The US Economy Is In Big Trouble

By Dave Kranzler – Re-Blogged From Gold Eagle

“You’ve really seen the limits of monetary and fiscal policy in its ability to extend out a long boom period.” – Josh Friedman, Co-Chairman of Canyon Partners (a “deep value,” credit-driven hedge fund)

The Fed’s abrupt policy reversal says it all. No more rate hikes (yes, one is “scheduled” for 2020 but that’s fake news) and the balance sheet run-off is being “tapered” but will stop in September. Do not be surprised if it ends sooner. Listening to Powell explain the decision or reading the statement released is a waste of time. The truth is reflected in the deed. The motive is an attempt to prevent the onset economic and financial chaos. It’s really as simple as that. See Occam’s Razor if you need an explanation.

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Will The Fed Cut Its Interest Rate Forecast

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

Some important pieces of the US economic reports, including the latest nonfarm payrolls, have disappointed recently. May indicators (including the leading ones) have hit a soft patch it seems. Will that push the Fed to downgrade its dot-plot or fine-tune the monetary policy mix anyhow? Can gold jump in reaction to the Wednesday’s FOMC policy meeting?

February Payrolls Disappoint

U.S. nonfarm payrolls plunged in February, falling way short of expectations. The economy added just 20,000 jobs last month, following a rise of 311,000 in January (after an upward revision) and significantly below 172,000 forecasted by the economists. The number was the smallest increase since September 2017, as one can see in the chart below. On an annual basis, the pace of job creation increased slightly last month to 1.8 percent.

Chart 1: Monthly changes in employment gains (red bars, in thousands of persons) from February 2014 to February 2019

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US Budget Deficit And Interest

By David Haggith – Re-Blogged From Gold Eagle

Is Capital Creation Beating Capital Consumption?

By Keith Weiner – Re-Blogged From Gold Eagle

We have written numerous articles about capital consumption. Our monetary system has a falling interest rate, which causes both capital churn and conversion of one party’s wealth into another’s income. It also has too-low interest, which encourages borrowing to consume (which, as everyone knows, adds to Gross Domestic Product—GDP).

What Is Capital

At the same time, of course entrepreneurs are creating new capital. Keith wrote an article for Forbes, showing the incredible drop in wages from 1965 to 2011. There was not a revolution, because prices of goods such as milk dropped at nearly the same rate. The real price of milk dropped as much as it did, because of increased efficiency in production. The word for that which enables an increase in efficiency is capital.

Or, to put it another way, capital provides leverage for productive human effort. We don’t work any harder today, than they did in the ancient world (probably less hard). But we are much richer—we produce a lot more. The difference is capital. They had not accumulated much capital. So they were limited to brute labor, to a degree which we would find shocking today.

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More Evidence That The Bears Have It Dead Right

By David Haggith – Re-Blogged From The Great Recession Blog

In my last article, “The Bears Have it Right: Economy went Polar Opposite of Bullish Predictions,” I laid out my first prediction for 2019 — a recession by summer. I don’t want the following revelations and facts that I have since come across to get lost in comments I recently posted to that article, so I’m bringing them all together here.

How bad was 2018?

The Wall Street Journal just said it was “one of Buffett’s worst years ever.

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Extraordinary Changes Coming

By Mike Gleason – Re-Blogged From Gold Eagle

Mike Gleason: It is my privilege now to welcome in Dr. Chris Martenson of PeakProsperity.com, and author of the book Prosper! How to Prepare for the Future and Create a World Worth Inheriting. Chris is a commentator and a range of important topics such as global economics, financial markets, governmental policies, precious metals, and the importance of preparedness, among other things, and it’s always great to have him on with us.

Chris, welcome back, and thanks for joining us again.

Chris Martenson: Thank you. It’s a real pleasure to be back with you and all your listeners.

Mike Gleason: Well, Chris, when we spoke last in early November, we talked about the Fed printing money and expanding credit to prevent markets from correcting. The central planners there are always ready to intervene. At the time, equity markets were correcting and stock prices fell through the end of December. Officials must have then decided that enough was enough with all the selling because the Fed has very publicly signaled a change in course and instead of more rate hikes and more selling from the hordes of bonds accumulated during QE, the Fed is putting the brakes on tightening and looking to return to stimulus. Now the equity markets are off to their best start in something like 30 years. What do you make of the most recent intervention? Are they likely to get away with yet another round of bubble blowing here, Chris?

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Wall Street is Chasing Ghosts

By Michael Pento – Re-Blogged From Pento Portfolio Strategies

Wall Street’s absolute obsession with the soon to be announced most wonderful trade deal with China is mind-boggling. The cheerleaders that haunt main stream financial media don’t even care what kind of deal gets done. They don’t care if it hurts the already faltering condition of China’s economy or even if it does little to improve the chronically massive US trade deficits—just as long as both sides can spin it as a victory and return to the status quo all will be fine.

But let’s look at some facts that contradict this assumption. The problems with China are structural and have very little if anything to do with a trade war. To prove this let’s first look at the main stock market in China called the Shanghai Composite Index. This index peaked at over 5,100 in the summer of 2015. It began last year at 3,550. But today is trading at just 2,720. From its peak in 2015 to the day the trade war began on July 6th of 2018, the index fell by 47%. Therefore, it is silly to blame China’s issues on trade alone. The real issue with China is debt. In 2007 its debt was $7 trillion, and it has skyrocketed to $40 trillion today. It is the most unbalanced and unproductive pile of debt dung the world has ever seen, and it was built in record time by an edict from the communist state.

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