The U.S. Economy: Stand by for more worse news

[joepistole]

That is an article of faith - not well supported by historical fact that China was world's dominate power for 1700 years and not at all an "open society"

Actually, your assertion is wrong on several fronts. It is not an article of faith. It is an article of truth. You don't have to look far or hard to validate it. China actively censors information. Further, China has never been a dominate world power; with few exceptions Chinese emperors believed they were the center of the world and had little interest in the world outside China.

 

[kmguru]

LOL
China has been a unified Nation State for 2236 years. I'm pretty sure they'll last another couple of weeks

But, yes, once that comes to an end - they'll be just as f*cked as all other Central Banking/Central Planned economies.

Yes...but 70 more years to go before that happens...In the mean time...enjoy the show...

 

[Billy T]

Interview of Jim Rickard (promoting his book at end) at: http://pro.moneymappress.com/MMRBSS...84&s=71985&u=2670213&l=395247&r=MC&g=0&h=true
has some interesting graphs and points such as:

Declining growth per buck of Federal stimulus has been noted by several voting members of the Fed as why the tapper had to start.

His response to interviewer point out that unlike the great depression US has very few soup kitchens now was: "Well, we have soup kitchens today {but at } … your local supermarket, because 50 million Americans are on food stamps. It's not that we don't have distress. We have enormous distress, but it's being hidden in different ways."

Mainly because the Fed carries on its books at face value, not market value, all the "toxic trash" in got either directly from banks with "trouble assets" ( via TARP) or indirectly when helping make Freddy and Fanny May sound. And many more such charts - all with same top line because:

and claims, quite possible true as they study many different things, that these 16 agencies have jointly issued their assessment of what impact a collapse of the dollar would have on them.

 

[joepistole]

Interview of Jim Rickard (promoting his book at end) at: http://pro.moneymappress.com/MMRBSS...84&s=71985&u=2670213&l=395247&r=MC&g=0&h=true
has some interesting graphs and points such as:

Declining growth per buck of Federal stimulus has been noted by several voting members of the Fed as why the tapper had to start.
His response to interviewer point out that unlike the great depression US has very few soup kitchens now was: "Well, we have soup kitchens today {but at } … your local supermarket, because 50 million Americans are on food stamps. It's not that we don't have distress. We have enormous distress, but it's being hidden in different ways."

Mainly because the Fed carries on its books at face value, not market value, all the "toxic trash" in got either directly from banks with "trouble assets" ( via TARP) or indirectly when helping make Freddy and Fanny May sound. And many more such charts - all with same top line because:

and claims, quite possible true as they study many different things, that these 16 agencies have jointly issued their assessment of what impact a collapse of the dollar would have on them.

Except almost none of that crap is true, it is more conspiracy nonsense. It is true that Keynesian fiscal programs like food support do keep people off the street and fed – as if that were a bad thing. It is difficult for me to equate a full belly and a roof over your head with distress as you have done.

Now let’s talk about “face” value or “mark to market accounting”. The St. Louis Fed has a good article on the subject. If held to maturity, the “face” value will equal “market value”. It is only when a debt security is sold or traded priority to maturity that there might be a discrepancy between market value and face value. And history shows us that it is more likely the Fed will hold an asset rather than sell it.

Here is the other thing, it is kind of difficult to bankrupt when you can create new money with the stroke on a keyboard and that is the case with The Federal Reserve. It cannot go bankrupt, because it can print as much money as it needs. And let's not forget The Federal Reserve is very profitable. For several years now since The Great Recession, the Federal Reserve has been earning the federal government almost a 100 billion dollars a year, thereby helping to reduce federal deficits.

https://www.stlouisfed.org/pulications/re/articles/?id=1877

Let's refresh your memory, you have repeatedly predicted a collapse of the dollar on Halloween of this year. One more point, the US economy has been growing at an average annual rate of 2.25% for the last 4 years which is pretty good compared to other advanced economies and "stimulus spending" ended long ago - damn minor details again.

 

[Billy T]

... It is true that Keynesian fiscal programs like food support do keep people off the street and fed – as if that were a bad thing. It is difficult for me to equate a full belly and a roof over your head with distress as you have done.

