muses of the moment

January 18, 2014

John Williams with shadowstats.com

Summary of John Williams’ real stats:

– Inflation Picks Up as the Economy Slows Down
– December Annual Inflation: 1.5% (CPI-U), 1.5% (CPI-W), 9.1% (ShadowStats)
– Real Retail Sales Declined by 0.1% in Industry’s Flagship Month of December; Slowing Annual Growth Signaled Recession
– Real Weekly Earnings Declined in December

gg says: quite a disconnect between inflation formula of today and inflation formula of the pre-1980’s. If you don’t like the number, just change the formula! Did your wages and/or investments go up 9% after taxes?

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September 12, 2013

The Failing Middle Class

Here is an excellent article on the failing middle class. The widening gap between rich and poor will continue for years to come. It will be the driving factor of the depression.

Side musing: the failing of the middle class would happen anyway, regardless of a global derivatives collapse, and then banking collapse. The move of baby boomers from working to retirement (in every first-world country) means their standard of living drops in the best of economies. The loss of their equity in their homes (in the US) due to the long-term decline is the housing cycle compounds the problem. And the student loan burden coupled with low youth (good and full-time) employment, guarantees that those under 25 will not be able to take over the middle class spending habits (such as buying a home) of those retiring.

So, demographics has foreseen this decline of the middle class for years, but the financial derivative and banking crisis will just make the global depression worse and/or longer. There are many other major issues impacted by this demographic move, such as social security bankruptcy, pension fund bankruptcy, medicare, etc. This issue is not being addressed by government nor is it being prepared for on an individual level. It will not end well. When people are panicked, they do not make good decisions.

September 4, 2013

April 7, 2013

Jim Rogers

Click here for a recent interview with Jim Rogers. H/T to SW.

December 11, 2012

Another dissection of the unemployment rate

Here is another dissection of the “official” unemployment rate.

Click here.

Barack Obama has been president for less than four years, and during that time the number of Americans “not in the labor force” has increased by nearly 8.5 million.  Something seems really “off” about that number, because during the entire decade of the 1980s the number of Americans “not in the labor force” only rose by about 2.5 million.  At this point the official unemployment rate is so manipulated that it is of very little value at all.

Why should we care?

Unemployed people do not buy things and the US GDP is currently over 70% consumer driven. Economy is not recovering and will not recover until we have more people with jobs and more disposal income.

Unemployed people do not pay their mortgages, credit cards, and other bills. The banks are HIDING the true percentage of mortgages in default or official foreclosure. They are legally falsifying their balance sheets and the government is propping up the housing market by keeping foreclosures out of the market. These maneuvers hide the fact that people are using mortgage money for consumables (which can not last forever) and the housing market is in a long-term decline.

Unemployed people do not buy health insurance, they go to emergency rooms for health care. The latest Health Care Law will not fix anything. Since if you don’t have a job, you don’t or can’t get health care through your employer or any new Fed program. No job, no money, no health care.

Unemployed people do not pay income taxes. Tax revenue will fall no matter who you increase or not increase taxes on.

Unemployed people do not pay social security and medicare tax. We have hit a tipping point where the number of people paying into the system is far under the people requiring money out of the system (and the US government already spent the excess and/or replaced it with T-bills).

Even if this unemployment issue is purely based on the change in demographics and older people retiring (which it is not, judging from the age/job division charts gg has seen), all these problems still remain.

The punch line: there will be no economic recovery.

Even if all the best government economic schemes were working. Demographic shifts demands a declining economy. Debt collapse demands a correction to levels that sustain the debt service.

Side musing: the government is still the biggest sector actually creating jobs right now. Kind of defeats the whole purpose.

November 9, 2012

Surprise!!! Basel III on hold…..indefinately.

Groovygirl is shocked, shocked, to find that Basel III rules for banks’ capital will be postponed…indefinitely.

Click here.

