Peter Schiff, president of money manager Euro Pacific Capital, warns that after years of profligate spending, the "chickens are finally coming home to roost".
"Our whole phony standard of living is imploding," he said. "We have borrowed and spent ourselves into oblivion."
"It's amazing that people can't figure out that America is broke."
Americans are feeling a lot more economic pain than the government's official statistics would lead you to believe, according to a growing number of experts.
They argue that figures for unemployment and inflation are being understated by the government.
Home prices have posted another record decline, as most of the nation's largest markets suffered double-digit drops over last year, a survey released Tuesday shows.
The S&P Case/Shiller Home Price Index, which tracks 20 of the largest housing markets, showed prices plummeting by 12.7% in the 12 months ending February. That's the biggest fall since the index began tracking prices in 2000.
Of those 20 metro areas, 17 posted their largest year-over-year declines ever. Ten of the 20 cities posted double-digit dips.
The 10-city Case/Shiller index is down 13.6% year-over-year, the biggest drop since its launch in 1987.
"There is no sign of a bottom in the numbers," S&P spokesman David M. Blitzer, said in a prepared statement. "Prices of single family homes continue to drop across the nation."
"This is huge," said Dean Baker, co-director of the Center for Economic and Policy Research. "Back a couple of years ago, people were saying, 'Housing prices are not like stocks; they change slowly,'" he said.
Sky-high oil prices are causing pain at the pump, but bills for air conditioning this summer and heating next winter -- combined with rising food costs -- promise to squeeze U.S. consumers even more.
With gas at $4.00 a gallon, households already have less to spend on a new grill at Home Depot; a vacation at Walt Disney's Disney World; a new TV from Best Buy; or a new "hog" from Harley-Davidson.
And there are no signs things will get better soon for the consumer, long the driving force of U.S. economic growth.
"For the areas of the economy that rely on heating oil, high fuel prices are going to be another blow to the consumer this winter," said Jack Kyser, chief economist at the LA County Economic Development Corp.
"The hotter states will feel the pinch during the summer months but in the mid-America states where you get hot summers and cold winters, it's going to be very uncomfortable," he said.
"This is going to eat into the disposable income of American consumers -- supposing they have any left."
Oil prices, now $130 a barrel, have risen six-fold since 2002. On Wednesday, heating oil reached a record high above $3.90 a gallon and the price is expected to stay high.
Heating oil, which cost $3.29 a gallon in January, will likely cost $3.83 in December, according to the government's Energy Information Administration.
Those costs come at a time of rising food prices, forcing people to spend more on basics as wages fail to keep up. The effects on the economy could be profound.
Diane Swonk, chief economist of Mesirow Financial, says one of her biggest concerns for the short term is that the Bush administration's tax rebates, which were designed to stimulate the economy, will be used by consumers to fill their tanks and use air conditioning as usual rather than cutting back.
Many retailers, like Wal-Mart and Sears and supermarkets Kroger and Supervalu, have offered customers incentives to spend their rebate checks with them.
President George W. Bush signed into law a $152 billion fiscal stimulus package earlier this year to provide tax rebates to 130 million Americans. Some $107 billion of the total was allocated for households.