Yves here. There’s one thing to add to Richter’s useful recap of what the supposedly sparkling 3Q GDP results mean for those of us who live in the real economy. The GDP deflator fell from 2.1% in the second quarter to 1.3% this quarter, so some of the rosiness of the results was due to the swing in the deflator.
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.
For individual Americans, economic “growth” means the opposite.
That the economy grew at a “faster than expected” annual rate of 3.5% in the third quarter has been touted as a sign that now – finally, after years of false promises – it is reaching that ever elusive “escape velocity.” But instantly, people with keen eyes began to quibble with it.
One big factor was military spending, which spiked 16%, the fasted since Q2 2009. This rate is based on the increase from the second quarter that is then annualized, assuming that spending wound continue at this rate for a year. This type of quarter-to-quarter annualized rate is volatile. For example, it plunged 20% in Q4 2012, jumped 17% in Q2 2009, and 18% in Q3 2008. Spikes and plunges often run in sequence (chart).
In reality…. According to data from the US Treasury, the Department of Defense spent $149 billion in Q3, which was actually down a smidgen from the $150 billion it spent in Q3 2013. This lets out a lot of hot air. That spike was likely a fluke, much like other spikes and plunges before it, and much of it may well be undone in Q4.
The other two big factors in that “faster than expected” growth of GDP were inventories, which ballooned and will eventually have to be whittled back down, and exports.
The surges in these three categories caused JPMorgan to cut its Q4 GDP growth forecast to 2.5% from 3.0%. “All three of these categories tend to be associated with payback the following quarter,” explained chief US economist Michael Feroli. And the crux of the economy, the consumer? “Still plodding along in a steady, but unspectacular, manner….”
Whether or not that annualized quarterly rate of 3.5% was a mirage – year over year, the economy grew by just 2.3%.
A growth rate barely above 2% is exactly where the US economy has been for the last five years! Nothing has changed. For a recovery by US standards, it’s a very crummy growth rate, and far from the escape velocity that Wall Street hype artists have predicted for years in their justification for the ceaselessly skyrocketing stock market.
But it gets worse. The population in the US has been growing too. And the economic pie has to be divvied up among more people. So the pie has to grow faster than the population or else, on an individual basis, that growing overall economy, gets cut into smaller slices of the pie.
GDP adjusted for inflation as well as population growth produces real per-capita GDP. It is the sort of economic growth that people actually experience. Doug Short at Advisor Perspectives has been tracking this measure for years (here is his update and methodology). And it paints a gloomier picture.
Before the financial crisis, real per-capita GDP peaked in Q4 2007. Then it fell 5.5% to bottom out in Q2 2009. Since then, it has been working its way back up. In 2013, it surpassed its pre-crisis peak. Now, it is up a measly 2.3% from where it was nearly seven years ago! And it remains far below the long-term trend (red line):
On this per-capita basis, the economy grew only 1.7% from Q3 last year. That’s less than half the annualized quarterly rate that has been bandied about all day.
It doesn’t even include the fact that the fruits of this economy have been very unequally distributed over those seven years, with the gains concentrated at the very tippy-top of the heap of humanity that makes up America. For the rest, this economy has been a tough slog.
And then, of course, it gets even worse.
The deflator used in the GDP calculations to come up with an inflation-adjusted growth rate is the Personal Consumption Expenditure (PCE) index. But the PCE index is usually lower than the already dubious CPI. The only time since the financial crisis when PCE was higher than CPI was in 2010. In the latest reading, core PCE (without food and energy) was 1.47%, while core CPI came in at 1.73%. Same inflation, different numbers.
The difference each month may not be huge, but it’s cumulative, and over the years, it adds up. This chart by Doug Short (here is his latest update) shows the diverging paths of PCE (blue line) and CPI (red line) – and the game that those who’re using PCE are playing with us:
Since PCE is used to adjust GDP for inflation, “real” economic growth has been systematically overstated by understating inflation. If GDP had been deflated over the years with CPI, instead of PCE, that measly 2.3% growth of per-capita GDP since 2007, as crummy as it may appear, would likely be negative. And that explains why so many people – struggling with soaring rents, medical expenses, college costs, etc. – find that their slice of the economic pie has been shrinking since the financial crisis.