Point 1 - I was quoting, not stating. Point 2 - Yes modern way to feed those needing food assistance, I.e. food stamps is both more efficient and gives some freedom of choice, vs the old way of soup kitchens used in the great depression, but people using either were "stressed."

... Now let’s talk about “face” value or “mark to market accounting”. ... If held to maturity, the “face” value will equal “market value”.

true of government debt - They will just print any new funds needed, but I was not speaking of government debt. I specifically said:
"the Fed carries on its books at face value, not market value, all the "toxic trash" in got either directly from banks with "trouble assets" ( via TARP) or indirectly when helping make Freddy and Fanny May sound."
Many who signed those mortgages, etc. have already been evicted - their toxic trash will not increase in value at maturity - then it will be impossible for Fed to continue fiction it is worth something. It is not paying the interest due now, even. But you are correct that "face value" of a mortgage declines with age - should become zero with the last payment, so yes then the face value of toxic trash will equal the market value I. e. zero.

... Let's refresh your memory, you have repeatedly predicted a collapse of the dollar on Halloween of this year. ...

That is true, has been for more than seven years now except original date was illdefined as in late 2015 or early 2016 but things were gong down hill faster than I expected, so I move date a year closer to present and made it very specific, with only about + or - one month margin of error, not the original + or - 6 months. We are now about 5 weeks from start of this two month widow.

 

[shawn_michael]

LOL
China has been a unified Nation State for 2236 years. I'm pretty sure they'll last another couple of weeks

China may last a few more weeks for sure. However, long term whether China can last is a totally different question.

China is in a precarious situation if the western economy collapses. A few points to consider:-
1) China is an export oriented country.
2) Majority of Chinese still live with less than $5-6 a day.

If the western economy collapses and they are not in a position to buy made in China products, China will be sitting with a lot of surplus goods for which there are not alternate markets as of today.

Due to #2 above, China cannot consume these goods either. This can result in unemployment, which in turn can cause social unrest. From there it goes downhill.

The Chinese leaders knowing that such a situation will lead to a collapse of China, will try to divert the attention by launching attacks on one of its neighbors. If you look at the war mongering that China is displaying with pretty much every Chinese neighbor, you can see this strategy is already in place and being fine-tuned in the case of an eventuality.

 

[Michael]

China may last a few more weeks for sure. However, long term whether China can last is a totally different question.

China is in a precarious situation if the western economy collapses. A few points to consider:-
1) China is an export oriented country.
2) Majority of Chinese still live with less than $5-6 a day.

If the western economy collapses and they are not in a position to buy made in China products, China will be sitting with a lot of surplus goods for which there are not alternate markets as of today.

Due to #2 above, China cannot consume these goods either. This can result in unemployment, which in turn can cause social unrest. From there it goes downhill.

The Chinese leaders knowing that such a situation will lead to a collapse of China, will try to divert the attention by launching attacks on one of its neighbors. If you look at the war mongering that China is displaying with pretty much every Chinese neighbor, you can see this strategy is already in place and being fine-tuned in the case of an eventuality.

I'm not necessarily disagreeing with your assertion (particularly about war - I mean, it's good enough for America). However, I'm not convinced "China" will collapse. Their economy may 'collapse' (whatever that means) - but not China. People may riot. Maybe even have another 'Revolution' (I highly doubt). But at the end of the day, China will persist. Collapse doesn't mean people stop trading. Everyone needs to sleep, eat, move about, etc... thus, trade will continue. Chinese trust their government. Think of themselves as "Chinese". Not to mention, the West will still buy products from China (even if our economy does collapse - which I think it did decades ago). As well as Europe. As well as other Asian countries. As well as Chinese themselves.

We will see.

I think its more likely we'll start to see State's within the US legally succeeding, long before we see anything like this take place in China. The Han Chinese have moved to all the areas that might have, and in many of these places outnumber the indigenous population. Whereas the USA is a diverse mix of people already at odds with one another.

