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ShadowStats' John Williams Explains Why It's All Been Downhill Since 1973

Tyler Durden's picture


Submitted by Chris Martenson

ShadowStats' John Williams Explains Why It's All Been Downhill Since 1973

"If you look at the government’s latest statistics - the poverty survey of 2009, which is the most recent release, with average and median household income adjusted for inflation (and they use a really gimmick low inflation rate with that one) - it shows that not only has household income been falling the last year or two, but it’s below its near-term peak before the 2001 recession. Household income has not recovered above that, and if you use the CPI-U (the usual inflation rate to deflate that by instead of the gimmick one) it shows that household income today is below where it was in 1973. Again, the average household has not been able to keep up here. If income growth is not keeping ahead of inflation, very simply you can’t have consumption growing faster than inflation on a sustainable basis."

Government statistics guru John Williams believes the most important economic indicators used by our political leaders in their decison-making - the Consumer Price Index, the unemployment rate, the Gross Domestic Product - are deeply flawed in how they're calculated. Whether these flaws result from letting theory trump reality or by machinating politicians, the result is the same: we are fooling ourselves at our peril. We have been understating the risks we face - which is why we are working harder for less today than the previous generation, and why our economy is not only not in "recovery" - but on the precipice of crisis.

Click here to listen to Chris' interview with John Williams (runtime 37m:40s)

Read the Transcript of the Podcast
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In this podcast, John and Chris outline how: 

  • John came to understand how changes in the way the key economic indicators are calculated has resulted in an outcome in which they no longer reflect reality. No one believes, values or knows how to accurately apply them anymore.  
  • There is rampant precedent for political manipulation of how these indicators are calculated. Past administrations forced changes in the forumlae for many reasons - a common one being optics.
  • Using erroneous indicators is dangerous - not just for the governement, but for everyone. When inflation is running higher than most expect (as it is today), investors are cheated out their returns, wage earners wonder why their paychecks buy less goods, and fixed income earners suffer greatly. Unfortunately, there are myraid incentives for politicians and corporations to embrace artificially-low calculations - as they justify reducing obligations owed.
  • The key approaches to calcualting inflation are especially convoluted, especially the practice of applying hedonics. If we instead calculate inflation according the formula used in 1980, we would see a number closer to 8%+ vs today's 1.5% rate.
  • Similarly with unemployment, John calcualtes the true rate in the country today is 22% (vs the reported 9%).
  • In sum, he sees the US suffering from structural issues that are extremely hard to address - but impossible if we continue to let fantasy data be our guide. Our circumstances are not sustainable and, in his eyes, have us on an inexorable path to higher inflation - and likely hyperinflation.

Part 2 of this interview is available to enrolled users and focuses on the main drivers behind John's inflationary predictions, how he sees events unfolding & on what timeline, and what individuals can do today to protect themselves from such an outcome. If you are not an enrolled member, enroll today to access Part 2.


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Thu, 03/03/2011 - 11:30 | 1014900 Cognitive Dissonance
Cognitive Dissonance's picture

I encourage everyone to listen to this. I did during my drive in to my office after loading it into my new iPhone 4 (h/t to WB7 for infecting me with the iVirus). Well worth the two car accidents I had along the way. :>)

Thu, 03/03/2011 - 11:35 | 1014924 Spastica Rex
Spastica Rex's picture

You should get an iPad for your car. There's a special mount available that secures it to your steering wheel so you can use it whilst driving:

Thu, 03/03/2011 - 11:42 | 1014947 Cognitive Dissonance
Cognitive Dissonance's picture

WB7 has been trying to get me to purchase the iGag, but so far I've been able to resist.

However, the iGag2 is on the way. With two cameras I could film myself and everyone else at the same time. The narcissist in me loves that idea. :>)

Thu, 03/03/2011 - 11:58 | 1015020 DaveyJones
DaveyJones's picture

if you have multiple personalities, can you be a narcissist? Group sex, I guess.

Thu, 03/03/2011 - 14:08 | 1015624 A Texan
A Texan's picture

I'm going to get my wife an iRon.  Let's see if I can avoid a trip to the hospital.  :>)

Thu, 03/03/2011 - 11:45 | 1014953 Sudden Debt
Sudden Debt's picture

I think it's more safe to put it on the passenger seat and look to it 5 seconds, back 2 seconds to the road, 5 seconds to the Ipad and so on. And the 2 seconds you use to look to the road you can also use to check the GPS and the ladies you pass by.



Thu, 03/03/2011 - 11:58 | 1015015 Atomizer
Atomizer's picture

Just duct tape it to windshield, problem solved.

Sat, 03/05/2011 - 14:55 | 1022138 Problem Is
Problem Is's picture

Oregon style...

Thu, 03/03/2011 - 11:48 | 1014973 Spastica Rex
Spastica Rex's picture

Pro Tip:

Aimless keyboard banging can cause lasting finger injury.

Thu, 03/03/2011 - 12:07 | 1015059 hbjork1
hbjork1's picture


I beg to differ.  I have been aimlessly banging keyboards for a lifetime and other that some carpel tunnel in the wrists, and a few patent office postings, so far no effects.

Thu, 03/03/2011 - 13:15 | 1015389 Dr_Dazed
Dr_Dazed's picture

I tried aimless keyboard banging and all I got was a brused Di*k.

Thu, 03/03/2011 - 11:50 | 1014989 Hulk
Hulk's picture

Please, please, please, quit wasting letters of the alphabet...

Thu, 03/03/2011 - 11:58 | 1015007 outamyeffinway
outamyeffinway's picture

Math man, every post I read from you, up to this point, has led me to believe that you are just a dumb ass. Trollfuk.


And it's pathetic how you junk people who respond to you. Lame.

Thu, 03/03/2011 - 11:59 | 1015024 tmosley
tmosley's picture

Sorry, you have no credibility.  You have been told this numerous times, but you keep flapping your gums.

Thu, 03/03/2011 - 12:00 | 1015031 outamyeffinway
outamyeffinway's picture

Wait for him to junk you. Wait for it, wait.....wait.....wait.......!


Thu, 03/03/2011 - 12:02 | 1015033 outamyeffinway
outamyeffinway's picture



Thu, 03/03/2011 - 12:04 | 1015042 DaveyJones
DaveyJones's picture

We pay dearly for government statistics.

And you're right, they never hide or twist information 


Thu, 03/03/2011 - 12:09 | 1015075 curbyourrisk
curbyourrisk's picture

Can you say Federal Reserve Employee???

Thu, 03/03/2011 - 14:43 | 1015725 akak
akak's picture

You know, there has been something about the egregiously illogical, irrational, hate-filled anti-precious metals rants of MathMan that kept striking me as somehow familar.  The focus on minor and potentially PM-negative factors while ignoring the ongoing numerous, massively pro-PM factors, the denial of gold and silver's decade-long price run, the denial of inflation and its obvious connection to the rampant money creation by the US Federal Reserve, the fervent defense of fiat currency, and everything status-quo in general, the smug arrogance overlying it all .... now it all fits.

"MathMan" is in fact our dear friend, the arrogant bankster shilling, hysterically anti-gold propagandizing, so-called "Senior Analyst" and official Kitco spokesman, Jon Nadler.


Thu, 03/03/2011 - 13:01 | 1015321 chubbar
chubbar's picture

He told you how he calculates his numbers, using the methodology the gov't used in 1980.

Google "boskin commission" and read anyone of the several critiques written about their "findings". 

Here is a sample


“The debate about the CPI was really a political debate about how, and by how much, to cut real entitlements.”

-Greg Mankiw, chairman of George W. Bush’s Council of Economic Advisers from 2001-2003


I’ve been meaning to get to the absurd argument put forth last week by Michael J. Boskin in the WSJ, titled “Don’t Like the Numbers? Change ‘Em.”

Fred Sheehan saved me the trouble with a brutal takedown of Boskin here.

For those of you who may be unaware, Boskin is the economist/weasel/fraud who helped to officially distort the CPI, making it more or less worthless as a measure of inflation. The Boskin Commission was an act of fraud, a backdoor method to suppress Social Security cost of living adjustments (COLAs). To be blunt, it was an act of cowardice. Rather than man up and say “fix this, its broken, we can’t afford it” the commission took a different route — they fabricated a series of nonsense adjustments  that artificially lowered CPI by 1.1%.

The Boskin Commission’s massive government falsehood allowed former Fed Chair Alan Greenspan to take rates to absurdly low levels, as the official CPI data showed no inflation, despite double digit price increases.

As such, he is one of the contributors to the financial collapse.