And this is the economy that has been stimulated since 2008 by the Fed’s relentless zero-interest-rate policy and $3.5 trillion in QE, on top of an additional $8.8 trillion in federal government debt. More “stimulus” can hardly be imagined. It makes otherwise sane people walk off in an uncertain direction, muttering to themselves and shaking their heads uncontrollably.
So, right in line, the essential ingredient in a thriving housing market is skidding inexorably in America. Read… The American Dream Going Bust – in One Chart
succinct and convincing. this is also the economy returning with the help of fracking to energy independence. especially appreciate how you cleaned the “growth” figure for inflation and population growth. imagine if the population figure were cleaned up. 10 – 20 million “illegals” are likely under the census system, and their contribution to gdp is welcomed by the fortunate one tenth of one percent.
And how much longer do you think fracking will continue with the price of oil where it is?
illegals and the prison population. doesn’t dc exclude cons from the unemployment stats? 2 million cons might be 1 % of the labor force. they may be missing from the population stats.
I really have to take issue with the ‘government debt’ part. Government debt is *still* private income. If it’s not in our pockets, it’s because it’s been routed to the top. This isn’t a government debt problem, it’s a routing problem. Now, if we were to go on a nice government spending spree, while incidentally fixing up some bridges and building a lot of windmills and other cool stuff that would employ *everybody*, all that money at the top would be likely to collapse as all those new government employees paid off all their debt and the blood funnels into our throats suddenly ran dry. Imagine the panic at the top as they scramble around looking for somewhere to invest, and there’s nothing but production and new growth to invest in! Oh my.
Inequality evidently throws a wrench in the works as far as predicting the effects of monetary policy. Back when there weren’t derivatives, CDS’s, MBSs and all those other casino acronyms, boosting the banks’ liquidity would have led to main-street lending. But then we wouldn’t have had such a magnificent crash to begin with.
Reality is, without boosting demand from the bottom, buying securities or not buying securities will make little difference. There isn’t anything else to invest in.
During the first and second round of stimulus I was heavily for shovel ready projects because we desperately needed the job creation. However, at this point I really think that THIS would have been the ideal time to do a money drop since we are getting some job creation at this point and most of the people who have jobs aren’t terrified they’ll lose theirs. Either that or we should do a combination of the two, a money drop (to perhaps help consumers erase some of their debt so that we can possibly see some households being created) AND some shovel ready projects( to maybe tighten the labor market a little faster and maybe goose wages.) Either way I’d like to see the government start to help Americans address THEIR balance sheets instead of just bankers. I honestly don’t see how the housing market goes anywhere if they can’t figure out how to help some of the people with massive amounts of student debt put some of that debt to rest. I also think it’s a drag on wages. Even if you increase wages to $10 an hour it isn’t going to be enough if that person has a $300 a month student loan payment to make on top of housing, health care, transportation, food, utilities and taxes. $1600 only goes so far. It gives them little room to save for that vacation, down payment on a home, etc, etc. While from a environmental standpoint that means less consumption, it also means our economy continues plodding along.
Either way I’d like to see the government start to help Americans address THEIR balance sheets instead of just bankers. cwaltz
The maddening thing is that a money drop would have helped EVERYONE from the bottom up, including the banks, and without price inflation risk IF the ability of the banks to create credit had been reigned in at the same time, at least temporarily.
An instant money drop would trigger fury, especially from the ROW. When you kid eats a full bag of cookies in a day do you run out to replace it asap? I’m afraid of the American answer!
The money drop will happen but not before the ROW comes begging.
The other developed countries think the us have an entitlement problem… many are only starting to see that they also jumped on the bandwagon… had the us gone for debt jubilee a few years ago, the other developed countries would have had a fit.
