Three Trillion Dollars Later: Charting A Recovery Only Failed Fiscal And Monetary Policy Can Buy

Tyler Durden's picture

Another indicator of what the US "recovery" looks like come courtesy of the Chicago Fed National Activity Index. As can be seen in the chart below, one can only wonder just what recovery the US would have if it did not spend $3 trillion to kickstart the virtuous (or better make that virtual) economic cycle when it did. And by the looks of facts (and not Tim Geithner spin), the downward inflection point has now arrived. Next up: another $1-1.5 trillion in monetary stimulus, although admittedly in a form that may be slightly different from the LSAPs we have all grown used to love and expect each and every day at 11:00 am EST.

courtesy of John Poehling

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Bindar Dundat's picture

This time the drop in activity will be measured in weeks not quarters!

Quixotic_Not's picture

Recovery Summer Part Deux!

Have fun ZH, been nice knowin' ya  ;-)

Quixotic_Not's picture

At the core of what you call civilization...Is a scam that everyone depends upon.


It's always been a scam...that you all only become aware of at the end...


Like all scams...It looks good at the start.


All the illegal activity and hijinx is just an effect...It's not the cause of the collapse.


The massive expansion of the money supply the credit system allows...makes those with an income think they have skills or are important.


We need jobs? Who is going to create all these Jobs? An employer obtains the money to hire employees from where?


Where does money come from?

Are you hiring?


How is the FEDERAL Government going to obtain the money to hire people?


Print money?


Do any of you have the foggiest idea how civilization is constructed?

The problem now is that the US Consumer reached maximum potential in 2008.


The lower rates go the greater the volume required...because there is a cost.


The required yield is...not too much...not too little...but always greater than previously.


But something new showed up...Because US consumers have basically reached the point where they have requested their maximum amount of debt to be manufactured by commercial banks...they can't sustain the volumes required to allow the continuing drop of rates.


The FED was finally forced to use unconventional measures...


So the FED for the first time in decades was forced to build a floor under bonds by buying them...As opposed to the manipulation of Congress into increasing the supply to absorb demand like all the previous times...


Due to the elimination of the consumer from the equation, the FED had to become the consumer, The flow has basically stopped and reversed...yields should have stopped dropping and rocketed up.


The US domestic economy along with the 1944 global trade system should have imploded...It was..still is.


*Game over*

Let the liquidation games begin...

Better get some hyperinflation soon or the daydream is going to turn into a nightmare.

fate resistors = terrorists

What a bunch of maroons...

anti Oligarchy's picture

Ok, so can someone expain why the only "-" bar that is red is the one on the end?


Shouldn't all of them be red except for the few positives?


Coloring it red does not make it an inflection point. 

sschu's picture

Not quibbling, but isn't $3T a bit light?


GetZeeGold's picture


They cracked the spigot when they needed to open the spillway.


uno's picture

The data in the Index is probably manipulated (tortured) up, and this is the best they can do.  At least Steve LIESman will have a positive spin to it.

IdioTsincracY's picture

Over the last 30 years both the rate and scope of economic crises have increased .... the response has always been the same: welfare for the rich and socialism-for-the-top10%  ......and this is what you get!

.... there needs to be a rebalancing of the distribution of wealth ....

stop the policies that promote wealth extraction from the real economy ....

instead promote a strong middle class and invest into worthy ideas and endeavours ...

then you'll get growth ....


onarga74's picture

Sorry, our priority is to buy things from China, have them serviced in Pakistan, and tossed into a landfill in the good ol USA.  We don't need no steenkin middle class...

naughtius maximus's picture

Actually one of our largest exports to china is trash.

IdioTsincracY's picture

As stupid as that sounds, it is actually improving our trade balance with China .... unfuckingbelievable!?!?!


luciusfargo's picture

Is debt considered an export now?

Caviar Emptor's picture

Don't forget: the aspirational US consumer is encouraged to buy West (autos, suits, shoes, bags, ties, wine) while the average US joe and jane are encouraged to buy East. It's a very very sophisticated economic model

IdioTsincracY's picture

Not at all sophisticated .... it just reflects declining middle class wealth in the west, and rising in the east.

Caviar Emptor's picture

Pardon me, but I've been told by Nobel Laureate economists that it's very sophisticated: US citizens wave credit cards at foreign nations that make stuff. They produce, we consume! And everybody's happy! And the Fed has a magic machine in the basement that makes it all possible. 

It's gotten to the point that work has gotten in the way of more consumption! The solution? Mass unemployment with mass Federal relief and banks letting people live rent-free! It's a win-win-win

ISEEIT's picture

Go away obama. You do have a good and no doubt unintended good point though,...................there needs to be a rebalancing of the distribution of wealth (power as well).....................Away from the Mafia thug central government and toward the former wards of the state/useful idiots that have so foolishly fallen for your ponzi.

The game is up and when the dust settles you goofs will not have your dreamed for marxist revolution.

Freedom will take the prize despite your crafty efforts.


Invest what you asshat? Our money is already gone, you spent it foolishly long ago.

IdioTsincracY's picture


Funny is fine ... but try to keep it meaningful as well!

I don't have the time to explain it all to you ...

read this comment from somebody else and that should do:

ISEEIT's picture

Carl? WTF? I read it already. My comment would be Duh! Look up captain obvious and things that make you go Hmmm.

I'm not meaning to go after you specifically and/or individually.

Perhaps I'm a bit trigger happy when I see the term INVEST. I'm quite sincere however in disparaging the idea. It is Leftist claptrap, nothing more than an excuse to pay off the status qou.

The public sector is BROKE. The can has been kicked far enough and Keynesian voodoo needs to become a history lesson. So don't take it personally or anything; just accept that it is grow up time now. obama and his asshat wanna be mafia represent nothing but what is most wrong with this already failed but to big to know it yet social experiment.

Bring on the pain. Better I suffer than my grandchildren. Just get it the fuck over with and stop the game.

IdioTsincracY's picture

I did not mean government-guided and funded investments ....

What I mean is that right now the system is structured so that investors have no incentives to put their money into the real economy, when there is a no-risk casino all set up for them ....

What made our Country great was a system based on:

Inventors -> patents -> investors -> funding -> workers -> wages + returns for investors and inventors.

Right now we have investment for investment sake .... what do algos know about great ideas and worthy endeavours?

....  The oligarchs have us fighting among ourselves as they enjoy pure, unadulterated wealth extraction.

ISEEIT's picture

:) I thought you might be a troll. I'm good with you now. Sorry for the outburst.

apberusdisvet's picture

Pakistan now under the Chinese umbrella; the Bin Laden psyop was supposed to give us leverage.  Even Hillary and Kerry, the 2 biggest NWO proponents couldn't save the day.  There must be more war to distract the sheeple from their empty wallets.  The banksters are slowly running out of options, even as the police state closes around us.  The Euro ressolution will be telling.

6 String's picture

I just wonder how the fiscal year budgets are going to look like at the bankrupt states next month as the stimulus packages from the economic recovery end and they all scramble to well...scramble to just stay afloat (should be good for a big GDP push, rigth? Well, no).


Out9922's picture


WhOracle's picture

four more years, four more years, four more years !

gwar5's picture

$3 Trillion? Isn't that $10,000 for every man woman and child in America? They couldn't stimulate the economy with that? 

Obviously they never gave any of it to any of the people that were evacuated from Katrina. Those people really knew how to stimulate an economy with government money (bars, liquor stores, strips joints).

Of course, the banks and crony corps got most of the $3T they're not giving it up.

Caviar Emptor's picture

If you add it all up, each US family could have received $75,000. That woulda stimulated some trickle-up fireworks

CH1's picture

It's actualy $25,000. per hoursehold or so, but the point is the same.

The money went to friends of the state (like banks), of course, not to 'normal' people.

gwar5's picture

Aww come on, give some up to the kids in those households, too. They grow up fast these days. Spread that wealth all around to every man, woman, and child which is 308 million strong. We'll get this economy rockin'.

duo's picture

$3T?  That's what it took to kill Bin Laden.  Imagine if $6T was spent entirely in the US

cosmictrainwreck's picture

How dare you accuse Timmah G-man of putting a so-called "spin" on things!

gianakt's picture

Timmah needs to go to jail for a long time, for all the crimes to humanity in the USA!!!

chemystical's picture

And who exactly is going to do that?  A federal judge?  Excuse me while I laugh for a few years.

The game is rigged.

Timmy & Co will swing only when the public **has had enough**.  Alas Big Brother has far too much revolution insurance: 1) WELL over half of the public depend on the government for either a paycheck or public assistance.  Teats A and B.  2) WELL over half of the sheople know more about Snooky and Dancing with the Stars than they do Timmy Geithner.  Game over.

One other possibility is a military coup, but rumor has it that the last time this was discussed we ended up with fewer admirals and generals than we began the day with.  See: Admiral Jeremy Boorda for example.  That was a strange 365 days in D.C.  Admirals and others commiting "Arkancide"and former CIA Directors who decided to go kayaking alone at midnight.

Game well over. 


 **EDIT "...when the public realizes that it's had enough".

Beatscape's picture

With the double dip now becoming more and more obvious, the only question becomes what form will "QE3" take? Benny and the Jets will have to create some form of smoke screen so that the compliant MSM and corrupt capital hill will have something with which to provide cover for them. Maybe the Fed can get kick-backs from the IMF? Maybe the Fed will the ramp back up purchases of MBSs? Imagine the frustration of Benny and the Jets after buying all those MBSs and stoking the fires of inflation in food and energy in the process, but getting no bump up in RE prices.

DavidC's picture

I'm being a bit slow here. LSAPs?


Muir's picture

google LSAP + Federal Reserve

GetZeeGold's picture


Think do understand robbery don't you.


Caviar Emptor's picture

ECRI weekly leading down x5 in a row. 

Slumping our way to prosperity. Gonna be a long hot summer.

Let's make Greece the 51st state and take them off the Eurozone's hands. 

RobotTrader's picture

The Fed will simply print even faster if the economy slows down too much.

With the eye-popping rally the last few years in the SPY, it is the only thing the Fed can do which it knows will work.

Print more, boost stocks even higher, and interest rates crash back to 45-year lows.

A speculator's paradise.

I predict that margin interest rates will collapse in 2011 in order to entice even more people into the NYSE casinos.

Caviar Emptor's picture

Too bad that solution would also give a much bigger boost to cost of living, cost of working and doing business. 

DNB-sore's picture

Caviar Emptor, The Netherlands are the 51st state or like some like to state maybe Israel

Let's turn the chart upside down, then you call it the inactivity chart or the real thing that maybe should have been done.

Caviar Emptor's picture

Actually, the 51st State that makes the most sense for everybody would be  Saudi Arabia. For one thing our economic models are converging: half of oil profits go toward packaged social programs to prevent insurgency. They import everything including workers. And they own our banks. 

Urban Redneck's picture

A billion Muslims and a couple hundred nukes might disagree with Saudi Arabia joining the US.  On the bright side NY & LA will no longer exist...