The following rant is only my personal take on the situation. I'm no economist, in fact I'm not a very educated man, so take it with a grain of salt and reach your own conclusions.
The dust bowl of the 30’s created widespread economic and human devastation through parts of Kansas, Colorado, Texas, and New Mexico. It was caused by drought and government stupidity. The storm just over the horizon will affect the entire country with equal devastation and unheard of misery, but this time it will be caused by government stupidity and a flood, a flood of money, which will have no more value than toilet paper.
Do you know how the money in your wallet came into existence? Is it like a deed showing ownership of some asset or a certificate, redeemable for something of value? Nope, it was created out of thin air, or more precisely it came from the ether sphere. It came about as an electronic credit from the Federal Reserve's computer. Essentially, when the Treasury needs more money it goes to the Fed and says I need a billion dollars, so the Fed says OK we will loan you a billion dollars in exchange for a promissory note making the citizens responsible for a debt of a billion dollars (called a bond). The Fed then writes a check for a billion dollars (the Fed writes the check against its own account which has no money or assets) and gives it to the Treasury which then prints up a new billion dollars. Neat trick right? The Fed lends assets it does not have and then collects interest from all of us. Oh, BTW the Federal Reserve is not a government entity, it is a privately owned corporation and is a leech which has been sucking blood out of the country for decades.
Fiat currency (the US dollar) like any commodity is subject to the laws of supply and demand and when there is too much of any commodity, you know what happens. The value decreases. Except this commodity has no intrinsic value; it’s only value is based upon expectation. We think a dollar bill is worth a dollar, so we accept it in trade for something else, but what happens when the public loses confidence in the dollar? Sellers will start demanding other assets like other goods or gold or silver and the dollar collapses. This could be a fairly gradual process or some drastic event could trigger an immediate collapse. What are you going to do when you go to the grocery store and they won’t take your credit card, debit card, check, or even cash?
Obama is spending at a rate never thought of before and much of it is being done without Congressional approval. Hell, there hasn't even been a budget approved in years. I don't know why they bother with a budget or debt limit anymore. It's all meaningless now. I believe everything Obama does, from regulations, to debt accumulation is designed for one purpose, and purpose only.....to destroy the economic and military strength of the United States. I can't fathom his reasons; it may be part of the one-world-order plan, it may be the hatred he adopted from his father against colonial imperialism (some how America is lumped into this category), maybe its his mother's Marxist legacy, who knows, but its obvious by his actions, policies, rhetoric and the people he surrounds himself with, this is his goal and intention.
Where does the money go? Look here, and here. Federal spending is exceeding inflation by 33%, and spending is exacerbating inflation.
Inflation is the government's friend and the citizens' poison. As the national debt grows, the interest on that debt becomes more and more a burden and a larger percentage of the spending. Inflation devalues the worth of debt (say you borrowed $1,000 in 2012 and the annual rate of inflation is 10%, then in 2013, the $1000 dollars you borrowed is only worth $900.00, so you are repaying with less valuable dollars). In the mean time, your $40,000.00 salary will only purchase $36,000.00 dollars worth of goods. So, let's say your employer gives you a 10% cost-living-raise (when is the last time that happened). You broke even right? Wrong, you must now pay a higher, progressive rate of tax and your savings are now worth 10% less. These numbers may not jive, but the result is more-or-less the same.
The way the government calculates inflation is disingenuous, they don't factor in price increases of everything you must purchase like fuel and food among others things so actual inflation is quite a bit higher than you are told it is. At the rate the government and the Federal Reserve are pumping money into the economy (quantitative easing), inflation will continue to grow and probably will reach a level called hyperinflation.
The federal government and the Federal Reserve are pumping huge amounts of currency into the economy, running up huge debts and keeping interest rates at unrealistically low rates. I personally believe the economic collapse and eventual currency collapse has already started in the form of ever-increasing inflation, which will in short order escalate into hyperinflation. It has happened before in other countries in the past. And I'll bet the same people who called certain corporations too big to fail will also say it can't happen here.
Current Federal revenue (taxes) only pays for about 30% of spending. The rest is debt. Right now, the debt is running at about one trillion dollars per year. This is what a trillion dollars in $100 bills looks like. It's the last image on the page and for scale, that little figure at the front left is a man.
The government won't just suddenly stop paying social security benefits, housing subsidies, issuing food stamps, etc. But the amount of dollars those benefits will purchase will keep diminishing at an ever increasing rate. The same food stamps that once purchased a week's worth of food will only purchase three days worth, then one day's worth, then only a loaf of bread. One government reaction to this might be price controls, but what happens if the food store is losing money on this deal? They close their doors! Works the same way with your pay check.
What happens when a spoiled populace can't get the things they have become accustomed to, much less the necessities of life? Social chaos, rioting, looting, and general mayhem. It will start in the largest cities like, New York, Atlanta, Detroit, Chicago, Dallas, and LA. But it won't happen in DC.
The Obama administration knows this is coming, in fact they are orchestrating it. Why do you think the DHS, Security Administration and National Oceanic and Atmospheric Administration are driving the cost of ammunition up by buying hundreds of millions of rounds, 7,000 new "assault" rifles, and working so feverishly to disarm the public.
Maybe I'm completely wrong about the scenario I've described. I hope I am, but afraid I'm not. There seems to be a lot of other people who agree; the web is full of stuff on the subject, emergency food, and survival goods sales are booming, and there is the TV show 'Preppers'.
To be on the safe side I think those who have resources should invest in long shelf life food, guns and ammunition, non-power hand tools, fuel, gold and silver, and whatever else you think you might need.
Here are some signs to indicate hyperinflation.