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Chart Of The Day: The "New Normal" Trade Off - Debt vs Jobs

Tyler Durden's picture


In the last few weeks much has been said about how the US economy, after nearly collapsing in the Lehman aftermath has staged a gradual, if painful and very slow improvement in the last 3 years. Sure enough, After jobs peaked at an all time high of 138 million in January 2008, they then tumbled to a depression low of 129.2 million in February 2010 and beginning in September 2010 have posted 24 consecutive months of growth, rising to 133.5 million last month: a 4.25 million trough to, so far, peak.  Not bad.

What, however, has received very little discussion by either presidential candidate, primarily because it is largely a byproduct of both Republican and Democratic policy and action, is what can be seen on the chart below courtesy of Diapason Securities, or the cost of said recovery - namely the New Normal angle of debt increase, which from merely steep, has mutated into beyond acute.

What is worse, is that instead of a mere one-time bump in the rate of public debt accumulation, as has happened in days past, the New post-Lehman Normal has shifted the entire curve steeper by a factor of two!

What one can also see is that the public cost of "normalization", aka the Trade Off of the new normal is an additional $4.25 trilion in debt over and above where the previous historic trendline would put total US debt, just under $12 trillion. Instead total debt is now $16.2 trillion. Oddly enough, this translates to precisely $1,000,000 per job gained or saved from the first (and certainly not last) post-crisis trough: yet another fact that will not be mentioned in either the mainstream press or any presidential debate, as sadly trading off record amounts of public debt for new jobs is the only game left in town for either party. 

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Mon, 10/08/2012 - 08:14 | 2867158 GetZeeGold
GetZeeGold's picture



Jobs.......like in work?


Screw that....cat promised me 4 years ago I'd never have to do it again...and I'm holding him to it.



Mon, 10/08/2012 - 08:33 | 2867201 margaretfitzgerald
margaretfitzgerald's picture

With the annual US deficit now greater then the entire after-tax earnings of the S&P500 - when he said 'yes we can' he was referring to a request from Goldman about getting a raise

Mon, 10/08/2012 - 09:05 | 2867283 Sofa King Confused
Sofa King Confused's picture

Give me that $1,000,000 for my job and cross me off the list forever


Mon, 10/08/2012 - 09:20 | 2867321 Dr. Engali
Dr. Engali's picture

You'll be getting that million soon enough....it won't buy you a loaf of bread but you'll still be a millionaire.

Mon, 10/08/2012 - 09:27 | 2867359 lincolnsteffens
lincolnsteffens's picture

I can be bought cheap. Just send me half a mil. in gold coin and I promise never to look for work again. It is my patriotic duty to help out with the deficit!

Mon, 10/08/2012 - 08:14 | 2867164 JPM Hater001
JPM Hater001's picture

I'll get the paint.  We're gonna need to whitewash this one.

Mon, 10/08/2012 - 08:23 | 2867171 GetZeeGold
GetZeeGold's picture



I think it's called painting the _______.


It will come to me......my trading skills have sorta atrophied a tad bit the last 4 years hanging out on the beach.


Mon, 10/08/2012 - 08:35 | 2867206 Upswaller
Upswaller's picture

Anyone have a read on what's going on here?  Metals mashed, oil sliding, dollar up in spite of QEternity.  What the heck????  Rotten in Denmark and getting downright stinky.

Mon, 10/08/2012 - 08:41 | 2867215 LawsofPhysics
LawsofPhysics's picture

other fiats and sovereign bonds trying to pull ahead in the race to the bottom?  Seems like the forex guys are doing well front running all this.

That's all I got.

Mon, 10/08/2012 - 09:15 | 2867310 JPM Hater001
JPM Hater001's picture

----> Asian Markets Down 1%

---> European Markets Down 1%

--> Metals Down 1 %

->US Dollar Safe Haven still intact

Well, at least they think it is.


Anyone want to bet on todays green red?

Mon, 10/08/2012 - 09:26 | 2867356 Oh regional Indian
Oh regional Indian's picture

Slightly OT and very Tin Foil...


Being a deep admirer of Ayrton Senna, I always felt his death was suspicious. Many did. I discovered today that his deat was probably a hit.

In 1994. Deep conspiracyu, many actors.

But the finger really points to three actors...

Nazi Max Mosely

The Agnelli Family (FIAT and Ferrari)

The famous German who followed Senna and Dominated F1 (Shoe Maker).

So, FIAT really came into it's own via the mob in 1994.

How fitting eh? Cue the veritable EXPLOSION of FIAT since then.

1994 was the next big turning point after 1971.


Interesting dot-connect, ne? 



Mon, 10/08/2012 - 10:02 | 2867443 magpie
magpie's picture

Now THAT is what you call a conspiracy theory

Mon, 10/08/2012 - 10:23 | 2867512 Oh regional Indian
Oh regional Indian's picture

:-) Grazzi Magpie.