Don't get me wrong, China's economy is stuffed - thanks to central planning. The question now is can they shift from a copy-paste economic model to become a world leading innovator. I think they can. I've read articles regarding some Chinese schools adopting the Finish school model - this is besides the fact they do better than the Finish on international standardized tests. Imagine the forward thinking that takes, to see past standardized testing, while at the same time having been self-evaluated and normalized to said testing. Now add to this, the insight to adopt a new system that, for all intents and purposes, is producing students with inferior standardized test scores. And get this: Doing it. Ha! The political will to take that chance?! HA! You'd never, never in a million + 1 years see this happening in the U.S.S.A. No f*cking way. You'll get a little grass-root change in the USA, but not from our millionaire Political Elite. They'd stand too lose to much by changing the educational system of pump-and-dump compliant functionally illiterate labor-cogs. No way. Americans have the insight of a turnip. Which is why we're so easily ruled over, told what to do, what to think and led off by the nose to fight in phony wars in Asia or the ME - that we promptly lose, only to rinse and repeat a few years later with another round of cannon-fodder.


No, I'm sorry, but Asia (and China) is (for now) on the rise.
I wouldn't worry too much about them - we're the ones on the steep decline and there's no changing course.

 

[Billy T]

...
China is in a precarious situation if the western economy collapses. A few points to consider:-
1) China is an export oriented country.
2) Majority of Chinese still live with less than $5-6 a day.

If the western economy collapses and they are not in a position to buy made in China products, China will be sitting with a lot of surplus goods for which there are not alternate markets as of today. ...

True now, but rapidly changing:
"Trade between ASEAN and China increased by 13.6% from USD 280.4 billion in 2011 to USD 318.6 billion in 2012. The Leaders expressed confidence in their goal to achieve bilateral trade of USD 500 billion by 2015." From China daily but I lost the link. Also I recall reading that trade is now growing at 21%, because:

ASEAN countries now supply the components that higher cost Chinese labor once made, so earn yuan that they buy higher value added goods (with their components built in now). This trade China likes, as unlike trade with US, China does not need to make loans to the buyer, or accept more unwanted treasury notes / bonds, and it is rapidly growing. By 2016, the ASEAN trade ALONE will be greater than that with the US. And the tread with other BRICSs is growing by at least double digits - Soon China will not trade much with the US.

I. e. Rising Chinese buying power (higher real salaries) is making it necessary for China to import the lower value added componets it needs ad that is making a market for increased sales to ASEANs - a positive feed back economic system. - Why trade is so rapidly growing.

BTW, Russia is not a member of ASEAN, and US +EU are sending that trade into overdrive now. The just signed oil/ gas deal, which STARTS at 400 billion!

Also note, it is very hard to live in US on $6/day, but not in China. For example, a 1 Km taxi ride in Beijing, cost less than 10% of what a 1Km taxi ride in NYC does. Also Chinese wages in urban areas at rising in purchasing power by low double digits and, from lower base, in rural areas by 30 + 5 or - 10% annually. Domestic consumption is not growing correspondingly as Chinese like to save ~50% of the discretionary income, but the young are learning what credit cards are - like to do as Americans do - spend more than they earn.

 

[cornel]

Also note, it is very hard to live in US on $6/day, but not in China. For example, a 1 Km taxi ride in Beijing, cost less than 10% of what a 1Km taxi ride in NYC does. Also Chinese wages in urban areas at rising in purchasing power by low double digits and, from lower base, in rural areas by 30 + 5 or - 10% annually. Domestic consumption is not growing correspondingly as Chinese like to save ~50% of the discretionary income, but the young are learning what credit cards are - like to do as Americans do - spend more than they earn.

Those savings have to be spend at some point as well, and they're a nice buffer for when/if people get unemployed.

 

[Billy T]

Fed economists conduct the survey once every three years to produce a snapshot of household balance sheets, pensions, income and demographics that’s more detailed than broader reports about the economy. The surveys allow comparisons over time, with consistent methodology since 1989.

Only the richest Americans saw their incomes benefit from the economic recovery during 2010-2013, as earnings stagnated or fell for all others, a report from the Federal Reserve showed today. Median income adjusted for inflation rose 2 percent to $223,200 for the wealthiest 10 percent of households from 2010 to 2013, the Fed said today from Washington in its Survey of Consumer Finances. The bottom 60 percent saw the biggest declines. ...

The report “reveals substantial disparities in the evolution of income and net worth” since 2010, Fed economists wrote. ... The median, or mid-point, income for all families fell 5 percent from 2010 to 2013, while mean, or average, income climbed 4 percent, the data show. That’s “consistent with increasing income concentration during this period,” the report stated. Median net worth fell 2 percent to $81,200 from 2010 to 2013, while mean net worth was little changed at $534,600. ...

