A good portion of reported economic growth over the last several decades can be attributed to a liquidity explosion reflected by enormous increases in debt. The graph of the money supply since the removal of the gold constraint in 1971 looks like that proverbial hockey stick. The US Federal Reserve is the greatest source of this liquidity around the world, [...]
Debt
How To Identify Economic Zombies
Economics is not a difficult subject, unless you try to learn it from an economist. As described by John Kenneth Galbraith, who posed as an economist but was far better as a critic: Economics is a subject profoundly conducive to cliche, resonant with boredom. On few topics is an American audience so practiced in turning off its ears and minds. [...]
Economic Disaster Coming Our Way
I get tired of preaching economic disaster and I am sure readers are just as tired of reading about it. Yet, it is coming regardless. The disaster will be of such importance that one cannot overemphasize it or warn too often about it. It will be a disaster of unprecedented scale. My approach in discussing the on-coming economic disaster is [...]
More Evidence of the Economic Hustle — The Retail Industry
Readers of this site know what I think of the economic recovery. There ain’t one! James Quinn provides his take on retail. Let’s begin with one of his graphs: The bars go the wrong way in the two graphs above. This is not a recovery. It looks like a train wreck in progress. The country is over-malled and over-retailed compared [...]
QE Cannot Stop
Zerohedge.com showed this chart of US Treasury holdings through November 2013: Over the course of a year, the two major holders of Treasuries not named the Federal Reserve increased their holdings by about $200 Billion. China and Japan purchased about 20% of new US government debt. The Fed purchased 2.5 times what they did. The other entities shown on the [...]
Will Japan Topple First?
Simon Black discusses Japan’s problems: 46% of the Japanese government’s budget is financed by debt. Most of this is mopped up by the central bank. Yet as the government’s debt level already exceeds 200% of GDP, the gross interest payments alone eat up more than 50% of tax revenue. Japan has no hope of getting out of this alive. Will [...]
Debt Galore
Is there a scarier chart than this if you are Japanese? Note the position of the US, lest you think things are rosy here! The interconnectedness of the world financial system ensures that problems in one area will ripple throughout the system. In that sense, responsible behavior by one country may not be enough to protect against irresponsibility elsewhere. Think [...]
Sundown In America
A very long and relevant talk was given by David Stockman at Harvard. His conclusion is that the problems are political and irreversible, two common themes of this website. Imagine how this bastion of liberalism must have taken his analysis? His talk follows (the emboldening in mine). SUNDOWN IN AMERICA: THE KEYNESIAN STATE-WRECK AHEAD Remarks of David A. Stockman at [...]
Civilizations Don’t Die of Old Age
A simple video explains what has happened and how it is no different from any other country/civilization that rises and falls. It focuses on money/gold and provides an historical as well as a causal explanation of why a major crash is inevitable. We can either die in the flames of inflation or freeze in deflation/depression. Both roads end in the [...]
Quantity vs Quality Only Makes Economic Problems Worse
Reader RFNII frequently sends me analysis sent to his clients. The findings below should not surprise. Government is desperate and has gone into survival mode. To protect itself it will do anything necessary. This condition is not new. The desire to cover up economic weakness was what was responsible for the bubbles that led to the 2008 crash. Lying about [...]
Extreme Fear Is Reasonable
It is nearly impossible to convince people that an economic collapse is likely, perhaps inevitable. It is beyond anything they have seen or can imagine. I attribute that to a normalcy bias, an inherent weakness of experiential learners. For many, accepting something that has not occurred during their time on the planet is not possible. The laws of economics and mathematics [...]
There Is No Recovery
For anyone foolish enough to believe there is a recovery underway, Business Insider provides a slide presentation by David Rosenberg that should disabuse you of any such notion. Mr. Rosenberg is one of the more astute analysts around. His take is that the Federal Reserve is doing all it can to save the economy but there is nothing it can [...]