The specific fraudulent methods of the Boskin Commission are laughable. That the Economics profession failed to kick him out of its membership is as much an indictment of the profession as it is about Boskin.

My two favorite pieces of Boskin intellectual fraud are substitution and hedonic adjustments.

Hedonic adjustments are addressing the improvement in quality as a form of deflation. For example, the price of a new car in the U.S. had risen from $6,847 in 1979 to $27,940 in 2004. Using hedonic adjustments, the government calculated the price of a new car had risen from $6,847 in 1979 to $11,708 in 2004.

These adjustments wildly distort not only CPI data but GDP as well. Bill Fleckenstein calculated that the hedonic adjustments of faster computer chips and dropping costs massively jacked up the productivity data and GDP data from 1995-2002.

Substitution is a nonsensical approach that adjusts inflation for consumer behavior. When steak prices rise, consumers “substitute” cheaper proteins such as hamburger or chicken. Thus, Boskin states, the consumer is spending no more than they previously were, and is not suffering inflation.

The reality is that consumers have been priced out of steak due to price increases. Oh, and somehow, the decrease in quality does not get hedonically adjusted when it raises inflation.

As I said, the Boskin Commission was a massive fraud. Fred Sheehan has more here . . ."

Thu, 03/03/2011 - 14:32 | 1015726 A Texan
A Texan's picture

"...The Boskin Commission was an act of fraud, a backdoor method to suppress Social Security cost of living adjustments (COLAs). To be blunt, it was an act of cowardice. Rather than man up and say “fix this, its broken, we can’t afford it” the commission took a different route — they fabricated a series of nonsense adjustments  that artificially lowered CPI by 1.1%."


They not only screwed with the annual CPI adjustment, they raised the retirement age from 65 to 67 and they also raised the FICA tax limit each year, and STILL the fucking thing is going bust (and taking all of us with it).


As to how to calculate inflation - I think that the CPI was manipulated from the beginning (and, even so, it still shows a decrease of ~96% in the dollar's value since 1913).  Why?  Common sense.  Take products that everyone buys - a stamp, for instance.  It was $0.03 to mail a letter as late as 1958.  Now it is $0.44, which reflects an increase of about 5.2%/year compounded.  Yet, inflation is calculated at just under 4% per year over the period.  Try it with a loaf of bread, a subway token, the price of a house, cars, etc.  ALL of them show a significant understatement of the inflation rate.


I think that the price of AU and AG, as manipulated as they are, give some hint as to the true inflation rate.  A silver quarter was worth $0.25 in 1964.  Now just the metal content is worth $6.20.  Nearly 25 times the price in just 47 years - that dwarfs reported inflation, which at 4.0% would increase the price of anything by only 6.3 times.  Gold has gone from ~$40/oz. since 1968 (when a two-tiered market came about) to ~$1400 now, and increase of 35 times - again dwarfing reported inflation.


But Mathman swallows the reported figures hook, line and sinker.  He's got exactly zero credibility with me.

Thu, 03/03/2011 - 13:45 | 1015506 ElvisDog
ElvisDog's picture

I like MathMan's posts. He is the new Harry Wanger.

Thu, 03/03/2011 - 13:57 | 1015574 r101958
r101958's picture

He calculates them the same way the gov't calculated them before they started fudging the numbers.

Thu, 03/03/2011 - 11:37 | 1014908 asdasmos
asdasmos's picture

Anyone have a link to Part 2 that they want to share?

Thu, 03/03/2011 - 11:34 | 1014910 Spalding_Smailes
Spalding_Smailes's picture

This fucking clown ••• Did anyone see Gonzo Lira ?




Shadowstats' John Williams: Prepare For The Hyperinflationary Great Depression

 • 12/14/2009 •


John Williams, who runs the popular counter government data manipulation site Shadowstats, has thrown down the gauntlet to deflationists, and in an extensive report concludes that the probability of a hyperinflationary episode in America over the • next year • has reached critical level.



Thu, 03/03/2011 - 11:37 | 1014931 Robot Traders Mom
Robot Traders Mom's picture

Listen you little fucking dweeb, the whole commodity complex went through the roof in the year after he said this. It has reached a critical level. Thanks for pointing out that John Williams is correct and you are a tool.

Thu, 03/03/2011 - 11:41 | 1014943 panika2008
panika2008's picture

Yeah, e.g. steel prices going up 16% over 2010 or natgas price in a standstill. Definitely a hyperinflationary depression.

Thu, 03/03/2011 - 11:56 | 1014975 Spalding_Smailes
Spalding_Smailes's picture

Hyperinflationary great depression .... I just picked up a loaf of bread for 75 cents.


Show me any signs of a looming hyperinflation • depression ? Cat's booming , McD's , GE, AT&T, Berkshire , IBM, Verison, Boeing , Kroger , Microsoft , Dupont , Alcoa , Tyson , Macy's , Deere , Apple , Publix , Coke , Eli Lilly ,Weyerhaeuser , Halliburton , Colgate , Pepsi , Waste Management , Monsanto , Cambell Soup ,Dover , Smurfit - Stone , Google , Famiy Dollar .... ( The USA is a fucking power house ).............since this dufus ran his trap .......


You fucking tool. Look at yourself and your post, no insight on finance , modern day troll spewing forth .... hold it, hold it .... Nothing, your a clown. 


Thu, 03/03/2011 - 11:55 | 1015006 Sean7k
Sean7k's picture

As the recipeint's of the primary dealer QE liquidity, the nifty fifty have continued to march higher. Which begs two questions: one, what happens when the liquidity injections stop? and two, what is the value of the currency these gains are valued in?

Then consider the ramifications of China's drive towards reserve currency status- even if it is a shared one. Trillions of dollars with no place to go will produce continuous inflation. Hyperinflation? Probably not. I think the FED is smart enough to either manage it with high inflation or resort to a global currency through negotiation and in an effort "to be more fair to developing economies". 

Thu, 03/03/2011 - 12:02 | 1015019 Spalding_Smailes
Spalding_Smailes's picture

So QE & Pomo are powering the these businesses bottom line over the last 3 years ....???? Are you fucking stoned ?


They are booming on a global market place • stage .....


Did you ever think China , Brazil , USA picking up may be driving commodities also ????

When China stops printing ( M2 25% per year ) building roads • buildings commodities will drop , big time.

Thu, 03/03/2011 - 12:06 | 1015056 Sean7k
Sean7k's picture

Yep. An inflated money supply increases the numerical value of stocks, but not the actual value. That is done through production. This is why the stock market is not the economy. 

See you can make a point without name calling- care to try?

Thu, 03/03/2011 - 12:14 | 1015089 Spalding_Smailes
Spalding_Smailes's picture


All those business are expanding across the globe. Selling more product , You can look at any of the businesses and see the bottom line getting better every quarter. • fact • 

Pomo • QE are helping fill the void of deflation in the shadow banking complex .... Book it.


ANALYSIS - China the wild card for commodity prices

(Reuters) - A strengthening global economy and growth in demand are likely to keep commodity prices high in coming months, but there is a risk China could slam on the monetary brakes and trigger a reversal.



• • • • • Ludwig von Mises Institute • • • • •

How China's monetary policy drives world commodity prices

How monetary expansion and the rigid exchange rate drive commodity prices

Based on the huge trade surplus with the United States, which stood at $114 bill in 2005, most analysts have concluded that the current rate of exchange of 8.017 yuan to the US dollar is far too high. However, what matters for the currency rate of exchange is the pace of money expansion relative to real economic growth — not the state of the trade account.

After falling to negative 1.2% in March 2001 the yearly rate of growth of the central bank balance sheet (monetary pumping) relative to real economic activity climbed to 28.2% in September 2005. In February this year the yearly rate of growth of the relative pumping stood at 22.1%.

In contrast, the yearly rate of growth of the Fed's balance sheet in relation to real economic activity fell from 11.6% in September 2001 to 0.9% in March this year.


Thu, 03/03/2011 - 12:18 | 1015126 asdasmos
asdasmos's picture

Tuesday, May 02, 2006

Thu, 03/03/2011 - 12:21 | 1015153 Spalding_Smailes
Spalding_Smailes's picture

They are still using the dollar peg & they are printing like mad ... It's worse now ...


FEBRUARY 27, 2011, 7:51 P.M. ET

BEIJING (Dow Jones)--China's broadest measure of money supply, M2, is likely to rise by 16% this year, Gao Xiaoqiong, the head of a regional branch of the People's Bank of China, said in a commentary piece in the Financial News on Monday.

At the end of December, M2 was up 19.7% from a year earlier.

Thu, 03/03/2011 - 13:10 | 1015351 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Dude you are somewhat correct on the short term, but utterly wrong on the longer term. You are looking at numbers based on artificiality, plus a lot of those stats are based on cooked numbers. Everything out there is artificial right now. Check out all the empty cities in China: empires to nothingness. What the fuck are they being built for? Its busy work based on government stimulus. There wasn't demand, it was simply desperate stimulus spending targeting these sectors. In the past this has worked. Now, not so much because of the structural, systemic problems. It will end. Those numbers will go belly up.


You can junk and be a total dick all you want:


In the end the inevitable march of Time and Math catches up with us all.


We'll laugh at your embarrassment for being completely off course, for what little it will be worth.


Ps-- Tell Ben he sucks.

Thu, 03/03/2011 - 13:15 | 1015397 Spalding_Smailes
Spalding_Smailes's picture

Check out all the empty cities in China: empires to nothingness. 


So is this driving commodity prices ( construction 60-70% of GDP in China ) Or is it Ben's Pomo • QE ?

Thu, 03/03/2011 - 12:21 | 1015154 Sean7k
Sean7k's picture

Not sure why you are using information that is severely dated- 5 to 10 years. Things may have changed since then.

As for bottom lines, they are priced in dollars- yes? Those dollars are inflated- yes? Then those "facts" need to be interpreted in that light- yes? 

Certainly, if they were making more product, it would show up in their employment numbers- yes? They would be buying more inputs- yes? There would be no evidence of margin squeezes- yes? There would be declining inventories- yes? 

The problem with "facts" is they require a setting and interpretation. Without that, they are merely statistics- lies with mathematical proofs. 

Thu, 03/03/2011 - 12:31 | 1015183 Spalding_Smailes
Spalding_Smailes's picture

So what has changed since that piece China still peg's. Thats the only point in the article , money games.

Don't tear down the piece because its 5 years old, they are doing the same shit.

USA • EU • M2 growing at 3% • China 25% ...


We have had 1 quadrillion dollars floating around the globe for years now. Your saying the new pomo • QE are tipping things over now ?

Thu, 03/03/2011 - 12:25 | 1015164 Spalding_Smailes
Spalding_Smailes's picture

Hey SeanK7 ......


What do you have to say now ? Still blaming Ben or is it the Peg that China uses ?


Is it 60% GDP in construction in China driving commodities ? Do the hedge funds • speculators have anything to do with the price. Look at when oil hit $150 a few years ago, the traders fueled that !!!

Thu, 03/03/2011 - 12:42 | 1015247 Sean7k
Sean7k's picture

I'm not sure what you are referring to when you say, "what do you say now?".

As for Ben and the peg, I am still blaming Ben. The Chinese are in the same trap we set for the Japanese. If they remove the peg, there investment in dollars creates huge losses. This is the trap. We trade market access for dependency on our debt. The Chinese are merely trying to find the best way to extricate themselves from the process.

Unfortunately for Ben, I think the Chinese will do a better job. As they are not dependent on us militarily, they can be more brazen in their exit strategy- thus the expansion of the yuan as a reserve currency, the transfer of dollar denominated debt for gold, silver and other commodities and finally, the western technology and research that has caught them up and will power them in the future.

It will be a large price to pay, but as the Chinese have always been hard workers, they will make that up and more in the future. 

We will have created and funded our very own barbarian at the gate. 

Thu, 03/03/2011 - 12:54 | 1015286 Spalding_Smailes
Spalding_Smailes's picture

The PBoC controls the peg. I'm not sheeding crocodile tears for the communist PBoC, sorry.


They do this so they can build shit really cheap. But this also causes them to import inflation, just like all the other countries that peg. Not Ben's problem.




Your argument has been blown out of the water. 

Thu, 03/03/2011 - 13:13 | 1015378 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

In your own mind maybe. Take some calming meds dude.

Thu, 03/03/2011 - 13:14 | 1015384 Sean7k
Sean7k's picture

Funny how you only answer the parts of a comment you want to. 

Yes, China controls the peg. It will be slowly removing it from the peg as it expands it's economic base and includes more countries willing to trade in the yuan. I think it will be successful. 

It is not Ben's problem- no, but it is ours. We are beginning to pay the price and the price will continue to rise, while China moves ahead. 

The US is creating debt at a pace that dwarfs it's ability to pay it off. We are destined to default. This will have ramifications that even our military cannot overcome. 

China is creating debt also, but it is doing it while creating assets- assets that will be valuable in the future.

As you have yet to respond to my argument, it appears to be sitting idle and at peace- awaiting a well reasoned response. That is the problem with copy and paste- it requires analysis.

Thu, 03/03/2011 - 13:46 | 1015441 Spalding_Smailes
Spalding_Smailes's picture


The commodities are driven by building • construction  60 % of GDP, all the workers, will they building at this pace for 5 years. They have a per capita of $5,000 cerca 1890 in USA.

Look at Japan and her debt. We are the reserve currency our inflation gets spread out throughout the world because of this just like we sold debt ( cdo's ect ) we sold off that debt. China has no securitization market for selling of debt. They are sitting on bad bank loans ( asian crisis from 10 years ago ) they have 12 trillion in bad debt at the local level, all the npl's because the corrupt local pimp's.


If you build a city for 1 million and no one moves in is this an asset, really ? No its big trouble, no maintenance , how long can a building stay empty before it fails. The roads, all the construction is producing a 9-10% GDP all bullshit. How will everyone afford all the new building and everything they bring if they don't have jobs because the the manufactures are no long hiring, they are now firing because they are no longer competitive.





O.K.... Keep attacking my cut • paste facts. It's needed for ZH like you ....


Ordos still empty ... Years later built for 1 million.




Feb. 12 (Bloomberg) -- Jack Rodman, who has made a career of selling soured property loans from Los Angeles to Tokyo, sees a crash looming in China. He keeps a slide show on his computer of empty office buildings in Beijing, his home since 2002. The tally: 55, with another dozen candidates.

“I took these pictures to try to impress upon these people the massive amount of oversupply,” said Rodman, 63, president of Global Distressed Solutions LLC, which advises private equity and hedge funds on Chinese property and banking. Rodman figures about half of the city’s commercial space is vacant, more than was leased in Germany’s five biggest office markets in 2009.

Beijing’s office vacancy rate of 22.4 percent in the third quarter of last year was the ninth-highest of 103 markets tracked by CB Richard Ellis Group Inc., a real estate broker. Those figures don’t include many buildings about to open, such as the city’s tallest, the 6.6-billion yuan ($966 million) 74- story China World Tower 3.

Empty buildings are sprouting across China as companies with access to some of the $1.4 trillion in new loans last year build skyscrapers. Former Morgan Stanley chief Asia economist Andy Xie and hedge fund manager James Chanos say the country’s property market is in a bubble.


Thu, 03/03/2011 - 13:47 | 1015524 Sean7k
Sean7k's picture

First, commodities are not driven by building. Most commodities are food, many are used in manufacturing or agriculture. Second, construction is a part of industry- which represented 46% of last years GDP (wikipedia). 

Now that we are past the lies in your statement, what percentage of GDP is represented by these assets? Are they similar to our shadow inventory of construction that is sitting empty? 

As we have global derivitives in excess of one quadrillion dollars and most are represented in construction, who is really in the more dangerous position? Are they assets for our banks, but not for theirs?

You are applying prejudice and bias into your argument and  stacking it with statistics that are dead wrong. I don't mind humoring your attacks, but please take the time to introduce discipline in your acquisition of material- it breeds a better argument and makes your position easier to defend.

Thu, 03/03/2011 - 13:54 | 1015529 Spalding_Smailes
Spalding_Smailes's picture

Copper , Steel , all shirts for all the workers in China ect .... So China does not use food , Cotton, ect ... 1.4 billion in China all naked, Lol'


Keep twisting in the wind. China's a bubble ,book it.

This is from 08' before all the construction really went crazy ....

.......... " Metal consumption in China and the U.S., the future of copper and nickel

Posted: February 20, 2008, 9:05 AM by Jonathan Ratner

While average U.S. metal consumption per capita is nine times that of China and 15 times greater than in India, it is less influential on the global metal market than it has been in the past.

This message comes from Sucden (UK) Ltd.’s Jeremy Goldwyn, the firm’s global head of industrial commodities, who spoke to Desjardins Securities’ 2008 commodities outlook conference recently.

One important thing to note in terms of China’s consumption, he said, is that it has shifted from manufacturing to infrastructure.

Meanwhile, copper, which has rallied 400% from its cyclical lows and has not experienced the weakness other base metals have, remains the barometer for other metals, Mr. Goldwyn said.

As for nickel, Norilsk Nickel’s chief economist David Humphreys said he expects China will retain significant growth potential given the large gap between annual stainless steel production growth at 46% and nickel consumption at 22%.

He also said nickel is often the late runner amongst major metals and sees stainless steel producers restocking in the first half of 2008.

His conclusion: The nickel cost curve has steepened on a sustainable basis, which will support higher prices. Industry returns will grow, but not all producers will get an equal cut, Desjardins said. " .....................

Thu, 03/03/2011 - 14:08 | 1015614 Sean7k
Sean7k's picture

Pretty sure China would use clothing and food, regardless of the industry they are in, but you still haven't mentioned your statistical lie of 60% construction.

Copper is ONE commodity.

Stainless steel is used more often in food preparation, restaurants, furniture etc- all items for domestic and export markets.

As your own statistics point out that the US is the biggest purchaser of these items, I would conjecture that the dollar is driving the price and, correct me if I'm wrong, Ben is driving the dollar. 

Please learn how to do analysis.

Thu, 03/03/2011 - 14:54 | 1015830 Spalding_Smailes
Spalding_Smailes's picture

What lie ??? Fucking Clown .... Your the guy spreading false hoods about the commie's. Consumption dropping .....



The overdependence on new real estate in China, when the demand isn't there, will cause the nation to eventually "hit a wall," hedge fund manager James Chanos told CNBC Friday.

Construction is 60-plus percent of GDP, compared to exports of 5,” said Chanos, who is the founder and president of Kynikos Associates.


“The problem is that consumption as a percentage of Chinese economy has declined in the last 10 years, from 40 to 35 percent. It’s all real estate,” he said. After the US, China has the world's second largest economy.

Chanos said that steel, iron ore, cement and other materials needed for construction will be "under pressure."

China has built new cities that are now essentially empty, he added. Despite the overbuilding, said Chanos, construction continues at a good clip, with 12 million to 15 million residential units this year. The units, priced similar to those for US residents, are intended for Chinese who earn about $3,500 annually and are in the bottom 20 percent of wage earners. Ironically, many of the Chinese who've moved to cities from the country are construction workers, he noted.

“When construction is • 60 percent of your economy •, and you are building lots of things that people don’t need, the state may let this get out of control,” he said. “It’s hard to manage this type of bubble.”

Chanos predicted that America would fare better, should the China bubble burst, because the US doesn’t export as heavily to China as do Europe, other countries in Asia and Latin America.


Thu, 03/03/2011 - 13:44 | 1015496 Spalding_Smailes
Spalding_Smailes's picture

As they move the peg the manufacturing complex grows weaker. More people get fired. 


The debt is not an issue , look at Japan. The communist overlords that run everything are producing massive amounts roads , building just so they can print 10% GDP. All the construction is driving commodity prices , copper , steel , ect ... Not Ben's pomo.


They are creating debt at an alarming pace, we are the reserve currency out dollars flow through forex , oil , global letters of credit ect ... You can't compare the yuan debt issues with the USA. Those are not assets , are all the over built McMansion's assets now after the 40% drop over the last 4 years in the USA, yup, but its dropped 40%. Whats going to happen to all the construction workers in China after the building bubble pop's ? Or can they just keep building printing M2 at 25% per year.

Thu, 03/03/2011 - 14:00 | 1015579 Sean7k
Sean7k's picture

Prove your first statement. It is an assumption. The manufacturing complex is dependent on the sale of goods and services- you must first show a decline below break even to make your point- you haven't. The peg is only a part of the equation.

Communist overlords? Really? Do they just dress differently than our overlords? More sinister I suspect...of course, our dollar printing has no effect on commodity prices whatsoever, it is only the Chinese...Look at Japan- you want that economy? Coupled with our consumers and military? Now, that is just laughable.

Yes, they are creating debt at an alarming pace, something that is necessary if they are to become a reserve currency, just as they are selling Yuan denominated bonds- something else necessary to become a reserve currency. Oh, and the topper? They are creating goods and services wanted by the global economy to continue to grow their GDP without all those pesky entitlement programs while they trade dollars for gold and silver and their people continue to save and invest. 

Your inabilty to analyse material is clouding your judgement. I suggest some further study...

Thu, 03/03/2011 - 14:21 | 1015630 Spalding_Smailes
Spalding_Smailes's picture

People saving and investing with a per capita of $5,000 grand, O.K.


They are printing building roads bridges , empty buildings so they can print 10% GDP , and this is good. What happens when all the construction jobs go by, by , after the crash. With no social safety net in place. They are having unrest now, wait till the bubble pop's.

They can't be the reserve currency without trust, the books are cooked from top to bottom, all tylers post on business fraud , wikileaks proved that, on of the top officials said GDP was a joke. Still no answer for all the building that helps them print GDP of 10%. Or is Chanos , Hugh Hendry , the guys from CB Richard Ellis are they wrong .... ? What about the safety net ? The pollution, child labor issues , abortion issues , do the people love that country ? The USA is free, open a business if you want, make your own bed, innovation, look at my post above all the power house fortune 500 businesses , built upon the freedom we find in the USA. China has stolen most of her tech from us, total pimp's .... Not stuck in some box and some overlord tells you when to eat, sleep, drink , shit, how much money you will make ....


Communism or freedom .... Black or white. If they speak up , boom , off with your head. Did you ever hear of Tiananmen Square ???


They are light years behind the USA. Keep drinking the commie red cool aid. It's a fraudulent bubble.


You should read a few books.

Thu, 03/03/2011 - 15:04 | 1015891 Sean7k
Sean7k's picture

Yes, their savings rate dwarfs ours and they do invest. You don't even have a paste to support your derision- which is all it is.

What happens when... that's the best you've got? Probably the same unicorn farts we keep telling everyone, the future is the future. We don't have a bubble? Really. They depend on the same social net we once did- no net. With over one billion people, they can afford the fall. Cruel, but life is cruel. 

Unrest? They have made all the same preparations we have. They have the same internment camps. They have the same troops and militias. They will kill with the same ruthless efficiency we will. 

We are the reserve currency- who is trusting us now? People are questioning safety flight to the dollar and treasuries- they are going to gold and silver. We have no fraud? Our fraud makes the chinese look like boy scouts- Tyler has run a few pieces on this as well. Oh wait, you like to pick and choose facts.

The US is free? Really, where? No barriers to entry? No fees and tax schedules that are the highest in the world? Damn, that must be why all those corporations hide theoir money in off shore accounts and refuse to repatriate their profits.

As for reading, read some history- we stole Europe's inventions to power our rise to economic power. Check out the steam engine, telegraph, telephone, light bulb, etc. All european inventors we stole the technology from. 

Tiananmen square has nothing on the world trade center. 

Of course China is behind us, but as they rise- we are falling. The Chinese are no more communist than we are. If you read more, you would realize this. Throwing slurs reinforces the failures in your argument. Patriotism is the last resort of scoundrels. 

This all began when you questioned the integrity of John Williams, strangely, I find his integrity is largely intact- yours? Not so much.


Thu, 03/03/2011 - 11:58 | 1015026 Robot Traders Mom
Robot Traders Mom's picture

No insight on finance...okay, I didn't know that I had to point out that gas, cotton, and food prices all went up dramatically last year. So unless you don't drive, don't wear clothes, and don't eat, you probably already knew that. I'm glad your stocks have gone up synthetically. Or at least the fictional, for-fun portfolio you run on yahoo finance for kids.

Send me your bberg offline and i'll send some paper your way and see if you know what the fuck you are looking at.

Thu, 03/03/2011 - 12:05 | 1015058 panika2008
panika2008's picture

Depending on whom do you believe, food has risen 1.8% to 29% over 2010 (BLS to World Bank). Hardly a hyperinflationary depression, even if a little uncomfortable. By the way, 2010 was a very bad year for the crops.

Thu, 03/03/2011 - 15:05 | 1015901 akak
akak's picture

By the way, 2010 was a very bad year for the crops.


So was EVERY single year in the 74 year history of the Soviet Union!  Amazing how decades of "bad harvests" coincided with the advent of totalitarian central planning --- just a coincidence, surely.

I am just waiting for the next Holodomor, courtesy of the Fed and Monsanto.

Fri, 03/04/2011 - 11:00 | 1018430 DaveyJones
DaveyJones's picture

very nice

Fri, 03/04/2011 - 10:59 | 1018424 DaveyJones
DaveyJones's picture

I couldn't hear you, I was standing naked and starving at the bus stop.

Thu, 03/03/2011 - 12:00 | 1015034 tmosley
tmosley's picture

Stocks rising in hyperinflation?  NEVER!

Just because you picked up a month old loaf of bread for 75 cents does not mean that is the normal price.  The cheapest, shittiest white bread available in my area costs $1.20 per loaf.  My normal bread is up to $2.50.

But hey, maybe if you can get your head further into the sand, you'll pop up in China!

Thu, 03/03/2011 - 12:04 | 1015053 Spalding_Smailes
Spalding_Smailes's picture

Who the moron with said head up ass .... 



Click on link, Bitch.


Thu, 03/03/2011 - 12:34 | 1015208 Spastica Rex
Spastica Rex's picture

I clicked, but don't get it. (waves from the peanut gallery)

Thu, 03/03/2011 - 12:41 | 1015237 Spalding_Smailes
Spalding_Smailes's picture


This was his misinformation for ZHers...... On China consumption ....


................ " Demand increases as a currency's strength grows.  All they need to do is revalue the currency, and the demand will appear (it has the same effect as pushing prices down).  

In other words, the only hard part is making the stuff.  Consuming it is easy.  You think you would have trouble if your dollar suddenly bought twice what it buys now?  Four times?  Six?  Ten?  Neither would the Chinese.  They don't need our paper, but we need their products, or else our snap-on tools and CAT machinery will be all we have left, if that, as that stuff will be bought up by the Chinese with their newfound purchasing power.

And yes, it IS about capabilities.  They have all of the factories now.  We have been shutting ours down.  And before I hear a mercantilist argument, let me cut it off.  Saying that China "stole" our industry is analogous to China claiming that America "stole" their children.  Sound crazy?  It is.  They stopped their children from being born with their one child policy the same way we stopped new factories from coming online with similar regulations and high taxes.  America had no one-child policy, and China didn't have the regulations and high taxes.  

They grew their own industries, who were simply contracted by our own corporations to make things for Americans.  If our corporations hadn't gone there, those factories would still be there, they would just be making different things, whether they were to be consumed locally, or in nations other than America. " ...................


These are the facts.




Wrong again .......


Mike Pettis • China Pro •

...... " But what would happen if China were to raise the currency too quickly?  In that case the profitability of the export sector would decline so quickly that exporters would be forced either into bankruptcy or into moving their facilities abroad to lower-wage countries.  Either way, they would have to fire local workers


But firing workers reduces household income and household consumption. If it reduces household income faster than the revaluation increases real household income (by lowering import prices), the net result is a reduction in total household income and a reduction in household consumption.

Balancing and unbalancing

This is the problem China faces.  It must raise the value of the renminbi as part of its rebalancing towards greater domestic consumption, but if it does so too quickly, the rebalancing will occur not as an increase in consumption relative to rising production, but rather as a drop in production relative to declining consumption.

This may seem like a confusing point, but it is worth understanding.  China can rebalance with high unemployment as well as with low unemployment, and the difference has to do with the speed of the rebalancing.  If China adjusts too quickly, consumption will actually decline, and production will decline even faster.  In that case China rebalances (consumption rises as a share of GDP), but under conditions of rising unemployment. " ..................


Also ...... From a few years ago.


Bottom Line: While China's exponential economic growth over the last 40 years is pretty impressive, from wretched, abject poverty and only $128 of per capita real GDP in 1969, to per-capita output of $2,800 in 2010, China's economic output on a per capita basis is still about the same as the U.S. in 1878 ($2,800), 132 years ago. 



Thu, 03/03/2011 - 12:50 | 1015283 Sean7k
Sean7k's picture

You're entire rebuttal hangs on the word "if". How do you see your answer as superior to the pevious statement? It is another opinion, but only an opinion. It has no force of authority nor is it proven. Your bottom line is just another statistic without a reference point, eg cost of living, etc.

Thu, 03/03/2011 - 13:07 | 1015306 Spalding_Smailes
Spalding_Smailes's picture

So China de-pegs , guess what yuan goes up 75% overnight. PBoC insolvent, manufacturing complex blowtorched, they start firing people moving manufacturing to Africa. So the millions of fired people with a per capita of $5,000 rush out and start buying crap that they used to sell into the US & European markets ??? Because after they de-peg guess what happens to the cost of production....


No consumption. They have a per capita of $5000 per year. Are they going to start buying big screen t.v.'s , fire pits , tools , high end shoes , all the computer shit ,washer & dryers ect ... all the stuff they sell into the US market ?

They do not even have sewer systems in the majority of that country, its a total mess. And they are going to take over consumption like the USA and her 15 trillion dollar economy ??


They do not have a social safety net , people do not spend like we do.



Thu, 03/03/2011 - 13:27 | 1015434 Sean7k
Sean7k's picture

You are an assumption machine. China depegged last year. They are managing the peg for their own advantage. That is why it hasn't gone up 75% overnight. You speak as if there is a free market in currencies. 

You assume they must become a consumption machine, much like the US. Why? There is no reason China cannot grow their economy on production of goods and services for export as well as develop domestic consumption. Further, because the people are not used to our standard of living- this can be managed as well, in a way that does not lead to over consumption and a growing into their assets.

Their lack of a social net is a plus. More capital for growth, less spent on government consumption and waste. Sewer systems are problematic because of the lack of fresh water in the world- there are better systems available (humanure) and they are not saddled with the cost of infrastructure and maintenance. 

In the 1880's the US was in a similar position and found a way to manage the growth, banker excess, pollution amd development of social systems. China can't? What, is history denied them, can they not read?


Thu, 03/03/2011 - 13:57 | 1015566 tmosley
tmosley's picture

Why do you assume that they will stop printing after they drop the peg?

Oh that's right, because you are mentally handicapped.  Go deliver some lawn furniture.

Christ, even if the Yuan jumped 75% overnight, the Chinese are the ones with all the Yuan.  You think it's hard to go to the store and buy stuff when the price goes down 75% overnight?  You really think it is that hard to just stop the boats, and send their products to their own Wal-Mart stores?

You cherry pick your data so you can pretend everything is fine.  You see record food stamp usage, and your response is that it is the RICH using food stamps.  Jesus Christ, you are unbelievable.

Thu, 03/03/2011 - 15:01 | 1015876 Spalding_Smailes
Spalding_Smailes's picture

What about all the fired worker from the now defunct manufacturing complex. They will not spend , and now they will fill all the Walmart store are the empty now.


Who's buying what with an average per capita of $5,000 ? They will take over all the lost consumption that was heading toward the EU & the USA. ? Really ... 


When does Elvis start his comeback tour ....

Thu, 03/03/2011 - 15:12 | 1015925 tmosley
tmosley's picture

They won't spend when prices drop 75% overnight?  They won't spend when their average per capita rises from $5000 to $8750 (your numbers)?  

You are an idiot, and apparently beyond the reach of either facts or logic.

Now go deliver your fucking shinebox to one of your rich food stamp using clients.

Thu, 03/03/2011 - 14:59 | 1015870 Burnbright
Burnbright's picture

Spalding the Chinese sell more goods to emerging markets than the US 

Back in 2009 the US made up roughly 20% of Chinese exports. Your thesis is moronic.

Thu, 03/03/2011 - 15:05 | 1015887 Spalding_Smailes
Spalding_Smailes's picture

So as they revalue and the manufacturing complex is also forced at this point to raise prices and fire workers , will those fired workers start buying shit, with no safety net. Nope. Washers , dryers , all the crap flowing around the globe.


How can the manufacturing complex sell goods cheap if they de peg ? Your talking 70% overnight. And the banks loaned at suppressed rates , the PBoC would be insolvent. Boom gone, social unrest , chaos.

Thu, 03/03/2011 - 15:14 | 1015931 tmosley
tmosley's picture

No, they revalue and all the cash those companies are sitting on allows them to hire a shit ton more people.

If you can't stand the facts, go somewhere else.  

Thu, 03/03/2011 - 15:53 | 1016114 Burnbright
Burnbright's picture

So as they revalue and the manufacturing complex is also forced at this point to raise prices and fire workers...

Since when does a strengthining currency create inflation. The price of things decrease when currencies appreciate, manufacturing costs would drop not increase, you have it backwards.

How can the manufacturing complex sell goods cheap if they de peg ? Your talking 70% overnight. And the banks loaned at suppressed rates , the PBoC would be insolvent. Boom gone, social unrest , chaos.

The only thing blowing up is your arguement. Manufacturing can sell goods cheap when the currency appreciates as long as they do not have a ton of debt to pay off in the currency that is appreciating. China is blowing bubbles right now, I agree, but it is directly related to the Federal Reserves monetary policy.

Thu, 03/03/2011 - 12:39 | 1015230 Burnbright
Burnbright's picture

why don't you tell us where you got this .75 cent loaf of bread and tell us what kind of bread it was. Just show a reciept with a date and give us a name brand. Other wise you are full of shit. 

Thu, 03/03/2011 - 12:47 | 1015272 Spalding_Smailes
Spalding_Smailes's picture

Call them up now and ask, never, ever call Spalding a lier again....

Ask ... " do you sell white bred for 75 cents ? "    ....Real simple big mouth.



Fair Share Finer Foods 


708 386 6288

Thu, 03/03/2011 - 14:50 | 1015819 Burnbright
Burnbright's picture

Jesus Christ! You call the shit the store sells real food! Hope you like the taste of processed in mexico crap.


By the way I asked for the bread manufacturing name brand.

Thu, 03/03/2011 - 13:47 | 1015523 ElvisDog
ElvisDog's picture

What kind of bread can you buy for 75 cents? Moldy Wonder Bread? It's anecdotes like that that demonstrate that you're just making things up. Like that story about the homeless guy who was denied visitation rights for his partner in the hospital because he was gay.

Thu, 03/03/2011 - 11:38 | 1014936 asdasmos
Thu, 03/03/2011 - 11:44 | 1014957 Sean7k
Sean7k's picture

John's statistical work on inflation and unemployment have been excellent. However, the possibility of hyperinflation is a world of competing and colluding fiats is beyond what anyone can predict. 

Countries are no longer subject to fiat discipline, if they are part of the basket of currencies- especially as the reserve currency.

Consequently, what we have now is going to be worse than hyperinflation: 10 to 20% inflation extended over years, to be used to further transfer wealth and force austerity.

Still, this does not mean all of John's work is problematic. He has picked an area of expertise that is the definition of manipulation. He is bound to make some bad projections. 

Of course Spaulding, you have never made a bad projection, no? Or are you a "fucking clown" as well?

Thu, 03/03/2011 - 11:44 | 1014915 Mercury
Mercury's picture

...but entitlements have been growing quite a bit since 1973 too.

Real incomes may be shrinking but if your personal aspirations in life are more or less limited to sitting around, gluttony and watching TV, things have never been better.

Also, if you're a government employee or a top 3ish% income earner things have never been better.

So, get busy and try to sit down in one of those seats while the music is still playing.  Everyone else, shut up and pay your taxes.

Thu, 03/03/2011 - 13:04 | 1015335 kaiserhoff
kaiserhoff's picture

+1  Early seventies were clearly a peak.  This article understates the problem because incomes were more rationally based, health care was affordable, and there was mobility in jobs, location, and lifestyles that is hard to imagine today.

In my twenties, I owned three different houses.  Not unusual.  I know plenty of people in their twenties now, all renters, and not even thinking about real estate.  That's just one of the demographic train wrecks in progress. 

Thu, 03/03/2011 - 11:34 | 1014918 panika2008
panika2008's picture

John Williams "100% sure hyperinflation in 2010". Yeah right.

Thu, 03/03/2011 - 11:41 | 1014944 FoieGras
FoieGras's picture

So true. Williams is part of the "I am sure we're all going to hell, just not sure of the timing" crowd.

Thu, 03/03/2011 - 13:07 | 1015347 prophet_banker
prophet_banker's picture

look at what commodities did in 2010, that supports the thesis that hyperinflation already started last year, i mean silver doing 70%, and yet coming in like 5th or 6th place at that rate when compared to all comodities, come on.

Thu, 03/03/2011 - 14:24 | 1015688 panika2008
panika2008's picture

Look at what nat gas did. Or real estate.

Thu, 03/03/2011 - 15:15 | 1015941 tmosley
tmosley's picture

That is exactly what happens in hyperinflation.  Anything that can't be exported collapses in value.  Look at the % of expenditures that went toward housing in Weimar.  It went from some 30% down to 0.2%.

Thu, 03/03/2011 - 11:35 | 1014922 johnnymustardseed
johnnymustardseed's picture

Americans will be forced to a standard of living that will bring chaos. Nothing is made here anymore. Corporations are stupid. They took the short term gain of lower wage costs with out looking at the long term effect that someday they will have no one to buy their cheap shit from China.

Thu, 03/03/2011 - 11:45 | 1014950 panika2008
panika2008's picture

"Nothing is made here anymore", except for e.g. aluminium of which US of A is still the #1 producer in the world.


"Corporations are stupid", except maybe for those dumb fucks that built F-22. China, Russia and India will MAYBE build something similar in ten years. Yeah, those guys in Lockheed are soooooooo stupid.

Thu, 03/03/2011 - 12:04 | 1015054 Dr. Acula
Dr. Acula's picture

Don't forget Kazakhstan. No. 1 exporter of potassium.


Thu, 03/03/2011 - 12:10 | 1015083 panika2008
panika2008's picture

Does it somehow prove that USA does nothing by itself and is full of stupid people?

Oh, the second part gets more and more sensible to me as I read comments here...

Thu, 03/03/2011 - 13:50 | 1015532 ElvisDog
ElvisDog's picture

The U.S. is great at making large farm equipment, jet airplanes, and weaponry.

Thu, 03/03/2011 - 14:28 | 1015710 panika2008
panika2008's picture

Quite a bit for a country that does nothing any more.

Thu, 03/03/2011 - 15:17 | 1015946 tmosley
tmosley's picture

Find me a light bulb that is made in America.

How do you expect to run this country when we can't light it ourselves?

Thu, 03/03/2011 - 11:49 | 1014959 Dr. Acula
Dr. Acula's picture

>Corporations are stupid

Nah, the doomed USSA is full of thieving, socialist parasites.

Clearly the smart things for corporations to do is GTFO.

Unless you are a TBTF. Then the goal is to f things up more than anyone else so you can reap the rewards.


Thu, 03/03/2011 - 12:08 | 1015068 DaveyJones
DaveyJones's picture

more fascism than anything else

Thu, 03/03/2011 - 12:13 | 1015092 Bob
Bob's picture

Sure, they were driven to flee the clutches of the American socialist machine--by relocating manufacturing to China. 


Thu, 03/03/2011 - 13:16 | 1015403 prophet_banker
prophet_banker's picture

right, which corporations do you think he speaks of, certainly not these;



Thu, 03/03/2011 - 11:36 | 1014923 terryg999
terryg999's picture

I can't wait for healthcare to be free.


Yeah!  The good life is just around the corner.

Thu, 03/03/2011 - 11:38 | 1014935 RobotTrader
RobotTrader's picture

Right now, stocks are up in anticipation of a dollar crash.

Looking like the possibility of another Zimbabwe move right around the corner unless they can engineer a "Midnight Massacre" in the CRB Index and get the dollar to U-Turn

Thu, 03/03/2011 - 11:44 | 1014956 stormsailor
stormsailor's picture

a eurozone problem could come along, cause a selloff in euro and pump the dx back up.

it seems to happen that way frequently

Thu, 03/03/2011 - 11:51 | 1014987 lieutenantjohnchard
lieutenantjohnchard's picture

another knee slapper from the old catfish mouth robo uber bull bear wannabe. it was but two weeks ago he told us the market was up because of sustainable, organic growth. remember the post where he advised us that gm cars (rather than inventory stuffing of the pipeline) were flying off the lots. or when he slapped the zlc chart up and told us the consumer was back. ditto for fico and john henry charts with business expansion.

now he tells us it's only because of dollar devaluation that stocks are up.

btw: gentleman jim sinclair sends his regards. said he's looking forward to another call from you to advise him on your investment outlook.

Thu, 03/03/2011 - 12:05 | 1015045 alien-IQ
alien-IQ's picture

Anticipation of a dollar crash = Market euphoria.

that basically says it all. what's bad for the people is good for the market. perfect....where's my gun?

Thu, 03/03/2011 - 11:48 | 1014981 Eagle1
Eagle1's picture

I was a Captain in the Air Force in 1971, my total pay was about $12,000.00 per year. On that, we were able to afford to purchase a nice 2000 sq ft +- home in Albuquerque with piti of 173.00 per month, make what was left of a car payment of about 100.00 and get by just fine with my wife NOT working. No inflation since then? Using Shadow Stats calculator for SGS adjusted inflation, I am making some $212,000 today? NOT!! Since that time, I have been on the buy side for 25+ years and am now a securities examiner for a far western state. I have had full access in the past to both the DRI and Wharton models. Garbage in, garbage out. It does not take a genius to see that inflation to the consumer is far greater that what is officially published. Cynically, they need to keep the numbers low to keep the entitlements low.