Households with access to assets such as homes and stock portfolios have found their wealth buoyed over the last three years. The Standard & Poor’s 500 Index (SPX) climbed 47 percent in the three years ended December 2013, while the S&P/Case Shiller index of property values climbed 13.4 percent in the same time period. Americans without such assets may have found the recovery in their finances slower-going, due in part to a labor market that’s been gradual in gaining momentum. With a “substantial degree” of labor market slack, “the need for extraordinary accommodation is unambiguous,” Fed Chair Janet Yellen said in an Aug. 22 speech at the Kansas City Fed’s economic conference in Jackson Hole, Wyoming. ...

There were also disparities in changes of median and mean family business equity. The survey showed that median family business equity fell by 20 percent. The mean value of business equity rose 15 percent. “This change indicates that losses in business equity were not equally distributed, and many business-owning families experienced large gains, while the median business-owning family experienced a loss,” the report said. ...

The proportion of families with retirement accounts decreased 1.2 percentage points to 49.2 percent during the three years ended 2013, according to the report. The decline was driven by those in the bottom half of the income distribution, while participation among families in the top 10 percent increased. ...

The three sections I made bold all tell the same story: Great gains by a tiny few pull the averages up, but don't hide the fact that the median gains are falling.

This is not good news for an economy based 2/3 on Joe American's buying. This is exactly what I expected and predicted more than seven years ago - a collapse of the US economy starting with a run on the dollar + or - one month from 31 October 2014 (That scary day we call "Halloween.") - not far away now so I may not have timed it right 7+ years ago, but lets wait and see.

 

[cornel]

US economy isn't doing so well, but a collapse still seems far away to me.
How can there be a run on the dollar while there are so many dollars in circulation(and being printed) ?

 

[Kittamaru]

fukit... I'm moving to Iceland!

 

[Billy T]

... How can there be a run on the dollar while there are so many dollars in circulation(and being printed) ?

The first hints, some seen now*, will be people holding dollars will want to spend them as they fear that the dollar will lose purchasing power - Thus US exports will rise* as most dollars are NOT in the US. This too many dollars chasing limited supply of goods (and that includes natural goods, like farm land) will drive the price of goods up - I.e. make inflation. Those people not on the "leading edge" of this will see the value of their dollars falling and decide "better late than never" to spend their dollars too. I. e. once it starts this positive feed back system explodes driving inflation to double digits. Fed printing more dollar in the face of a flood of them coming out of shoe boxes, coffee cans, etc. will just make it worse.

Exports increased 0.9 percent to a record high of $198.0 billion in July, supported by a surge in goods, automobiles, parts and engines, as well as non-petroleum products.

* I. e. the "smart money" is already converting green paper pictures of George Washington into real assets, by spending dollars.

 

[joepistole]

The first hints, some seen now*, will be people holding dollars will want to spend them as they fear that the dollar will lose purchasing power - Thus US exports will rise* as most dollars are NOT in the US. This too many dollars chasing limited supply of goods (and that includes natural goods, like farm land) will drive the price of goods up - I.e. make inflation. Those people not on the "leading edge" of this will see the value of their dollars falling and decide "better late than never" to spend their dollars too. I. e. once it starts this positive feed back system explodes driving inflation to double digits. Fed printing more dollar in the face of a flood of them coming out of shoe boxes, coffee cans, etc. will just make it worse.

* I. e. the "smart money" is already converting green paper pictures of George Washington into real assets, by spending dollars.

People spending money is generally considered a good thing, not a bad thing. Increased exports is generally considered a good thing as it means more people are employed in the creation of those goods and services. Money being spent on assets is a good thing, not a bad thing. The problem we have had is people spending too little. People spending money doesn't cause inflation. And finally, there is no evidence of supply shortages, which would cause inflation.

 

[Billy T]

People spending money is generally considered a good thing, not a bad thing. Increased exports is generally considered a good thing as it means more people are employed in the creation of those goods and services. Money being spent on assets is a good thing, not a bad thing. The problem we have had is people spending too little. People spending money doesn't cause inflation. And finally, there is no evidence of supply shortages, which would cause inflation.

All true IFF the rate of spending changes slowly enough for production to increase (or decrease) as needed.

