Proof That This Economic Recovery Narrative Is False

By Sol Palha – Re-Blogged From

The financial media has provided reams of data trying to lay out the case that this economic recovery is real. Many of the statistics provided do indeed support the theme that the outlook is improving.  One must, however, keep these two facts in mind when looking at the data:

  • The Fed poured huge amounts of money into this market.  Minus the money, this so-called economic recovery would have never come to pass
  • Due to the low-interest rate environment, corporation borrowed money on the cheap and poured billions into share buybacks since the crash of 2009.

Hence, while some of these statistics paint a rosy picture, the outlook is far from rosy as two key leading economic indicators have failed to confirm this recovery from the onset.

The Baltic Dry index is trading 92% below its all-time high. Now imagine the Dow was in the same position and the press instead of calling it a crash, made the assertion that we were in the midst of a raging bull market. You would think they were insane.  Well, the same analogy applies today; this index clearly indicates that there is no recovery on a global basis and that hot money is creating the illusion of one. Remove this excess cash from the system, and the economy together with the stock market will collapse.

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Alternative Unemployment Measurement

By John Williams – Re-Blogged From

Counting All Discouraged/Displaced Workers, May 2016 Unemployment Rose to About 23.0%. Discussed frequently in the regular ShadowStats Commentaries on monthly unemployment conditions, what removes headline-unemployment reporting from common experience and broad, underlying economic reality, simply is definitional. To be counted among the U.S. government’s headline unemployed (U.3), an individual has to have looked actively for work within the four weeks prior to the unemployment survey conducted for the Bureau of Labor Statistic (BLS). If the active search for work was in the last year, but not in the last four weeks, the individual is considered a “discouraged worker” by the BLS, and not counted in the headline labor force.

ShadowStats defines that group as “short-term discouraged workers,” as opposed to those who, after one year, no longer are counted as “discouraged” by the government. Instead, they enter the realm of “long– term discouraged workers,” those displaced by extraordinary economic conditions, including regional/local businesses activity affected negatively by trade agreements or by other factors shifting U.S. productive assets offshore, as defined and counted by ShadowStats (see the extended comments in the ShadowStats Alternate Unemployment Measure).

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Inaccurate Statistics And The Threat To Bonds

By Alasdair Macleod – Re-Blogged From

Statistics have become very misleading:  in particular we are being badly misled into believing that the US is teetering on the edge of price deflation, because the US official rate of inflation is barely positive, a level that US bonds and therefore all other financial markets have priced in without accepting it is actually significantly higher.

There are two possible approaches to assessing the true rate of price inflation. You can either reverse all the tweaks government statisticians have implemented over the decades to reduce the apparent rate, or you can collect a statistically significant sample of price data independently and turn that into an index. John Williams of is well known for his work on the former approach, but until recently I was unaware that anyone was attempting the latter. That is until Simon Hunt of Simon Hunt Strategic Services drew my attention to the Chapwood Index, which deserves wider publicity.

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WSJ Reports CPI Under-Reporting

cropped-bob-shapiro.jpg   By Bob Shapiro

I’ve mentioned several times that our government under-reports the rate of rising prices. Prices are up about 30 times (that’s not 30%) since the Federal Reserve (FED) received the monopoly to print paper dollars in 1913. (The FED has printed well over 100 times as many dollars, but as innovation increases productivity, it keeps prices from rising as much as monetary debasement would call for.) has a pair of alternate measures to the CPI. One is calculating today’s numbers using the way they would have been calculated in 1990. That shows the CPI rising at around a 5.5% annual rate, versus the reported CPI figure of 1.8% over the last 12 months.

ShadowStats other calculation uses the BLS methodology from 1980, which shows price inflation of 9.5% since a year ago.

CPINov 14

I read on Yahoo! This morning of a Wall Street Journal report (paywalled) also indicating that the CPI grossly understates price inflation. (See Yahoo!’s article: Fed says ‘no inflation’ but middle class reality says otherwise.)

But, whether you accept the “Official” CPI numbers, prefer the WSJ’s study results, or think that one of ShadowStats’ inflation recaps is correct, all of them show prices going up year after year, decade after decade, at least since Eisenhower was President.

In a Capitalist country (that’s what our Founding Fathers originally set up) using Free Markets, prices should decline continuously as new and better ways of doing things improves productivity.

With over-regulation and other government tinkering with the US Economy, productivity gains will be slower, but prices still should decline over the long haul.

Monopoly Money

It is only with the FED’s continuous misuse of its role as the nation’s paper dollar printer, only with the FED’s debasement of the currency, only with the FED’s counterfeiting of Americans’ store of value, that prices can go up all the time.

Action Item: End the FED!