If everybody had high enough wages, and hence cash in their pockets, they’d pay off their debt. Why would you borrow if you could pay cash?
Before our illustrious leaders got the idiotic notion that a *government* should have a “balanced budget” — an impossibility; how can an entity that can’t run out of money ever be insolvent? — finance was a miniscule sector. People didn’t borrow because they didn’t have to. Now it’s huge, because government isn’t spending enough. There is no unencumbered cash available anymore.
I’m not sure…For the vast majority of people is is possible to find somebody else of even lower means who, even if they aren’t living within their means are living withing your means. The problem is that with the absence of demand for consumer goods, there is little reason for companies to invest in expansion…So the accomodative fed that we’ve had since ~2000 has led to more consumer borrowing and a greater availability to borrow, but no greater ability to service that debt. Which has been coming due. But the powers that be continue to behave as if the problem is a lack of money to lend.
The problem with the initial stimulus (which was a small money drop) in my opinion was the timing. It was done when people were afraid of losing their job so they just held onto it. I think it might be more effective now because the economy is creating jobs (albeit not great ones) and no longer losing them to the extent it was during the Bush years. People might actually use the money instead of clinging to it for dear life. The problem with the second shot during the Obama term which focused on shovel ready was that it was too small and was followed by the government actually drawing down it’s labor force and cutting its budget on everything except for defense and the security state.
However, at this point I really think that THIS would have been the ideal time to do a money drop since we are getting some job creation at this point and most of the people who have jobs aren’t terrified they’ll lose theirs.
It’s just not the way TPTB’s minds work; money drop = free ride unless it’s for them and only then does it equal stimulus. They are as drunk on their own cool-aid as the plebs they force feed it to.
The US could have just sent a huge cheque to every indebted household or done a debt jubilee. The problem is that this would have been a clear message that the ROW is working for free as the US just keeps on gobbling up world resources for their own consumerist pleasures.
The more logical choice is for the US to wait until many more countries, plagued with deflation, implode and come BEGGING the US to save them. Then the US can boost the value of its currency and keep on doing what it has been doing for decades.
I don’t think the US wants to boost the value of its currency. Being the reserve currency has put us between a rock and a hard place for decades.
The exporters in the ROW want a stronger USD and Japan seems to be sending a clear message… if the US does not raise the USD, it will cut the yen. I don’t see how a reserve currency can be weakened without generating global deflation… USD devaluations lead to currency wars. And we are witnessing it right now.
I see the same thing as the 70s and 80s coming our way… USD devaluation (last 6 years) followed by USD reflation…. this will give the US another couple of decades to enjoy their emperor position… I see this cyclical phenomenon playing over the next few decades, each shock bringing lower highs, until at last the dollar ends up losing reserve currency status.
Which always puzzles me because I wonder what is the real difference between maintaining a reasonable status quo of currency values and taking measures to squeeze out every last drop of inflation while being just cautious enough not to fall into a deep deflation trap. If the goal is to seek a viable economic balance, globally, why does everything seem so contradictory? We have to make up all sorts of lame excuses why we are not “stimulating” our economies when it really doesn’t make any difference, except politically.
If the goal is to seek a viable economic balance, globally, why does everything seem so contradictory?
I don’t think the goal is for balance. Too complicated and 7 billion people wanting more. Add to that unevenly distributed resources globally. Typically, nice people avoid positions of power in times of contractions because they know the world is not black and white and politics forces them to choose and shove ideologies down people’s throat. In hard times, this creates a vacuum and these position of power attract sociopaths.
Maybe I’m too cynical but I have trouble distributing resources fairly in a 4 person household!
Thank you for this, Wolf. I also read a number of the linked articles, whose comments are closed, and wonder, related to them and this, what your thoughts are on the continued “reports” about consumer confidence being high and spending for Christmas predicted to be stellar?
Just bs to roil up the masses and get them to trample each other getting into WalMart? I sure don’t see “enthusiastic” consumers” [whether buying houses or Christmas presents]; they don’t have the money.
