THE TRUTH ON US ECONOMY HERE:
“Once you strip out the effects of the debt binge, the artificial
stimulus via currency depreciation, and the fabled ‘wealth effect’ from the
equity market runup, real GDP growth stripped-down to its core was the grand
total of 0.7% last year. Potemkin would be proud.” – David Rosenberg
"The Big Lie method works wonders when you
have a willfully ignorant,
mathematically challenged, easily manipulated populace..."
I don’t need politicians pissing down my back and
telling me its raining.
See Chart:
Monthly
Change in US total Non-Farm Pyrolls at the source below
The stock market bubble has been driven solely by
the Federal Reserve providing free money to Wall Street, with a guaranteed put
by Bernanke and then Yellen. QE, ZIRP,
and an unspoken agreement between the central bankers at the Fed, ECB, Bank of
Japan and the Swiss National Bank to buy stocks has
effectively elevated stocks around the world to absurd valuations.
The Fed
announced the unwinding of their $4.4 trillion balance sheet of dodgy
mortgages, treasuries, and other Wall Street created dreck, many months ago. They
had been all talk until the last week of January when they reduced their
balance sheet by a measly .5%. Do you think it was just
a coincidence the stock market imploded by 10% in an instant? Shockingly,
the Fed increased their balance sheet by $15 billion over the next two weeks
and the stock market rebounded dramatically. Weakening
the dollar at the same time didn’t hurt either.
See chart:
All
Federal Reserve Banks: Total Assets at the source below
The
other excuse for the stock market correction was the CPI hysterically coming in
too high at 2.1% and resulting in the 10 year Treasury surpassing 2.9%. It is hysterical the government expects the plebs to believe health care
costs are only rising by 2%, auto prices are falling, food prices are
increasing less than 2%, and shelter expenses are only rising by 3%. Anyone living in the real world knows their living expenses
are rising at an above 5% clip, while their wages are barely growing. It
is absolutely essential for the Deep State to disguise the true level of
inflation or panic and retribution would ensue.
See chart
CORE
CPI Y o Y at the source below
In reality, real wages have been in steady
decline since 1999. If millions of jobs have been added over the
last two years, they must be the shittiest paying jobs
possible to not budge wages up one iota. Fries with that Coke?
See
chart:
Real Average Hourly
Earnings at the
source below
This is exactly what the Deep State controllers want. They don’t want real wages for real people in the real world
to go up. The true purpose of the actions
taken since 2008 has been to enrich Wall Street while impoverishing Main Street.
Mission accomplished.
Today, with
the 10 Year around 2.85%, the average money market pays .12%. The Too Big To Trust Wall Street cabal reaped
all the ZIRP benefits and continue to screw the little guy. While they borrowed
from the Fed for free, they continued to charge 15% or higher on their credit
cards to the ignorant indebted masses.
Let’s face the facts. Your overlords have doubled down on
debt to keep this crumbling empire alive, so their looting and pillaging
operation could continue. The fractional
decline in debt during the 2008/2009 Fed created financial crisis virtually
destroyed the global financial system. The solution
to this debt problem has been to add tens of trillions in debt while
artificially suppressing interest rates by rigging markets. The U.S. alone has added $13 trillion of debt since 2009 – a
25% increase in eight years. The corporate media and Wall Street cheer,
as consumer debt surpassed its previous high and stands at over $13 trillion,
with revolving credit card debt soaring.
See Chart: Revolving Consumer
Credit and Monthly Change ($BN) at
the source below
With only 4% unemployment and nothing but rosy
economic indicators for as far as the eye can see, one might ask why revolving
credit card debt is at all-time highs and the personal savings rate is at
all-time lows. Are
these two indicators a positive economic sign or a sign of desperation for the
average working class family? If the bottom 80% have not had any real wage
gains in over a decade, are paying through the nose for healthcare, rent,
education, energy, and food, maybe their only choice is depleting their savings
and surviving on their credit cards. Does that sound like a
Goldilocks scenario for Main Street?
See Chart: Personal Savings Rate at
the source below
Do you remember the strident mainstream media
narrative about the best holiday retail season in years? It seems the Big Lie
narrative has been revealed to be false by actual data. Retail sales were flat in December
and down substantially in January. The trend is down. Retail sales in the
discretionary categories are negative. But at least gasoline sales are robust,
due to soaring prices. The debt based auto sale (rental) scheme is unraveling
as defaults soar among the millions of subprime borrowers comes home to roost. The
average family is barely scrapping by and retail sales will continue to
stagnate, while thousands more retail stores are shuttered. Ghost Malls R Us.
See table:
Estimated
Changes in Monthly for Retails & Food Service, by King of Business
The precarious fragile nature of our entire debt
dependent financial house of cards has been revealed by the reaction of the
housing market to the slightest blip up in mortgage rates over the last two
months.
A lousy 37 basis point increase in mortgage rates resulted in mortgage
applications plunging. And we all know what happened next.
See Chart
Mortgage
Rates v. Mortgage Apps at the source
below
Existing
and new home sales both collapsed in a heap. We have home prices at all-time
highs, exceeding 2005 bubble highs. We have heavily indebted millennials
working shit service jobs who will never be able to afford to buy. We have a
new tax law that no longer rewards home ownership. And now we have rising
mortgage rates. Get
ready for housing collapse part deux. Home prices are poised to fall by at
least 30%, again. Thank you sir may I have another. I wonder how much of
the $8.9 trillion of mortgage debt will be written off this time and passed to
the taxpayers.
See Chart:
Home
Sales, Existing, New , pending at the source
below
The Deep State overlords and their lackeys at the
Federal Reserve hit the panic button after the 10% correction two weeks ago. The Fed increased their balance
sheet, they’ve managed to push rates back below 2.85%, and they have
drastically weakened the dollar to support their Wall Street masters. They can’t keep this up for long. The Fed committed to drastically reducing their balance sheet and weakening the dollar has had
zero impact on our worsening trade deficit. Bug is approaching
windshield.
Any success they attribute to their intellectual
capabilities can also be attributed to just plain dumb luck. The lethargic, plodding, boring economic recovery
has been just right for Wall Street and the political class. Not too hot and
not too cold. Just right to keep interest rates at emergency level lows while
not resulting in workers actually getting wage increases which would create
inflation.
It’s truly been a Goldilocks recovery for the stock
owning .1%. But, as Ludwig von Mises
noted many decades ago, the boom cannot continue indefinitely. Valuations are
stretched to the breaking point. Those in power are unwilling or unable to
voluntarily renounce further credit expansion. They have laced Goldilock’s porridge with
arsenic and it is just a matter of time until she’s dead. A depression is in
our future, no matter what actions are taken at this point. Keep calm and
prepare yourself.
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