The rules will never be enacted because they are all BANKRUPT. But don’t worry your money, the money in your pension, and the money of your country of origin is all perfectly safe.

November 1, 2012

The slow burn

Groovygirl has talked about the strong possibility of a slow burn. Between the pressures of increase costs in energy and infrastructure, the devaluation of the dollar, and the contraction of government scope, the economy would be in a slow burn mode rather than a quick jump off the cliff. That just means longer to reset the economy, but the same end.

Charles Hugh Smith talks about what a slow burn might look like for government. Click here.

October 2, 2012

401k talk with Chris Martenson

Chris Martenson has a great audio interview with New Harbor Financial Group.

Click here for audio or transcript. Muses of the Moment readers are always asking about their retirement plans and planning during this economic crisis. There were very good ideas discussed in this interview.

August 27, 2012

David Walker

The FinancialSense Newshour had an excellent interview with former US Comptroller, David Walker. It was an insider only interview, but you might want to read the summary and key points here.

March 17, 2012

Hyperinflation

Jesse over at Cafe Americain has a very good post exploring the possibilities of a hyperinflation and how it might come about.

Click here. There are also excellent links in his post to further information on hyperinflation and examples of hyperinflation from far and recent history.

Groovygirl hopes that the large number of occurrences in history of hyperinflationary events will at least open some people’s minds that it can happen. GG says this, because hyperinflation happens very quickly and all savings, (i.e. pension funds, social security, money markets, cash, bonds) disappear overnight. There is no reaction time. The only consultation is that everyone is in the same boat.

Side musing: the very dangerous difference from other examples of hyperinflation and the Western Countries today is the large population of older citizens. Old people can not start over with nothing. Groovygirl is very concerned that we will have elderly people literally dying in the streets, or worse, dying alone, hidden away, with society ignoring their plight.

Jesse suggests that the highly leveraged and unregulated global derivatives market bubble could cause a situation in which the powers that be would make a dangerous and ill-advised reaction.

Groovygirl completely agrees with Jesse. When the derivative market blows up or deflates, it doesn’t matter, the global economy is in for severe depression. Judging only from Central Banks and Government Entities’ reaction to the small explosions in derivatives, Lehman and AIG, it is clear they will paper over it as much as possible. That much paper (remember it is a $600 trillion dollar market right now) has to end up as cost-push inflation at best and hyperinflation at worse.

Right now, the increase in US dollars to try and catch the falling knife of debt is causing inflation in out-lying countries. It is not yet really impacting the average US citizen, yet. GG’s last post, click here, outlines a trend that could accelerate the US dollar’s inflationary affect on actual US citizens. The Fed is printing more and more dollars to fight imploding US bank debt, but also, now to swap for imploding European banks debt exposure to Greece. At the same time, Eastern and Middle Eastern countries are shying away from more dollars. They are accumulating each others’ currencies as reserves, not US Dollars, and trading in non-dollar currencies and gold.

The world in which the dollar circulates is getting smaller and smaller, but the number of dollars is increasing , not decreasing. This is an unseen pressure from both sides on the Western economies (or those still loyal to the reserve dollar). At some point, a policy or policies may force a large number of dollars home quickly. Perhaps in reaction to a large derivative crisis. Or a large portion of global countries rejecting the dollar as a protest. Or all oil countries demanding payment in gold instead of dollars. Although the Fed says it can take the dollars out, they can not. Anymore than they can direct where the inflation is going now.

Side musing:

And speaking of inflation, here is John Williams’ summary of the real stats. Current inflation in the US is not 2.9%, but 10.5%. 

– February CPI Was Shy of Reflecting Full Impact of Gasoline Prices
– February’s Consumer Inflation: 2.9% (CPI-U), 3.1% (CPI-W), 10.5% (SGS)
– Real Retail Sales Monthly Gain Was Not Statistically Meaningful
– Volatile Monthly Production Numbers Sputtered And Stalled Once Again

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