Amid parallel reports that “spending has slipped”. Cheerleading!
The currency wars are telling us that the elite in the ROW, mostly bankers and exporters, want the system to stay the same as it has been for the last 40 years. And after 40 years of gains, they hold the really long end of the stick.
They want a strong US dollar. With long rates at 1% or less in many major countries, we have hit the point where money will be going into mattresses or, IOW, vanishing from the market at exactly the time when as many transactions as possible need to be recorded to boost GDP. We are close to our Waterloo in terms of this zero bound experiment. My prediction is that within the next year something will pop.
It sure looks to me like the US will be forced to boost the value of its currency and the same malinvestment game that has been going on for decades will continue, meaning there will be growth but not evenly distributed. Fairness will not happen without some kind of pain for Americans because the US is already absorbing an unfair portion of world resources. When a country’s strength is built on exploiting the world, chances are the same values are applied internally.
Fairness will not happen without some kind of pain for Americans because the US is already absorbing an unfair portion of world resources. Moneta
Then let’s aim for maximum pain and then we’ll achieve maximum fairness?
Unnecessary pain is as obsolete as the gold standard. A metered money drop, including to non-debtors, plus a temporary ban on new credit creation would fix EVERYONE from the bottom up including the banks and without significant price inflation risk. AND if, at the same time, banks were transitioned to 100% private with 100% voluntary depositors then we’d be well on the way to preventing future recurrences of this mess.
As for consuming the world’s resources, don’t forget that matter is recyclable and as for energy we could have that in abundance without extracting fossil fuels once we get serious about nuclear energy.
What I am saying is that you will not get fairness without civil uprising. It won’t happen without someone’s sacrifice (I.e. pain).
Agree. Our elites (including the Fed) are desperate to patch the old system together and believe it still works. They can’t even contemplate an alternative. Hence, I look for the Fed to gradually ‘normalize’, and the asset bubble to continue to inflate for some years, in a replay of the cycles since Greenspan. Of course, more QE from Japan and some from Europe will support the official US narrative.
As amazing as it sounds, it seems we must have a crisis even bigger than 2008 to bring change.
Unnecessary pain is obsolete? It is alive and growing among millions of families today. There is a discrepancy between this goal and reality. The world is never going to be how you want it. You can push for what you want (low chance of success unless in a growing movement) or be an opportunist.
Simplifications are necessary, but “matter is recyclable” is a distorting over-simplification. The usefulness of ‘matter’ depends on its state and our current recycling technology is subject to diminishing returns. It takes energy to put matter into, and to keep matter in, specific states. What makes some collection of matter a ‘resource’ is precisely the fact that it is found in nature already in some useful state. We can’t simply side-step the issue of resource depletion because matter is, at base, all the same “stuff” and, oh yeah, conservation of matter. Recycling slows the flow of material through the economy, but it doesn’t obviate it.
“…get serious about nuclear energy” is about the most idiotic suggestion I can imagine. Nuclear energy is not now, nor will it ever be economical OR safe. Enormous releases of radionuclides from TMI, Chernobyl, and Fukushima are destroying the gene pool of all life on earth in perpetuity. First make the nuke industry clean up the Fukushima mess and the Hanford and WIPP messes (which it refuses to do and/or has no idea how to do it), which will cost hundreds of billions and will take decades (if ever). Don’t believe the futuristic hype about “next generation” nuke power — it is far from being cost effective or safe let alone feasible to develop, which is why Wall Street avoids it without federal loan guarantees and insurance cos won’t touch it without liability limits. Solar, wind, geothermal, fuel cells, etc. are where it’s at.
I agree with you. Until we have better basic science and applied technology nuclear energy is a disaster waiting to happen.
Nuclear energy is not now, nor will it ever be economical OR safe. Gaylord
Your absolute assertion is very risky since naysayers have been consistently refuted throughout history wrt technology . Rather, you’d be far safer to assert something like this which, even after 320 years, has not been refuted:
Government-subsidized banking is not now, nor will it ever be, just or stable.