Not true if even half the dollars outside US come back in a few months trying to buy something - anything that is not losing value as rapidly as holding dollars is.

There are 1.24 Trillion dollars existing. Do you really think run-a-way inflation could be avoided if 500 Billion dollars returned in a few months trying to buy the limited supply of goods existing? Or do you think that is impossible? If you do, why - what law of physics or human nature does it violate? What do you think your dollar bank account would be worth in purchasing power, as percent of what it was worth before the flood of dollars returned?

SUMMARY: There can be "too much" of good thing - even sales to foreigners. For example buying up sacks of rice / potatoes that take > 6 months to produce. Yes, I agree the govenment would step in - probably issue ration cards, etc. block foreign sales of critical items - What do you think that does to the already declining value of the dollar, when foreigners discover it is just green paper after all?

 

[cornel]

Ah, i thought you were talking about the opposite (run *for* the dollar seemed to imply people would save them up)
Still, the dollar is needed to purchase oil, and the USA is already creating a coalition to exterminate ISIS as they might want to change that,
many people over the world hold a few dollars as savings for when their own currency drops.
I think the USA is in the position where it doesn't realy matter what happens, they're going to come out ahead one way or another.

 

[joepistole]

Ah, i thought you were talking about the opposite (run *for* the dollar seemed to imply people would save them up)
Still, the dollar is needed to purchase oil, and the USA is already creating a coalition to exterminate ISIS as they might want to change that,
many people over the world hold a few dollars as savings for when their own currency drops.
I think the USA is in the position where it doesn't realy matter what happens, they're going to come out ahead one way or another.

The US is affected by what happens overseas but less so than other countries. The real threat to the American economy is the American right wing (e.g. causing a debt default by not raising the debt ceiling) and similar fiscal profligacy.

 

[joepistole]

All true IFF the rate of spending changes slowly enough for production to increase (or decrease) as needed.

Not true if even half the dollars outside US come back in a few months trying to buy something - anything that is not losing value as rapidly as holding dollars is.

There are 1.24 Trillion dollars existing. Do you really think run-a-way inflation could be avoided if 500 Billion dollars returned in a few months trying to buy the limited supply of goods existing? Or do you think that is impossible? If you do, why - what law of physics or human nature does it violate? What do you think your dollar bank account would be worth in purchasing power, as percent of what it was worth before the flood of dollars returned?

SUMMARY: There can be "too much" of good thing - even sales to foreigners. For example buying up sacks of rice / potatoes that take > 6 months to produce. Yes, I agree the govenment would step in - probably issue ration cards, etc. block foreign sales of critical items - What do you think that does to the already declining value of the dollar, when foreigners discover it is just green paper after all?

There is no supply problem. Contrary to your predictions there is no evidence the dollar is endangered. In fact people around the world are buying dollars and the Euro is falling. And there is no indication of significant inflation in the US.

 

[Billy T]

There is no supply problem. Contrary to your predictions there is no evidence the dollar is endangered. In fact people around the world are buying dollars and the Euro is falling. And there is no indication of significant inflation in the US.

All true, until it isn't.

 

[Michael]

The Economic "Collapse" happened decades ago.

The receptivity of the great masses is very limited, their intelligence is small, but their power of forgetting is enormous. In consequence of these facts, all effective propaganda must be limited to a very few points and must harp on these in slogans until the last member of the public understands what you want him to understand by your slogan. As soon as you sacrifice this slogan and try to be many-sided, the effect will piddle away, for the crowd can neither digest nor retain the material offered. In this way the result is weakened and in the end entirely cancelled out.

Chapter 6, "War Propaganda" of Adolf Hilter's 1926 "Mein Kampf"

Chapter 7:
How the Federal Reserve Bank of New York used Quantitative Easing and Forward Guidance to save us from the Great Recession and usher in the current Economic Recovery.



So? How's everyone liking that "Economic Recovery"? Enjoying the New Economy? Isn't it wonderful? So nice to live as Hyper-Regulated Tax Chattel in the Central Banker's Tax Pen as Citizen's OF *insert nation State*. Yup, don't sell a hotdog, that'll land you in jail. But do try the ammonia boiled PinkSlime - it's FDA-certified 100% delicious.

LOL.... Amoorikkka, land of the fleeced, home of the slave.