.  The instability is already in the system.  We’re just waiting for that catalyst that I call the snowflake that starts the avalanche.   You don’t worry about the snowflakes; you worry about the snow and that it’s unstable and it’s just waiting to collapse.  That’s what the system is right now; we are just waiting for a catalyst.  People ask me all the time, what could it be?  Technically, my answer is it doesn’t matter because it will be something.  It could be a failure to deliver physical gold.  It could be an MF Global financial failure.  It could be a natural disaster.  It could be a lot of things.  The thing investors need to understand is the catalyst doesn’t matter.  It’s coming because the instability is already there.”

On gold manipulation and when it will end, Rickards says, “It will end when the physical shortage gets to the point that someone fails to deliver; which, at that point, there will be a buying panic.  There could be a buying panic or what some people call a demand shock.  One of the things I said about gold manipulation is if I was the manipulator, I would be embarrassed at this point.  The manipulation is obvious.  The evidence is coming in from all directions. . . . The manipulation is clear.  When will it end?  It will end when there is a physical shortage that pops up somewhere, or it will end with a short squeeze.”
James Rickards, author of the best-selling new book called “The Death of Money.”

rest of story - USAWatchdog >>>

U.S. Economy Starts Year With a Whimper

 I would imagine, the economy might have contracted in the 1st quarter but the government would not release a negative number which could easily be massaged up without any flack from the major media.

GDP Growth Stalls as Frigid Weather, Weak Exports Curtail Activity

Wall Street Journal

U.S. growth nearly stalled in the first three months of the year, fresh evidence that the economic expansion that began almost five years ago remains the weakest in modern history.

Gross domestic product, the broadest measure of goods and services produced across the economy, grew at a seasonally adjusted annual rate of 0.1% in the first quarter, the Commerce Department said Wednesday. It marked the second-worst quarterly performance since the recession ended in mid-2009.

The weak GDP reading came as Federal Reserve officials voted to continue withdrawing their support for the economy based on the expectation—shared by many private economists—that growth would rebound, as it already started doing as the weather improved. “Economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions,” the central bank said in its policy statement Wednesday.

Harsh weather likely slowed first-quarter business investment and discretionary consumer spending. It could have even blocked exports—which notched their sharpest decline since the recovery began—from reaching ports.  More >>>