It’s sounds like you think that I do. A money drop could be utilized to address balance sheets or utilized to spur growth.
However, I do have my concerns about nuclear energy in a capitalist economy. No one wants the waste in their neighborhood and I’m not really sure that with us drilling the Earth plates that we won’t eventually be dealing with consequences that could mean disaster.
I’m wondering how long or ir we have created a permanent underground economy with this new normal we’re calling our economy these days. At the end of the day if you can’t find work the traditional way you may pick up under the table work. That’s work that the government doesn’t know about or collect taxes on. I also wonder if with the large number of people our government is writing off as unemployed terminally may end up being a downfall. One of the things I noticed about the places who eventually had their economy collapse was that it’s underground economy was a prominent feature.
The government can massage numbers but the reality is unless it makes real attempts to address problems such as wages that can sustain a household or the underemployment/long term employment issues I suspect it may find that it’s creating long term problems for itself. If government is a hinderance instead of a help then people will find ways to work around it.
A note on inflation… the price of helmets might be going up by less than 2% annually but when I was born, none needed to be bought while today every family member needs one for a growing number of activities…
Governments need GDP growth. If it is achieved through inflation, it is logical to expect them to manipulate the numbers.
The price of helmets – is that code for something?
Many more things in the basket to stay in same social class and respect social rules and laws but not accounted for…
If the Jones’s are borrowing to afford their lifestyle, than borrowing is the only way to keep up with them. That’s a fools game, but we have plenty of fools…There will ALWAYS be people willing to borrow their way to the poor house. I mean, I think that we NEED to raise the minimum wage, but I also think that the economy would be better is credit was LESS available. And yet we’ve become so addicted to easy credit that people think that 6% mortgages that required 10%down would constitute the end of the world.
. . . bicycle helmets, football helmets, soccer helmets sooner or later, etc. . . .
I think inflation has been heavily understated thanks to the Fed using PCE instead of CPI. The formula used for housing is significantly different in the two. In the PCE housing is only around 15% while in CPI it accounts for around 31%. The thing is that housing is one of the most expensive portion of the budget for most people today. It was also the reason that we had so many problems because some households were spending up to half their income for a house.
One positive is voters clearly no longer care when meaningless stats (stats people barely understand such as the national debt or just useless ones) and stats out of context are tossed around.
Democrats are back to blaming sexism and racism for their losses. Mary Landrieu is blaming her fight on racists. The incumbent Mary Landrieu that is.
What continental Europe (and French-Canada and Argentina and Indonesia) have and we don’t? It’s the labor market (and its political shadow), folksies!
”Denmark has no minimum-wage law. But Mr. Elofsson’s $20 an hour is the lowest the fast-food industry can pay under an agreement between Denmark’s 3F union, the nation’s largest, and the Danish employers group Horesta, which includes Burger King, McDonald’s, Starbucks and other restaurant and hotel companies.”
What Denmark does have is legally mandated, centralized bargaining wherein every employee doing similar work negotiates one, common contract with every employer hiring for that work.
Centralized bargaining may be the foundation of every just and bountiful economy in the world: Germany, France, Nordic democracies and continental Europe in general, French-Canada, even Argentina, even Indonesia. Walmart closed down 88 big boxes in Germany where it had to pay the going wages and benefits (see Denmark above).
Obama abandons “the defining challenge of our time” — after internal polling. It would help if Obama and friends were not clueless about a modality that is actually capable of reversing middle-class decline (God help the growing ranks of the poor): legally mandated centralized bargaining — and the reconstitution of political financing and lobbying that go with it (and with the 99% of the votes).
How come America has Marxists and Austrians and every brand and flavor of economic/social enthusiasts except centralized bargaining advocates? ??? The only social/economic setup with a history of success for almost 70 years, all around the world?