Mon, 10/08/2012 - 08:49 | 2867216 GetZeeGold
GetZeeGold's picture



Metals mashed, oil sliding, dollar up in spite of QEternity


There you go Amigo, you just answered your own question....now stop bothering us.


Mon, 10/08/2012 - 08:43 | 2867220 spanish inquisition
spanish inquisition's picture

Called the battle for the Whitehouse. Even though Red and Blue are part of the same company, they both aspire to and will fight to be in one of the best middle management jobs in the world.

Mon, 10/08/2012 - 08:15 | 2867169 topspinslicer
topspinslicer's picture

Bang for the Buck Central Planning Amerikan Style

Mon, 10/08/2012 - 08:16 | 2867170 Dr. Engali
Dr. Engali's picture

The problem is that we aren't borrowing more. I don't understand why people don't get that.

Paul Skrugman

Mon, 10/08/2012 - 08:59 | 2867264 1100-TACTICAL-12
1100-TACTICAL-12's picture

Translation, We be fucked :0

Mon, 10/08/2012 - 11:57 | 2867454 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

I think it's safe to say that the concept of diminishing marginal productivity of debt would not be found anywhere in Krugman's syllabus.

Mon, 10/08/2012 - 08:18 | 2867172 eddybaby
eddybaby's picture

What on earth does it take for the bond markets to even stir? 

Mon, 10/08/2012 - 08:25 | 2867183 GetZeeGold
GetZeeGold's picture



Can't you see those guys are shell shocked.....leave those poor cats alone.


Mon, 10/08/2012 - 08:26 | 2867186 rbg81
rbg81's picture

Apparently the Federal Reserve is buying 77% of new UST bond issues.  As long as they keep that up, doesn't leave much room for bond vigilantees.  And I'm sure they'll try to keep it up indefinitely, especially if we get to negative interest rates.  With NIRP, the Government literally makes net $$ off its debt.

Mon, 10/08/2012 - 08:29 | 2867191 GMadScientist
GMadScientist's picture

This ain't Geneva.

Mon, 10/08/2012 - 08:33 | 2867203 francis_sawyer
francis_sawyer's picture

The Federal Reserve will not monetize the debt...



Mon, 10/08/2012 - 08:45 | 2867223 Genève Barbegazi
Genève Barbegazi's picture

Indeed it ain't...nor would Russia or China stand for that....

Mon, 10/08/2012 - 09:59 | 2867438 redd_green
redd_green's picture

You're joking, right?

Mon, 10/08/2012 - 08:33 | 2867204 Tyler Durden
Tyler Durden's picture

More accurate to say is that the Fed is buying ~100% of all long-dated (10 year +) bond issuance, and has been since Twist 1. Since debt 3 years and less is equivalent to currency (ZIRP thru 2015), the Fed is effectively monetizing all the inflation-risk debt, which is also shooting it in the foot as the Fed wants both inflation, yet is muting the primary inflation signal, i.e. the long bond rate as deficit funding is really all that matters for Bernanke.

Mon, 10/08/2012 - 08:39 | 2867211 LawsofPhysics
LawsofPhysics's picture

How soon will negative rates start taking over and will the rest of the world stand idly by when this happens?  I see the move into negative yields only hastening the destruction of the dollar and the Fed.  Bring it.

Mon, 10/08/2012 - 08:53 | 2867240 francis_sawyer
francis_sawyer's picture

How soon?... Well my guess is not until after all the necessary bunker complexes are built & fully [over]stocked... My guess is that they'd put most 'preppers' to shame... The rest have DWTS to entertain themselves with until it's finally time to pull the plug...

Mon, 10/08/2012 - 14:32 | 2868747 redd_green
redd_green's picture

Depends on your point of view.  For consumers, with current 8 or 10 percent annual inflation, and 0.2% interest on savings, we have been in negative territory for years.

Mon, 10/08/2012 - 09:33 | 2867375 Quaderratic Probing
Quaderratic Probing's picture

"yet is muting the primary inflation signal" He did say Deflation was hes real problem so higher priced 30 year mortgages and the lower rates is all he cares about. The side effect of commodities bubble and higher GAS prices the rich can take advantage of and the Government gets the extra taxs inbedded in the Gasoline. Thats the two groups who could tell him to stop it. Joe retail pulled his money out of the market and feels safe in the bent bond market as the face value keeps rising as Ben prints. One day the only way to stop Deflation is to scare everyone out of bonds with interest rate increases. That day comes when iQE no longer prevents deflation.

Mon, 10/08/2012 - 09:59 | 2867423 LawsofPhysics
LawsofPhysics's picture

"interest rate increases."


Bah ha ha ha ha ha ha!!!

Go ahead, raise interests rates on all that government debt, I double fucking dog dare you!!!!!!

"That day comes when the dollar dies." - fixed it for you.

Mon, 10/08/2012 - 23:35 | 2869827 Quaderratic Probing
Quaderratic Probing's picture

Dollar will go up in value if rates rise. I double fucking dog dare you!!!!!! Tell that to Volker he quadrupled rates and the great market run began 1982 2000 Most Govenment debt is just promises .... you dont think your getting a government pension or medicare do you. When everyone beleaves it cant happen it does.. The 1 % know the date

Mon, 10/08/2012 - 08:29 | 2867190 resurger
resurger's picture

Tyler, after reading this am now long

Ticker: USD (United States Debt)

i have bought 0.0010 shares along with gold&silver

PS the OCC Derivatives OS has plunged from 250T to 220T,does that mean US God Banks will get fucked or do you expect that line to rise with US Debt?

with 85% in interest OS, it will be downward from there, or they have to leverage 1000X to make some profts on couple of basis points? buts whos the next sucker?

i think they will cannibalize them selves ver very soon.

Mon, 10/08/2012 - 08:29 | 2867194 wonderatitall
wonderatitall's picture

i asked that empty chair and he said between lies and golf i dont have to work no more...bitch's

Mon, 10/08/2012 - 08:37 | 2867207 LawsofPhysics
LawsofPhysics's picture

infinite growth with finite resources?  FAIL.

Create all the capital you want out of thin air.  It only continues to enrich those closest to the free money spicket.

I'll take monetary collapse and global chaos as humanity has to re-learn what moral hazard and real value are, again.

So apparently yeast are smarter after all.

Mon, 10/08/2012 - 08:40 | 2867212 Peter Pan
Peter Pan's picture

The economy certainly did not get many jobs for the debt that was created, but it sure did get more than enough new crooks in banking to make up the difference.

Mon, 10/08/2012 - 08:51 | 2867236 hapless
hapless's picture

Considering that ~60% of federal spending is on mandatory programs, it appears that the economy got more than enough transferees.

Mon, 10/08/2012 - 09:01 | 2867271 LawsofPhysics
LawsofPhysics's picture

Yes, it is manditory to support the banking class and the industrial military complex, regardless of them producing anything of any real value.

Same as it ever was.

Mon, 10/08/2012 - 11:28 | 2867819 LawsofPhysics
LawsofPhysics's picture

Don't see any military spending on there.  -  FAIL.


Wake the fuck up, pentagon spending is over 800 billion, already "approved" for 2013 (at least what we know of).

Fuck you, you disengenuous fuck.

Mon, 10/08/2012 - 11:51 | 2868149 hapless
hapless's picture

Source?  By the way, you give "stupid cunt" a bad name.

Mon, 10/08/2012 - 08:42 | 2867218 econprof70
econprof70's picture

Here's a perfect chart for this conversation - tracks the 10 year cumulative growth in total debt versus the 10Y year change in non-farm payrolls:


Lots of New Debt, Not Many New Jobs

Mon, 10/08/2012 - 08:45 | 2867224 Inthemix96
Inthemix96's picture

When bernank finally understands what moral hazard means, god help him.

When he finally has to understand work, and work ethic.  And how to make money doing constructive, useful or needy things he is up shit creek without a paddle.  You see, he will have to EARN a wage.  Not print money, not worth the paper its not printed on.

I can honestly say, the likes of berank would rather kill themselves than do a proper days work, you see, the hard work would kill them anyhow.

Little dwarf shithawk, lets see this game end, and lets do a reality teevee program watching bernank and his ilk trying to do real work and providing a wage for their familys.  Priceless

Mon, 10/08/2012 - 09:02 | 2867273 Big Slick
Big Slick's picture

LIKE the reality show idea!   But all the good reality show names are taken... Big Brother, Shark Tank, Survivor, (Barak) Dancing with the Stars.

My Vote: So You Think You Can Destroy The Greatest Economic System In Earth's History

(Sad thing is that season 2 cannot happen for a minimum of 200 hundred years)

Mon, 10/08/2012 - 09:07 | 2867285 Inthemix96
Inthemix96's picture

Lets play a game.

Bernank, plays "Change that bulb".

Geithner plays "Change that plug".

And O'bomya plays "Cut that lawn".

And they prize for the winner is......... "Your fucking life".

Mon, 10/08/2012 - 09:26 | 2867351 edifice
edifice's picture

I'm thinking more like "Climbing For Dollars" or "The Running Man." Just watched it again the other night. My, is it coming true, and how...

Mon, 10/08/2012 - 09:04 | 2867281 resurger
resurger's picture

" lets do a reality teevee program watching bernank and his ilk trying to do real work and providing a wage for their familys"

He cant do that, he has a quivering disability man!

Mon, 10/08/2012 - 23:42 | 2869847 Quaderratic Probing
Quaderratic Probing's picture

You don't get into the 1 % with morals.. so moral hazard has no meaning

Mon, 10/08/2012 - 08:45 | 2867225 Rainman
Rainman's picture

Now try explaining the details of this debt flim-flam to J6P. All he knows is Romney's gonna put down Big Bird.

Onward to Greece....and beyond !

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