Disclosure: I have been a subscriber to ShadowStats for some time.

Thu, 03/03/2011 - 12:13 | 1015091 DaveyJones
DaveyJones's picture

nice post. Most boys in their thirties and forties feel like losers compared to their fathers despite having twice the education. We have less equity, more debt, less pay, less future, less stability, less hope, a working spouse. We don't need charts to tell us. We live it every day.   

Thu, 03/03/2011 - 12:16 | 1015120 Bob
Bob's picture

Ah, but our Captain is in his sixties . . .

Everyone but the top 0.5 percent has been fucked senseless.

Thu, 03/03/2011 - 12:42 | 1015243 Eagle1
Eagle1's picture

Exactly. My son and daughter and their children are screwed. We are helping them quite a bit now, figuring that shortly, money will be worthless. My wife and I will probably be screwed as well so we are well advanced in our preps for what is coming. I worked for Merrill for a time and "earned " the moniker of "The Prophet" for my calls on the markets in the early 70's. Needless to say, they finally asked me to leave as they did not want all those negative things being said and acted upon for customers. It is kind of gratifying in a sick way to see what I have been calling for coming to fruition. I was in the General Program at Notre Dame in the 60's where we studied the Great Books. I hope to live long enough to witness the collapse of western civilization, which I think is staring us in the face. Sick, but civilizational collapse is an event few get to witness from an historical perspective.

Thu, 03/03/2011 - 12:59 | 1015315 luk427
luk427's picture

Check out stats on social security dependants (If you are a worker in USA inc, you have 5x more dependants than your parents had and 15X more than your grandparents had.) Obviously alot of people just don"t get . Keep watching Jersey Shore as the Titanic sinks.

Thu, 03/03/2011 - 11:55 | 1015001 Raynja
Raynja's picture

if they go by actual inflation numbers welfare will be paying more than 'middle class' jobs by year end. Add in not having to buy gas for commute and not working will be a no brainer.

Thu, 03/03/2011 - 11:57 | 1015016 apberusdisvet
apberusdisvet's picture

The two posts above by the obvious government paid trolls prove that psyops programs are alive and increasing on any of the truely transparent financial sites.  I already know about the daily talking points memos on social policy issued by the WH to the various MSM "journolistas"; now we have to contend with paid rebuttors of economic reality from the FED and UST?

Thu, 03/03/2011 - 11:59 | 1015028 panika2008
panika2008's picture

OMG man, strapped for cash and can't afford the daily prozac?

Thu, 03/03/2011 - 12:10 | 1015061 Yardfarmer
Yardfarmer's picture


All this was inspired by the principle--which is quite true within itself--that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying.

—Adolf Hitler , Mein Kampf, vol. I, ch. X[1]

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.” Joseph Goebbels


Thu, 03/03/2011 - 12:15 | 1015109 DaveyJones
DaveyJones's picture

how's the winter garden?

Thu, 03/03/2011 - 12:37 | 1015219 Yardfarmer
Yardfarmer's picture

actually going quite well. with the extraordinary warm weather throughout the winter, broad leafs of spinach are now being gratefully consumed. lettuce, kale, bok choy are now on the way. just finished preparing a nice onion bed, whites and reds. of course, garlic is thriving. cheers

Thu, 03/03/2011 - 12:45 | 1015260 DaveyJones
DaveyJones's picture

yeah, started a permanent onion and garlic bed too. Going to start a lot of permanent, perennial stuff this year. Have been getting into dandellion. Amazing nutrition. Good taste cut into the salad. Even got mom eating it.

Thu, 03/03/2011 - 12:55 | 1015305 JR
JR's picture

Greetings, Yardfarmer. How well our masters – past and present -- understand us and manipulate accordingly.

Thu, 03/03/2011 - 14:04 | 1015603 prophet_banker
prophet_banker's picture

[corrupted in the deeper strata of their emotional nature]


i'd love to hear the interview Hitler could give to David Icke on this concept; striking at primal fear in our brain stem to stoke the cognitive dissedence of the masses


you shall know them by the fruits of their labor - Jesus Christ

Thu, 03/03/2011 - 14:53 | 1015848 tired1
tired1's picture

Observe, I do not mean to suggest that the custom of lying has suffered any decay or interruption--no, for the Lie, as a Virtue, A Principle, is eternal; the Lie, as a recreation, a solace, a refuge in time of need, the fourth Grace, the tenth Muse, man's best and surest friend, is immortal, and cannot perish from the earth while this club remains. My complaint simply concerns the decay of the art of lying. No high-minded man, no man of right feeling, can contemplate the lumbering and slovenly lying of the present day without grieving to see a noble art so prostituted. In this veteran presence I naturally enter upon this theme with diffidence; it is like an old maid trying to teach nursery matters to the mothers in Israel. It would not become to me to criticise you, gentlemen--who are nearly all my elders--and my superiors, in this thing--if I should here and there seem to do it, I trust it will in most cases be more in a spirit of admiration than fault-finding; indeed if this finest of the fine arts had everywhere received the attention, the encouragement, and conscientious practice and development which this club has devoted to it, I should not need to utter this lament, or shred a single tear. I do not say this to flatter: I say it in a spirit of just and appreciative recognition. [It had been my intention, at this point, to mention names and to give illustrative specimens, but indications observable about me admonished me to beware of the particulars and confine myself to generalities.]

No fact is more firmly established than that lying is a necessity of our circumstances--the deduction that it is then a Virtue goes without saying. No virtue can reach its highest usefulness without careful and diligent cultivation--therefore, it goes without saying that this one ought to be taught in the public schools--even in the newspapers. What chance has the ignorant uncultivated liar against the educated expert? What chance have I against Mr. Per--against a lawyer? Judicious lying is what the world needs. I sometimes think it were even better and safer not to lie at all than to lie injudiciously. An awkward, unscientific lie is often as ineffectual as the truth.

"On the Decay of the Art of Lying" - Twain

Thu, 03/03/2011 - 12:14 | 1015100 Atomizer
Atomizer's picture

Just asked my purchasing manager to forward a recent vendor email to me.

Dear Customer,

Please be advised that effective March 21, 2011, GLS Thermoplastic Elastomers finds it necessary to implement a price increase of


$0.11/lb for the brands listed below:


Due to continued escalating raw material costs and tight supplies, we have no alternative but to pass these costs along in the form of increased prices of our products.

This is one of many increases already in place.

Thu, 03/03/2011 - 12:20 | 1015140 Cognitive Dissonance
Cognitive Dissonance's picture

What is this increase as a percent of the original price?

1%? 5%?

Thu, 03/03/2011 - 12:27 | 1015178 panika2008
panika2008's picture

Enough for him to go "OMFG OMFG the world is ending we are all doomed OMFG OMFG"

Thu, 03/03/2011 - 13:07 | 1015339 Atomizer
Atomizer's picture

Nope, my Customer will be going OMFG.

Thu, 03/03/2011 - 13:02 | 1015331 Atomizer
Atomizer's picture


Thu, 03/03/2011 - 17:26 | 1016445 ToddGak
ToddGak's picture

Noticed today that my favorite sandwich at a local cafe had gone from $8 to $9, an increase of 12.75%.

When I asked the owner about it (he happened to be working the register), he let me know that a case of Romaine lettuce had gone from $22 to $50 in the last few weeks.  Same thing for a case of onions.

My first thought was, "can't wait to post this on ZeroHedge."

Thu, 03/03/2011 - 12:22 | 1015155 grl
grl's picture

Wait...Am I to understand all current economic problems were not created by the baby boomers? (since the oldest one was only 27, the youngest 9 in 1973). 

Thu, 03/03/2011 - 12:22 | 1015163 Henry Chinaski
Henry Chinaski's picture

Based on my personal anecdotal observations, I put the downhill slide starting when we put a man on the moon, not 1973.  I am open to compromise and the idea that it could have been some time between 1969 and 1973.  Going off the gold standard probably has something to do with it.

Thu, 03/03/2011 - 12:31 | 1015198 luk427
luk427's picture

My grandfather gave me $20.00 worth of silver quarters he had saved during the sixties. Todays they are worth $498.42.

Thu, 03/03/2011 - 14:12 | 1015634 prophet_banker
prophet_banker's picture

did anybody really land on the moon?