An exception to that may be: Thomas Geoghegan: Were You Born on the Wrong Continent?: How the European Model Can Help You Get a Life. Time is a-waisting. * Supermarket employees and airline workers would kill for centralized bargaining.
* A Pattern of Retreat: The Decline of Pattern Bargaining
1. Centralized bargaining doesn’t just materialize out of thin air, or even out of good public policy. In the places where it exists, it was built (a long time ago) by centralized, politicized labor movements – that is, labor movements with associated labor-based parties that aspired to real political power. (In many of the countries where it exists, it isn’t legislated/mandated – it’s just how collective bargaining is done.) We don’t have that.
2. You might think the US unions would be calling for such a thing but the vast majority of them have no sense of alternatives to our dysfunctional industrial relations. There used to be an applied American social science called “industrial relations” that grew out of the active union period (30s, 40s), with a very active international/comparative section, but it is pretty much dead at this point. The academic association even changed its name a few years back from Industrial Relations Research Association to Labor and Employment Relations Assn to make it more friendly to labor economists and business types.
3. The Dems of course have no interest in such a thing, or labor power of any sort.
the unions became as or more corrupt as others in positions of power. now the unions are basically important in govt or govt sponsored activities like large construction and utilities.
unions are just another extortion group that is feeding off those who are either too unaware or too weak to take evasive action.
The Democratic party became as or more corrupt as others in positions of power. Now the Democratic party is basically important in govt or govt sponsored activities like large construction and utilities.
The Democratic party is just another extortion group that is feeding off those who are either too unaware or too weak to take evasive action.
It wasn’t always so. The Reds created the union through the CIO. After the war, they were purged and the CIO was absorbed into the boss oriented AFL.
This post mourns low growth, while others of an environmetal bent decry any growth at all.
Our society is at cross purposes.
We need less growth if groath means wasteful consumption and using up non-renewable resources, and in measures like GDP that’s what groath means. But the only way to achieve that without pushing an even more inhumane system for the poor than the present one, is better safety net, better amelioration of poverty (guaranteed income maybe but at least those things). It logically follows from environmentalism.
Whether or not the middle class has to give up some materialism, meh, shrug. It’s almost too much to hope for a humane system that doesn’t destroy the biosphere we need to survive. That’s the baseline. Of course in the present system the middle class may lose much more than materialistic excess (like a sucky economy is making work conditions worse and worse – which is “why the glorious economy can feel so crummy,” because it’s not all about materialism although of course basic material needs need to be met) but that’s the present system.
The way out – while difficult, but remains the only sane way – is to better distribute that low or negative growth.
I believe it’s our best chance to satisfy both camps.
I for one would like to see charts of average wages and GDP per capita done for the 99%. I know that if one includes the highest end it skews the numbers. What would GDP per capita be if you subtracted the earnings of the top one percent and then divided by 99% of the population instead of 100 ? How has that number changed since 2007 ? Since 1970 ?
This might help though the chart only goes from 1972-2001. Explanation is there for why I was lucky to come up with even that:
To which I might add — you might want to know — that the US Census family income by quintiles chart top codes (that’s a verb) all income above one million dollars a family. Which practice made sense generations ago when you wouldn’t want a few rich families to throw off the basic picture. Now with the explosion of inequality precisely what you vitally want to know is income above one million.
At a certain point you have to learn not to take seriously what comes out of the USG and the mainstream media. We all kind-of know that. Is there some objective basis for the USG/Media claims–maybe. My motto is that everything you read in the mainstream media is a lie even if it’s true, i.e., the slant and context is everything–their job is to keep us in a state of sleep and will do what they have to do to do that. That’s all you need to know. We also know probably, that the political economy we live in is at best deeply corrupt and, in my view, needs radical change starting with the whole idea that money=values.
This is good time to be reminded of the Tcherneva chart that shows how more than 100% of the economic growth since the Great Financial Collapse has gone to people in the top 10%. We can be certain that a disproportionately large part of that wealth has gone to people in the top 0.1%, too.
