The Floodgates Begin To Open

By John Rubino – Re-Blogged From Dollar Collapse

It’s now clear that what governments did to counter the Great Recession may have delayed systemic collapse, but did not resurrect the old normal. Growth around the world is anemic – which is to say debt continues to increase faster than the productive capacity to service it – and inflation (the other way to shrink a debt burden) remains below target.

Now “anemic” is becoming “non-existent.” In the US, mini-credit-bubbles like auto loans, home mortgages and student loans are sputtering, leading economists to dial back their rosy scenarios for 2016. The Atlanta Fed’s GDPNow forecast for Q3 growth, for instance, was a robust 3.8% in August but is now less than 2% — and still falling.

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Time to Invest for Stagflation

By Michael Pento – Re-Blogged From http://www.PentoPort.com

Whether you call it a 1970’s style stagflation or, as we call it, a recessflation, investors need to prepare their portfolios to profit from a protracted period of rising prices in the context of zero growth. Here are some facts: Growth in the U.S. has averaged just 2% since 2010. However, Q4 2015 GDP growth grew at a 1.4% annualized rate and the Atlanta Fed model has Q1 GDP growth slowing to just 0.4%. The simple truth is that the rate of growth is slowing towards 0%, just as asset prices continue to rise to record levels due to vast intervention from central banks.

The U.S. is now in the process of moving away from an environment of disinflation and slow growth, to one of inflation and recession. Indeed, the entire global economy is careening towards an epic recessflation crisis.

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The Truth About GDP

By Alasdair Macleod – Re-Blogged From http://www.Gold-Eagle.com

“I can prove anything by statistics except the truth” – George Canning

Canning’s aphorism is as valid today as when he was Britain’s Prime Minister in 1817. Unfortunately, his wisdom is ignored completely by mainstream economists. Nowhere is this error more important than in defining economic activity, where the abuse of statistics is taken to levels that would have even surprised Canning.

Today we describe the economy as being in one of two states, growth or recession. We arrive at a judgment of its condition by taking the sum total of the transactions selected by statisticians and then deflating this total by a rate of inflation devised by them under direct or indirect political direction. Nominal gross domestic product is created and thereby adjusted and termed real GDP.

The errors in the method encourage a bias towards a general increase in the GDP trend by under-recording the rate of price inflation. From here it is a short step to associate rising prices only with an increase in economic activity. It also follows, based on these assumptions, that falling prices are to be avoided at all costs.

Assumptions, assumptions, all are assumptions. They lead to a ridiculous conclusion, that falling prices are evidence of falling demand, recession or even depression. Another of Canning’s aphorisms was that there is nothing so sublime as the truth. There’s no sublimity here. If there was, the improvement in everyone’s standard of living through falling prices for communications, access to data, and the technology in our homes and everyday life could not possibly have happened.

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What Killed Economic Growth?

By Jeffrey Tucker – Re-Blogged From FEE: The Foundation for Economic Education

Debating why the economy is so sluggish is an American pastime. It fills the op-eds, burns up the blogosphere, consumes the TV pundits, and dominates the political debates.

It’s a hugely important question because many people are seriously frustrated about the problem. The recent popularity of political cranks and crazies from the left and right — backed by crowds embracing nativist and redistributionist nostrums — testify to that.

Sometimes it’s good to look at the big picture. The Economic Freedom of the World report does this with incredible expertise. If you believe in gathering data, and looking just at what the evidence shows and drawing conclusions, you will appreciate this report. It sticks to just what we know and what we can measure. The editors of the report have been doing this since 1996, so the persistence of the appearance of cause and effect is undeniable.

The report seeks measures of five key indicators of economic freedom: security of property rights, soundness of money, size of government, freedom to trade globally, and the extent of regulation. All their measures are transparent and heavily scrutinized by experts on an ongoing basis. If you question how a certain measure was arrived at, you are free to do so. It’s all there, even the fantastically detailed data sets, free for the download.

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What Kind of “Improvement” Does the Fed Want?

By Peter Schiff – Re-Blogged From http://www.europac.com

Over the past few years observing changes in Federal Reserve interest rate policy has been a little like watching paint dry or grass grow…only not as exciting. That’s because the Fed has not changed its benchmark Fed Funds rate since 2008 (Federal Reserve, FOMC). So with nothing else to talk about, Fed observers have focused on the minute changes in language that are included in Fed Policy statements. The minuscule revision in the July statement was the inclusion of the word “additional” to the “labor market improvements” that the Fed wants to see before finally pulling the trigger on its long-awaited rate increases. That should lead to a discussion of what kind of “additional” improvements those could be.

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The Fortune Cookie Knows

… Just as I was ready to hit bottom, having dimly decided to give the glories of gluttony one more try (but this time with less bacon and more pornography), was absolutely delighted to read that Ben Bernanke was paid $250,000 to give a speech. A speech!

I was reborn! The reason for my new-found zest for living is because Ben Bernanke is BOTH a total, monumental failure as a former chairman of the Federal Reserve (I mean, look around you!), and an arrogant Keynesian dork-face chump if there ever was one. Yet, look at the loot!

One speech! A quarter mill! I mean, this guy is absolutely, completely delusional by actually thinking, and believing, that laughable Keynesian econometric gibberish (to replace falling consumer spending with more government spending) can prevent the horrific economic collapse that always comes after radical expansions of the money supply that distorts the whole price structure of everything into a bloated, inflationary insanity.

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The green plan to make Capitalism cruel

By Eric Worrall – Re-Blogged From http://www.WattsUpWithThat.com

A regular green claim is that, for the sake of the planet, we can’t afford any more economic growth. How many times have you heard something like the following:

The other tough reality demanding more honest business reflection is the incompatibility of further, orthodox economic growth in the OECD with the 2C target. The structure of markets relying on the shareholder model also demands that companies must grow. But the best analysis available suggests that growth in OECD countries cannot be squared with halting warming at 2C, 3C or even 4C.

Where are the companies brave enough to even ask the question of what the optimal size of a company might be, after which it should grow no further, and how that company should be governed and function with regard to investors?

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See No Evil: What We Chose to Ignore in the April Jobs Report

By Peter Schiff – Re-Blogged From http://www.europac.com

We live in an age where bad economic news is not only unwelcome, but it is routinely overlooked or excused. On the other hand, good news is spotted and trumpeted even when it doesn’t exist. An ideal illustration of this dangerous tendency towards collective selectivity came last week when the markets and the media somehow turned an awful employment report into an ideal data set that confirmed all optimism and contained nothing but good news for investors. In truth, it was anything but.

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The Dollar in FOREX Markets

cropped-bob-shapiro.jpg   By Bob Shapiro

The paper currencies of all countries fluctuate in exchange rate for several reasons, mostly (but not always) due to government policies.

The exchange rate for the Euro (since 1999 when the Euro was introduced) vs the US Dollar, started around $1.18, dropped to $0.83 in 2001, jumped up to $1.60 in 2008, and now is back just below where it started, today at $1.1275 per Euro.

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American Generosity vs Entitlements

cropped-bob-shapiro.jpg   By Bob Shapiro

Many people doubt the generosity of Americans, especially Americans. They don’t want to depend on the generosity of strangers to provide food for the hungry, shelter for the homeless, medical care for the medically indigent, or education for the poor. For them, if we don’t force all those American versions of Scrooge to cough up tax dollars, those in need won’t be provided for.

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