Debt

Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis

usissuescom Monetary Policy , , , ,
By Stefan Gleason – Re-Blogged From Silver Phoenix

Presidential candidates Bernie Sanders and Elizabeth Warren are promising as much as $1.6 trillion in student debt forgiveness for millions of borrowers. Critics smell a cynical campaign ploy to try to buy the youth vote.

How is it either realistic or fair to declare an entire category of debt to be assumed by taxpayers?

Regardless, pie-in-the-sky proposals to cancel student debt shed light on a very down-to-earth problem for not only college students and recent graduates – but also for the economy and financial markets.

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GDP Begets More GDP (Positive Feedback)

usissuescom GDP & Employment, Monetary Policy , , , , ,
By Keith Weiner – Re-Blogged From Gold Eagle

Last week, we discussed the fundamental flaw in GDP. GDP is a perfect tool for central planning tools. But for measuring the economy, not so much. This is because it looks only at cash revenues. It does not look at the balance sheet. It does not take into account capital consumption or debt accumulation. Any Keynesian fool can add to GDP by borrowing to spend. But that is not economic growth.

Borrowing to Consume

Today, let’s look at another problem with GDP. To understand it, let’s walk through a plausible scenario. It begins with Johnny Fastlane. Johnny borrows $10,000 on his credit card to (yes, our favorite example) go on a gambling vacation in Las Vegas. An airline carries away some of his cash. A hotel lodges some. A few restaurants eat it. And of course, the casinos roll in his dough.

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The Economy Continues To Deteriorate

usissuescom GDP & Employment , , ,
By Dave Kranzler – Re-Blogged From Gold Eagle

Trump’s trade advisor, Peter Navarro, was on CNBC today asserting that the economy was expanding at an unprecedented rate.  Either Navarro is tragically ignorant or an egregious liar. Either way he looks like an idiot to those us who study the real numbers and understand the truth.

The Global Manufacturing PMI (Purchasing Managers Index) dropped to 50.4 – the lowest since July 2016. It’s been falling almost nonstop since mid-2017. The current period of decline is the longest in the 20-year history of the index. The index includes the purchase of inputs for the manufacturing of consumer goods, investment goods (capex material) and intermediate goods (semi-finished goods used as inputs for final goods).

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Slowdown Confirmed

usissuescom Foreign Policy, GDP & Employment, Monetary Policy , , , , , , , ,
By Mike Savage – Re-Blogged From Gold Eagle

I have had a rough time for the last few weeks coming up with commentary that has anything new to say. It seems that we are bombarded day after day with talk of trade wars, tariffs and counter-tariffs.

Just today, April retail and industrial production numbers came out in China and in the USA. To say the least, the numbers were uninspiring at best.

In the USA retail sales for April contracted 0.2%. Much of the weakness was in auto sales because taking the auto numbers out there was a .1% gain in April. Electronics and building materials also fell. US industrial production, which has been stagnant all year, was not expected to grow in April either. It still surprised on the downside contracting 0.5%. That is the largest monthly drop since May of 2018.

Durable consumer goods dropped 0.8%. What caught my eye, however, was production decreased for business equipment, construction supplies and business supplies. This appears to confirm that 500,000 less people are actually working today than were at the beginning of 2019 even though we have “full employment”. What a joke that is! The only reason production wasn’t hurt worse was an increase in defense and space equipment materials.

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Magic Money Tree Economics

usissuescom Monetary Policy, Taxes & Spending , , , , , , ,
By GE Christenson – Re-Blogged From Silver Phoenix

Our Current Financial Circumstances

  1. The U.S. is $22 trillion in debt and burdened with $100 – $200 trillion more in unfunded liabilities. Just to pay the interest the U.S. must borrow. Debt is rapidly rising and cannot be paid unless “they” default or hyper-inflate the dollar.
  2. Chairman Jerome Powell stated, “The U.S. federal government is on an unsustainable path.” Even the Fed admits what everyone should realize.
  3. Global debt is $250 trillion. Some countries have descended farther down the debt-paved road to economic hell than the U.S.
  4. Pensions are under-funded, student debt is a disaster, the main street economy is weak, real estate prices and sales are falling, retail sales are down, real wages have been stagnant since the 1970s, and no credible plan exists to fix debt, deficits or devaluations.
  5. The political and financial elite profit from wars, inflation, devaluation, strip-mining assets, and income inequality.
  6. It’s an ugly picture with no easy answers. But debt, deficits and QE levitated stock markets to all-time highs.

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Silver Versus Debt, Delusions And Devaluation

usissuescom GDP & Employment, Monetary Policy, Stocks & Commodities , , , , , , ,
By GE Christenson – Re-Blogged From Silver Phoenix

Part One: THE ECONOMY – AND DEBT, DELUSIONS AND DEVALUATION

  • Global retail sales are weak. “Redbook Retail Index confirms Commerce Department December Retail Collapse.”
  • Falling Imports into the U.S.
  • Industrial Production dives lower
  • Housing sales are weak.
  • Auto (U.S. and China) sales are down and auto loan defaults are rising.
  • Tariff war with China. Does a tariff war benefit anyone?
  • From Charles Hugh Smith: “Credit Exhaustion Is global.”

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GDP-B Doesn’t Cut It Either

usissuescom Monetary Policy , , , , , , ,
By Alasdair Macleod – Re-Blogged From Gold Eagle

GDP is hyped-up to be an all-important measure of economic activity. It does not measure economic activity, instead recording meaningless money-totals spent in unsound currency over a given period. A bad statistic such as GDP is wide open to official manipulation, and there is always a desire to enhance it. GDP-B, which includes an estimated consumer surplus, appears to conform with this desire. If it is successfully introduced, GDP would be substantially increased, making governments look good, and reducing their debt to GDP ratios. However, it is no more than a statistical cheat.

Gross Domestic Product-B attempts to capture the added value of things we don’t pay for, such as Facebook, WhatsApp, Google and other digital services free to the user. B stands for benefits; the benefits consumers receive from free and subsidised services. It was devised by Erik Brynjolfsson, a professor at MIT, and is a work-in-progress. He points out that according to the US Bureau of Economic Affairs, the information sector in GDP statistics has been stuck at between four and five per cent of GDP for the last twenty-five years. Yet, the importance of this mainly digital sector now dominates both work and leisure activities, benefits not recorded in GDP.

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