It amazes me whenever people complain about income or wealth that is “redistributed” from the rich to the poor or middle class. Nothing would need to be “redistributed” if it hadn’t been stolen in the first place from the bulk of the population by the oligarchs and their top level stooges. As a result of this theft, vast numbers of Walmart employees receive SNAP and other assistance so they can survive.
If top 1% incomes continue to absorb all the economic growth, then, by the time the output per person expands 50% (25-30 years?) the top 1% income will “earn” half of a half-larger economy (25% + 50% = 75% of 150%). By the time output per person doubles (typically 40-50 years) the equation will read 25% + 100% out of 200% = 62.5% of a twice-as-large economy.
forget growth. it is all about stealing assets and asset inflation now.
The bit about military spending was interesting. I don’t know what budget item that was, but I’m pretty sure it’s meaningless because we spend, according to previously published budgets, over 1Tr a year on the military. As per last spring’s 6-month funding of the US military at @600 billion. We pour all sorts of money into military and military related industries and most of it is never even accounted for. Pouring money into some war somewhere has always been the favorite method to stimulate our economy. This time it is all so timely it can’t be a coincidence. Just when the Fed stops QE, Leon Panetta explains we’re in for a 30-year war; ISIS miraculous appears in all its hideousness; and ebola makes us all far more serious than we were before. Not to mention the big push for TIPP and TPP. Nobody is screaming for jobs anymore because we’ve all been worn down by this dedicated jobless recovery, unless those jobs are in the MIC. “Lowflation” is the new catch phrase for inflation denial. And etc. The more things change.
More stimulus is quite easy to imagine. It was apparent in 2008, based upon the history of combined recessions and financial crises, that sustained stimulus for a number of years was necessary for the economy to recover. Instead we got the bailouts of Big Finance and Wall Street, and just enough stimulus to forestall another Great Depression. There was no plan to bail out Main Street or the middle class, and we scrimped on the safety nets. Since 2010, the Tea Party Congress has done everything to prevent stimulus and to prolong suffering.
If any of you have watched the videos Crash Course presented by Chris Martenson http://www.peakprosperity.com/crashcourse you would understand not only what is going on but how foolish it is. Exponential growth in a finite system is not a possible outcome. Capitalism is its own worst enemy. It has no way to actually sustain the growth needed to pay back the leverage. They try to create inflation on a sustainable basis but how can that happen when exponential growth always ends up parabolic. In our world, not space but the one we live in, if you shoot a bullet straight up, it will eventually run out of momentum and gravity will bring it back to earth. Same thing happens to parabolic growth. It is not sustainable.. So continuous growth is not sustainable. At least not on our earth in a finite system.
So all this speculation about why we can not sustain growth is like asking why we have to have gravity.
Add that illogic to ever increasing debt which could only be serviced with constant continuous growth and what do you have? How will the Power of Positive Thinking over come gravity or the math of exponential growth?
Why do so many of our *leaders* have the disease of thinking illogically? Probably because they have been doing/thinking what they have been doing/thinking since college and to change now would be akin to a true atheist becoming a Christian Scientist. It is the group think or herd mentality or however you want to label it, our *leaders* are herding us all for the gaping whole in the earth and they have no thoughts of changing direction.
Maybe if enough people just refused to follow but most have no idea what is happening and only hear what the *leaders* want then to hear. Naw, doom and gloom is probably the most likely outcome.
Our fearless 1 percenters have been saved for the time being by Japan cranking up the money printing press just when the Fed turned its spigot off. Look how Wall Street responded Friday.
Meanwhile, I understand Barry is scheduled to have a heart-to-heart meeting with Janet Yellen on Monday. I wonder what that’s about.
They are playing with fire. No one is yet feeling the pain because bond portfolios are still offering stellar returns as yields go from 1.5% to 0.5% and credit spreads on safe stuff disappears. But when there are absolutely no more gains at all in bond portfolios, that’s when the system implodes. How many more quarters?