This is bigger…….

17 01 2016

That was big………  but this is bigger.

Whilst I admit to not hearing it for some time, the MSM has been spreading its usual nonsense in the form of “the fundamentals” [of the economy] are spot on, there’s nothing to worry about. Which I’ve been calling for years as crap, and now there’s a chart that explains everything regarding why I feel this way.

chart says it all

(Richard Koo: The ‘struggle between markets and central banks has only just begun’, Business Insider)

Why is the economy barely growing after seven years of zero rates and easy money? Why are wages and incomes sagging when stock and bond prices have gone through the roof? Why are stocks experiencing such extreme volatility when the Fed increased rates by a mere quarter of a percent?

It’s the policy, stupid. And here’s the chart that explains exactly what the policy is.

What this chart clearly shows is that the monumental increase in money printing had almost zero effect on lending, nor did it trigger the credit expansion the Fed were hoping for…… In other words, the Fed’s insane pump-priming of the economy experiment (aka– QE) both failed to stimulate growth and put the economy back on the so called ‘path to recovery’ we’ve been told was on, but everyone else has been saying for years never happened. For all intents and purposes, the policy was a complete flop.

Mind you, had it worked, I think we would have seen massive inflation. Basically, the fundamentals went AWOL way back in 2008. And no one wants to admit to it.lifestyle_banksy-500x332

The latest news from the US is that Walmart are closing 269 stores, which will probably leave some small towns with nowhere to buy anything,  and thousands of people out of work. If you need signs that economic collapse is now well underway, look no further than that little curler…..

The upside is that we might even see CO2 emissions starting to fall.

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3 responses

17 01 2016
regionswork

Using credit-money-debt too much of the future was ordered. It was mostly pizza, which is now cold, decomposing and destined for the landfill. Electronics have aged, if they ever worked at all, and they’re dumpster destined as well. More durable buildings and some infrastructure was made, yet maintenance was ignored. Quality was low and much is overcapacity, as the projections were not met. Gambling for redemption – a pot that pays all debt and gives a net plus cash – has yet to be won. Draws on the pot is a big stack – well really there’s been no pot for a long time, just IOUs. Hyping value of cold pizza and obsolete goods is just not working. Can’t pay debt with debt. The goal is to own the ranch. A small bet/debt on equity that is payable from income, with some insurance to cover risk – prudent – even puritanical. Too much debt/bets is a moral problem, not economic. Extension of credit is an act of faith and trust. To extend credit to those that will not be able to pay and have no insurance, gives them a piece of the future they won’t be able to own free and clear, yet they can pay fees and interest to support the lenders. This is a moral problem. Predatory debt is theft. The moral guidance is simple: Thou shalt not steal. That “Its just business” enables it is not something economics can solve, though it could measure if it didn’t obscure/deny the its presence. Boy and girl scouts taught to be honest have a hard time in such environments.

17 01 2016
ejhr2015

It’s way more complex than The Policy. Demographics is important. The ageing baby boomers are spending less. The echo boomers are in debt, in no shape to spend up and fill the gap. The baby boomers in the USA control 77% of the resources, the wealth. It make a giant difference to the economy and reduced spending says deflation, even recession. The Policy created a credit boom. It just bid up asset prices, in housing and other static assets. Unless governments deficit spend the money supply dwindles and we have yet another trigger for deflation. Neo liberal policy is against spending except on the wealthy. another bad result. And so on.

20 01 2016
pendantry

I’m reminded of a wibblette of mine from 2008: Time to get the flock out of here, in which I revealed I’d heard a ‘financial expert’ claiming that:

… financial markets are not logical; they behave as though they have a herd mentality.

I think that’s a fair assessment. That we continue to believe in a system that has failed us catastrophically once already, let alone believe that the economic system that underpins it can ‘recover’, just reveals us all for the fools we are, strutting around in our ’emperor’s new clothes’.

The upside is that we might even see CO2 emissions starting to fall.

Reducing CO2 emissions would be good, yes. Not much of that happening (despite the grandstanding positive-speak of a bunch of folks in Paris recently).

Unfortunately, there is no ‘upside’. A wholesale failure of the system might (might) be good for life as a whole on this planet, but once we stop pumping out all those other pollutants into the atmosphere, the ones that are acting to reduce the sun’s energy getting to us; then we’ll really be cooking. (Of course this is all set to happen anyway, once the last of the polar ice disappears.)

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