Thu, 03/03/2011 - 15:12 | 1015924 That Peak Oil Guy
That Peak Oil Guy's picture

Perhaps the most fundamental input to the economy is energy.

Per-capita energy use peaked in the 70's.  Some people believe that is about the time the decline started. Check this out and see what you think:

Without a doubt, the 70's saw several inter-related events that seem to have set us up for today's problems, which have been with us for a long time and are only now coming to a head:

1. US experiences peak domestic oil production.

2. US Dollar taken off the gold standard.

3. Per-capita energy use peaks.

It is also around this time that "Limits to Growth" was first published.  40 years later we are tracking the World3 model used for the study with dismaying precision.


Thu, 03/03/2011 - 12:33 | 1015210 dick cheneys ghost
dick cheneys ghost's picture

broke town USA..............

Thu, 03/03/2011 - 12:45 | 1015259 topcallingtroll
topcallingtroll's picture

While there are valid arguments why the previous cpi was inaccurately high, it is reasonable to think the current cpi is probably a bit too low.

Regardless, an unskilled or mis-educated American (with a worthless degree ) has no more valid claim on world income than our third world neighbors.

Get used to it and learn to compete. Downscale living aint that bad.

Thu, 03/03/2011 - 12:47 | 1015271 JR
JR's picture

QUOTE (pointing to rising prices as “the effect” of inflation)

Inflation tends to reverse the rules of economic behavior: where once it was prudent to save money, it becomes expedient to spend it; where once it was good business to supply customers with durable goods, it becomes profitable to delay the sale for the rising prices; where once creditors were those who were better off generally, it now becomes good business to borrow money and repay it with currency that is less valuable than when the loan was made.

The solid citizen who is cautious and prudent can do well over the years by hard work, careful investments, and savings, when the money supply is stable.  His prosperity may even be described as virtue rewarded.  Inflation sets the stage for wealth to be gained in a different fashion: by borrowing, by holding on to goods for the inevitable higher prices, and by attending closely to the swift changes in the value of money.  Of course, there are many losers in this gain; those who have saved for old age may find their life savings wiped out, and so on. --  Clarence Carson, Ph.D., Basic Economics p.101

Thu, 03/03/2011 - 12:49 | 1015278 fuu
fuu's picture

Getting harder and harder to wade through the astroturf around here. Who knew John Williams was such a threat.

Thu, 03/03/2011 - 15:50 | 1016096 Citxmech
Citxmech's picture

No shit huh?  There is an ungodly amount of shill crap being posted these days. 

Thu, 03/03/2011 - 12:50 | 1015285 Printfaster
Printfaster's picture

Did a stupid calculation with my son.  When I was in college, I made about 10K year lugging back  in the 60s.  Around 70 I made about 20K year working in industry while in college.  Figuring about a $45/oz gold, that was about 450 ounces.

Today that becomes about $600,000 per year, or $300,000 for lugging freight.

Hmm.  Face it folks, we are broke.  You wonder why we need social security and medicare.  We have no real wealth to retire on.  We need charity to get by.  Our wealth is being destroyed.  Look at the over 40 million on food stamps.  You cannot earn enough in menial work to survive.  Back in the 60s there was enough wealth generated in menial labor for everyone to reject government help and accumulate goods and wealth. 

It does seem that poverty is our future.  Thinking about living as a slave like in China.


Thu, 03/03/2011 - 13:12 | 1015375 JR
JR's picture

Following WWII, peace and prosperity were in the cards.  The growth came, the hard work was delivered, the opportunities expanded: and they were stolen.  The prosperity was systematically lifted from the citizens year by year and transferred to the accounts of the owners of the Federal Reserve System. And their weapon was the lie accompanying the control of the money supply: shadow inflation, manipulated statistics, purchased economists and politicians, and the ever present duplicitous media.

Who can expose these lies?  There have been others but few with the in-the-trenches, day-by-day hard facts exposing the day-by-day statistical lies…John Williams.

Thu, 03/03/2011 - 13:12 | 1015379 earnulf
earnulf's picture

Here's a comparison for you.  In 1964 minimum wage was $1.25/hr and gasoline cost .27 cents per gallon.   47 years later the minimum wage is $7.25/hr and gasoline costs $3.42.   1964 that hour bought almost 5 gallons of gasoline, today just over 2 gallons.   So much for the value of the dollar.

Why 1964?   Last year that silver coins were minted by the US for general circulation.   Those five silver quarters by the way have a silver value today of around $6 each, so 5 would be $30.00 which would buy considerably more than 5 gallons of gas (just over 9 gallons actually).


Thu, 03/03/2011 - 14:03 | 1015593 r101958
r101958's picture

earnulf-- excellent points!

Thu, 03/03/2011 - 14:18 | 1015667 prophet_banker
prophet_banker's picture

if you don't know where you stand, you'll never know where you going. . . .and consider TPTB's goal is poverty for everybody but them, you could call their plan for world socialism a success already

Thu, 03/03/2011 - 16:12 | 1016177 trav7777
trav7777's picture

well, if you look at the executive class and the top 1/2% of earners, you see that everyone who had connections to severe leverage has done better than ever.

Look at a mfer like Don Trump for example...he's levered to the moon repeatedly, gone BK a couple of times and is still crazy rich.  There was no penalty at all these past 4 decades for being as stupid as possible, imprudent, risky, and throwing all caution out the window.  Those who did and borrowed cheap to do it are now set.  They can afford to convert GLD and globetrot.

Thu, 03/03/2011 - 16:22 | 1016224 karthikraoa
karthikraoa's picture

I agree but I peg the year not at 1973 but 1971  which was the break down of the gold standard..

In a fiat monetary scheme, the people who get to use the newly created printing press created money first (banking establishment) get the maximum benifit and the people who use the money last (blue collar workers) get the pain.


Thu, 03/03/2011 - 21:16 | 1017139 RexZeedog
RexZeedog's picture

People forget what's happened in the USA since the 1973 era. You do recall that the single bread-winner household disappeared as a consequence of the 1970's inflation, right?

In other words, since the mid to late 70's, the USA converted over to basically all married couples both working. Aggregate supply in the USA has risen because more people are working. We are working because the goverment is printing too much money and inflating our money to nothing.

But now, the sheet has hit the fan because unless you have a plural marriage, there's no more people to send out to work.

So here's what we have: Dual income households and zero income households. Unless both people are working, you can't afford to suport yourself. If one or both spouses lose their job, the family's finances collapse and they drop down the foodchain to a sustinence existence. Unless one has a juicy government or executive salary.

The only solution to this is to simply STOP buying things.

I go out of my way to avoid buying anything ever - and then only what I need.

I NEVER spend any money on fancy clothes, jewelry or any vanity type items.

Food, utilities and an occassional durable good which I can't effectly get used (or make myself) - these are the only things I spend money on.

Boycott the fiat-money and consumer junk cunsumption cycle by opting out.

Stay out of debt, stockpile food and water, arm youself and stand back while the tax-spend-borrow-consume cycle flames out.

My son is 28 and (Bachelor's degree, state college) and just now got a half decent job after a series of crud work over the years.

But, in my class (I'm taking a few courses nights) the 20 year old girl in front of me makes like $50k+ selling boutique teas for a friend's company.

In this instance we see the end result of two 35 year trends - feminism and consumerism.

Do we really need boutique, expensive tea? No.

If you pay young single women $50k+ to sell it, does she need to think about getting married? No.

If she's not married, is she at home with kids, raising a family on her husband's income? No.

USA bid for income-egalitarianism between the sexes, but it didn't free women from anything. Once, they were chained to the kitchen; now they are chained to the consumerism treadmill.

Your husbands are out of work because capital is being re-allocated to consumerist companies which employ your daughter (and maybe, your son).

Stop buying Starbucks and all other vanity products. Start helping your kids find good marriage partners (my kid is close to tying the knot). Get off the consumerism treadmill and refuse to invest in vanity consumerist companies - especially if they don't pay dividends (ie; AAPL, etc.).

Stop pissing in your own soup and eventually it won't be so profitable for schemers to cheat you with CDO's,  property taxes which are rigged by inflated values, reduced size food packages, taxes & laws not indexed to inflation (since when did $250 of property damage deserve a felony charge? Since the original law is not indexed...).

Do NOT go to the movies. Do NOT buy fancy clothes. Do NOT buy expensive cars.

The sooner you quit the system of greed & vanity, the sooner you will do your part to force the capital allocation back to honest endeavors.

Mon, 03/07/2011 - 20:47 | 1028108 lsjcma
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