Great Depression

If the American Dream depends on skyrocketing debt built on a weakening foundation of stagnant productivity and income, then it is indeed over. Voters sense this fragile, debt-dependent economy is one repricing away from implosion, and they're uneasy for good reason. Voters are rightly angry that the official statistics mask or manipulate this reality, for if we can't face reality then we have zero hope of solving any problems.

In a recent survey not a single major central bank could provide an example of an accurate “a priori” recession forecast. The silence from the Federal Reserve, European Central Bank, BOE, BOJ and the Bank of Canada is deafening.

"Where is the bubble today? Perhaps central banks are the bubble."

Over the last few months, in a prime example of currency failure and euro-defenders' narratives, Finland has been sliding deeper into depression. Almost 7 years into the the current global expansion, Finland's GDP is 6pc below its previous peak. As The Telegraph reports, this is a deeper and more protracted slump than the post-Soviet crash of the early 1990s, or the Great Depression of the 1930s. And so, having tried it all, Finnish authorities are preparing to unleash "helicopter money" to save their nation by giving every citizen a tax-free payout of around $900 each month!

As we approach the Fed meeting expect markets to get more volatile. While the odds favor a move, it isn’t a sure thing until it is actually done. We found out last week what happens when forward guidance turns out to be forward misdirection. All those traders who thought they had a sure thing, who assumed that Draghi wouldn’t dare disappoint the market, got whipped. Whipped good.

According to the BLS' Household Survey, while 375,000 foreign-born workers found jobs in November, a whopping 326,000 native-born Americans lost theirs.

The mainstream media is increasingly suggesting that we have once again entered into a 'Goldilocks Economy.' The problem is that in the rush to come up with a 'bullish thesis' as to why stocks should continue to elevate in the future, they have forgotten the last time the U.S. entered into such a state of 'economic bliss.' You might remember this: "The Fed's official forecast, an average of forecasts by Fed governors and the Fed's district banks, essentially portrays a 'Goldilocks' economy that is neither too hot, with inflation, nor too cold, with rising unemployment." - WSJ Feb 15, 2007. Of course, it was just 10-months later that the U.S. entered into a recession followed by the worst financial crisis since the 'Great Depression.'

So how do you grow household wealth by $18 trillion in the face of these dismal real world trends? In a word, with a printing press. But what happened today is that Draghi showed he is out of tricks and Yellen confessed she is out of excuses. Yes, this sucker is going down. And this time all the misguided economics professors turned central bankers in the world will be powerless to reverse the plunge.

Most experts are of the view that the massive monetary pumping by the US central bank during the 2008 financial crisis saved the US and the world from another Great Depression. On this the Federal Reserve Chairman at the time Ben Bernanke is considered the man that saved the world. Bernanke in turn attributes his actions to the writings of Professor Milton Friedman who blamed the Federal Reserve for causing the Great Depression of 1930s by allowing the money supply to plunge by over 30 percent. Careful analysis will however show that it is not a collapse in the money stock that sets in motion an economic slump as such, but rather the prior monetary pumping that undermines the pool of real funding that leads to an economic depression.

Again, the globalists at the BIS and the IMF require a diminished U.S. dollar, greatly reduced U.S. living standards and a much smaller U.S. geopolitical footprint before they can establish and finalize a single publicly accepted global elitist oligarchy. If you cannot understand why it seems that the Federal Reserve and U.S. government appear hell-bent on self-destruction, then perhaps you should consider the facts and motivations at hand. Then, you’ll realize it is THEIR JOB to destroy America, not save America. When you are finally willing to accept this reality, every disastrous development since the inception of the Fed a century ago, as well as all that is about to happen in the next few years, makes perfect sense. As the U.S. destabilizes, we are not escaping the clutches of the Federal Reserve system, only trading out one totalitarian management model for another.

We are talking of course, about the infamous RRR-hike of 1936-1937, which took place smack in the middle of the Great Recession.

In a perfectly timed update to his infamous April 2009 "worse then The Great Depression" chart, Kevin O'Rourke has unveiled his latest chart-du-poor. With US manufacturing collapsing, bond yields tumbling, and The Fed about to hike rates to prove they can, this so-called 'recovery' has fallen below that following The Great Depression. As O'Rourke sums up, "pretty dismal stuff. Let’s hope that we can at least avoid the famous 1937-38 double dip."

The problem of suggesting that we have once again evolved into a "Goldilocks economy" is that such an environment of slower growth is not conducive to supporting corporate profit growth at a level to justify high valuations. Such a backdrop becomes particularly problematic when the Federal Reserve begins to raise interest rates which removes one of the fundamental underpinnings of an overvalued market which was low interest rates. Ultimately, higher interest rates, particulalry in an economy with a deteriorating economic backdrop, becomes the pin that "pops the bubble."  It is true that the bears didn't eat Goldilocks at the end of the story...but then again, there never was a sequel either.

It is Pedro's "courage to write" what Bernanke conveniently forgot to add in his memoir, that makes this review so much more memorable than the generic sycophantic tripe written by his "access journalism" peers.

Here is a sight that will never be seen in the US: the CEO of the country's largest investment bank arrested and perp walked after accusation we was part of the nation's largest corruption scandal.