5 Red Flags of Imminent Collapse: Be Aware of the Warning Signs
August 27th, 2013
These indicators will give you anywhere from a few days to a few months of warning that things are about to change drastically.
1) Interest rates on US Treasuries go up steeply, and/or suddenly
The definition of ‘defaulting’ on it’s debt means the US Gov’t isn’t able to pay the interest on the almost $16 trillion it owes. Currently interest rates are at all-time lows – as many homeowners are enjoying by re-financing their homes at lower rates. Interest on the debt is currently the smaller of the four biggest expenses the US Gov’t has. As interest rates rise, the interest expense will get bigger – and this will be very difficult for a Gov’t that is already deficit spending way beyond its means.
You want to keep an eye on the current rates on Treasuries for two reasons:
a) Increasing rates will require a debt laden Gov’t to barrow more and will accelerate inflation and the date of collapse. This is a 6-12 month red flag. As of today, rates are slowly rising although they are still very low.
b) A sudden and sustained spike in the interest rates indicates that there are fewer buyers of US debt. Without the ability to barrow more money or rollover the existing debt the US Gov’t will have to shut down or do desperate things like stealing from retirement plans or citizens bank accounts. Get your money out of the banks or markets immediately. This is a very severe red flag indicating only weeks before major financial crisis and economic collapse.
Here are two sites for monitoring Treasury interest rates. The first is my personal favorite. http://www.bankrate.com/rates/interest-rates/treasury.aspx (shows this week, month ago, year ago on short and long-term debt)
http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=billrates (Selectable menus to see current and historical rates)
2) Price of oil goes above $120/barrel
Essentially everything on this planet depends on oil; food, transportation, heating & cooling, and basically every consumer item you can think of. The world economy cannot sustain high prices of oil without collapsing. We saw that very clearly in 2008 when the price of oil hit a high of $146/barrel in June, and by September of that year we were in a full blown financial crisis.
For the past several years, oil has been trading around the $90/barrel price. Today it is over $106. Keep an eye on this!
If the price of light sweet crude oil stays above $120/barrel then you have only a few months before a major financial crisis unfolds. The financial crisis of 2008 was ‘solved’ by atrocious US Gov’t spending of more than a trillion dollars/year. That particular solution won’t be available to use in the next crisis. Does ‘the powers that be’ have another card up their sleeve for the next financial crisis? I don’t know, but I assume the answer is “no”.
I keep an eye on crude oil prices at the Kitco.com site. Look on the left sidebar a bit lower on the page (I like to use the Kitco website as it has a good summary of other prices as gold, silver, US dollar index, etc.).: