The Great Western Economic Depression

By Jeff Nielson – Re-Blogged From http://www.Gold-Eagle.com

Western economies are “recovering”. How do we know this? We are told this, over and over and over again by our governments. Then this assertion is repeated thousands of times more by the dutiful parrots of the corporate media.

The problem is that in the real world there is not a shred of evidence to support this assertion. In the U.S.; ridiculous official lies were created claiming the creation of 15 million new jobs . In reality, there are three million less Americans with jobs today than at the official end of the “recession”.

These imaginary jobs are invented by assorted statistical frauds, with the primary deceit being so-called “seasonal adjustments”. To be legitimate, all seasonal adjustments must to net to zero at the end of each year. Instead, in the U.S.A., the biggest job creator in the nation every year is the calendar.

Continue reading

Is The Economy At The Cusp Of The Next Recession…Or Maybe Worse? (Part II)

By Burt Coons (AKA the Plunger) – Re-Blogged From

http://www.Silver-Phoenix500.com

Part II takes a look at the macro economic backdrop for the trade of the year. Spoiler alert- its not a pretty picture, but don’t think doom and gloom, instead embrace crisis and opportunity! With our understanding of the history of oil we now focus on the macro backdrop for our Big Trade.

When the tide goes out you find out who has been swimming naked”– Warren Buffet

“This time around everything gets revealed in the next recession”-Plunger

In the next recession those leaning the wrong way… the levered players, will be forced to heave out their non-productive assets at fire sale prices. Commodity producers with entrenched costs will have to increase production as lower prices beget even lower prices since insufficient cash flows can only be recovered through higher volume production.

Continue reading

Fed Will Cause a 2008 Redux

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

Truth is a rare commodity on Wall Street. You have to sift through tons of dirt to find the golden ore. For example, main stream analysis of the Fed’s current monetary policy claims that it will be able to normalize interest rates with impunity. That assertion could not be further from the truth.

The fact is the Fed has been tightening monetary policy since December of 2013, when it began to taper the asset purchase program known as Quantitative Easing. This is because the flow of bond purchases is much more important than the stock of assets held on the Fed’s balance sheet. The Fed Chairman at the time, Ben Bernanke, started to reduce the amount of bond purchases by $10 billion per month; taking the amount of QE from $85 billion, to 0 by the end of October 2014.

The end of QE meant the Fed would no longer be pushing up MBS and Treasury bond prices (sending yields lower) with its $85 billion per month worth of bids. And that the primary dealers would no longer be flooded with new money supply in the form of excess bank reserves. In other words, the Fed started the economy down the slow path towards deflation.

Continue reading

Trump’s Biggest Enemy is the Fed

By Michael Pento – Re-Blogged From PentoPort

Right on the heels of Donald Trump’s stunning election victory, Democrats began to diligently work on undermining his presidency. That should surprise no one. It’s just par for the course in partisan D.C.

However, what appears to be downright striking is that the Keynesian elites may have found a new ally in their plan to derail the new President…the U.S. Federal Reserve.

First, it’s important to understand that the Fed is populated by a group of big-government tax and spend liberal academics who operate under the guise of an apolitical body. For the past eight years, they have diligently kept the monetary wheels well-greased to prop up the flat-lining economy.

However, since the election the Fed has done a complete about-face on rate hikes and is now in favor of a relatively aggressive increase in its Fed Funds Rate. And I use the term relatively aggressive with purpose, because the Fed raised interest rates only one time during the entire eight-year tenure of the Obama Presidency. Technically speaking, the second hike did occur in December while Obama still had one full month left in office. But coincidentally, this only took place after the election of Donald Trump.

Keep in mind a rate hiking cycle is no small threat. The Federal Reserve has the tools to bring an economy to its knees and has done so throughout its history of first creating asset bubbles and then blowing them up along with the entire economy.

Remember, it was the Fed’s mishandling of its interest rate policy that both created and burst the 2008 real estate bubble. By slashing rates from 6.5 percent in January 2001, to 1 percent in June 2003, it created a massive credit bubble. Then, it raised rates back up to 5.25 percent by June of 2006, which sent home prices, stock values and the economy cascading lower.

In the aftermath of the carnage in equity prices that ended in March of 2009, the Standard & Poor’s 500 stock index soared 220 percent on the coat tails of the Federal Reserve’s money printing and Zero Interest Rate Policies. But during those eight years of the Obama Administration, the Fed barely uttered the words asset bubble. In fact, it argued that asset bubbles are impossible to detect until after they have burst.

But since the November election, the Fed’s henchmen have suddenly uncovered a myriad of asset bubbles, inflation scares and an issue with rapid growth. And are preparing markets for a hasty and expeditious rate hike strategy. The Fed has even indicated in the minutes from its latest FOMC meeting that it actually intends on beginning to reduce its massive $4.5 trillion balance sheet by the end of this year. In other words, trying to raise the level of long-term interest rates.

In a recent interview, Boston Fed President Eric Rosengren has suddenly noted that certain asset markets are “a little rich”, and that commercial real-estate valuations are “pretty ebullient.” The Fed is anticipating as many as four rate hikes during 2017 with the intent to push stocks lower, saying that “rich asset prices are another reason for the central bank to tighten faster.” Piling on to this hawkish tone, San Francisco Fed President John Williams’s also told reporters that he, “would not rule out more than three increases total for this year.”

The Fed is tasked by two mandates, which are full employment and stable inflation. However, it has redefined stable prices by setting an inflation goal at 2%. Therefore, a surge in inflation or GDP growth should be the primary reasons our Fed would be in a rush to change its monetary policy from dovish to hawkish.

Some people may argue that the Fed has reached its inflation target and that is leading to the rush to raise rates, as the year over year inflation increase is now 2.8%. The problem with that logic is that from April 2011 all the way through February 2012 the year-over-year rate of Consumer Price Inflation was higher than the 2.8% seen today. Yet, the Fed did not feel compelled to raise rates even once. In fact, it was still in the middle of its bond-buying scheme known as Quantitative Easing.

Perhaps it isn’t inflation swaying the Fed to suddenly expedite its rate hiking campaign; but instead a huge spike in GDP growth. But the facts prove this to be totally false as well. The economy only grew at 1.6 % for all of 2016. That was a lower growth rate than the years 2011, 2013, 2014, 2015; and only managed to match the same level as 2012. Well then, maybe it is a sudden surge in GDP growth for Q1 2017 that is unnerving the Fed? But again, this can’t be supported by the data. The Atlanta Fed’s own GDP model shows that growth in the first three months of this year is only growing at a 1.2 percent annualized rate.

If it’s not booming growth, and it’s not run-away inflation and it’s not the sudden appearance of asset bubbles…then what is it that has caused the Fed to finally get going on interest rate hikes?

The Fed is comprised of a group of Keynesian liberals that have suddenly found religion with its monetary policy because it is no longer trying to accommodate a Democrat in the White House. It appears Mr. Trump was correct during his campaign against Hilary Clinton when he accused the Fed of, “Doing Political” regarding its ultra-low monetary policy. Now that a nemesis of the Fed has become President…the battle has begun.

CONTINUE READING –>

What’s Left To Drive The Recovery? Not Much

By John Rubino – Re-Blogged From Dollar Collapse

US growth, such as it is, has lately been driven by a handful of hot sectors. Car sales have set records, high-end real estate is generally way up, and federal spending – based on last year’s jump in the national debt – is booming.

But now the private sector part of that equation is shifting into low gear. Cars in particular:

Economy Will Miss That New-Car Smell

(Wall Street Journal) – The annual pace of light-vehicle sales fell to a seasonally adjusted 17.2 million in the first quarter from 18 million. That the decline has come despite generous incentives from car companies and still-low gasoline prices suggests that sales are past their peak.

Continue reading

Soaring Global Debt Sets Stage For “Unprecedented Private Deleveraging”

By John Rubino – Re-Blogged From Dollar Collapse

The UK’s Telegraph just published an analysis of global debt that pretty much sums up the coming crisis. Here’s an excerpt with a couple of the more hair-raising charts:

Global Debt Explodes At ‘Eye-Watering’ Pace To Hit £170 Trillion

Global debt has climbed at an “eye-watering” pace over the past decade, soaring to a fresh high of £170 trillion last year, according to the Institute of International Finance (IIF).

The IIF said total debt levels, including household, government and corporate debt, climbed by more than $70 trillion over the last 10 years to a record high of $215 trillion (£173 trillion) in 2016 – or the equivalent of 325pc of global gross domestic product (GDP).

Continue reading

Asia’s Dilemma: China’s Butter, or America’s Guns?

By Rodger Baker – Re-Blogged From Strafor 

Flying into Singapore’s Changi Airport, one is struck by the fleet of ships lined up off shore, the tendrils of a global trade network squeezing through the narrow Malacca Strait. Singapore is the hub, the connector between the Indian Ocean, South China Sea and Pacific. Since the late 1970s, with little exception, trade has amounted to some 300 percent of Singapore’s total gross domestic product, with exports making up between 150 and 230 percent of GDP. Singapore is the product of global trade, and the thriving multiethnic city-state can trace its trade role back centuries.