Guest Post: The U.S. Economy Is Now Dangerously Detached From Reality

Tyler Durden's picture

Submitted by Brandon Smith from Alt-Market

The U.S. Economy Is Now Dangerously Detached From Reality

Recently I was asked to give a presentation on the current state of the global economy to a local group of concerned citizens here in Northwest Montana.  I was happy to oblige but when composing my bullet points I realized that, in truth, there were no legitimate economic numbers to examine anymore.  You see, financial analysts have traditionally used multiple indicators of employment, profit, savings, credit, supply, and demand in their efforts to divine the often obscured facts of our financial system.  The problem is, nearly every index we used in the past, every measure of capital flow and industry, is absolutely useless today. 

We now live in an entirely fabricated fiscal environment.  Every aspect of it is filtered, muddled, molded, and manipulated before our eyes ever get to study the stats.  The metaphor may be overused, but our economic system has become an absolute “matrix”.  All that we see and hear has been homogenized and all truth has been sterilized away.  There is nothing to investigate anymore.  It is like awaking in the middle of a vast and hallucinatory live action theater production, complete with performers, props, and sound effects, all designed to confuse us and do us harm.  In the end, trying to make sense of the illusion is a waste of time.  All we can do is look for the exits…

There is some tangible reality out there, but it is difficult to find, and there are few if any mainstream numbers to verify.  One has to remember always that the fundamental world of money and trade revolves around real people and real circumstances.  No matter how corrupt our economic system is, as long as there are human beings, there will always be supply and demand that cannot be hidden.  We have to look past the “official numbers” and look at the roots of trade.  Where has demand fallen?  Where has supply diminished?  Where are the tangible goods and needs and how have they changed?

Let’s first start with the mainstream version of our system, looking at each aspect of the economy that no longer represents the truth of our situation…

Employment, Savings, And Debt

Much of this information is old news to those of us in the Liberty Movement, who tracked the progress of the global collapse long before the general public even knew of its existence.  However, it is useful to take a step back and look at the basic picture every once in a while. 

According to numbers issued by the Department of Labor, weekly unemployment reports have dropped to a five year low, and the overall employment rate is holding at 7.9%.  This would seem to be a vast improvement over the dreadful bloodletting in the system only a few years ago.  Has the private Federal Reserve and the Obama Administration really done it?  Have they turned back the tide on the greatest fiscal crisis the U.S. has seen since the Depression?

No.  They haven’t. 

They have only changed how the data is disseminated to the public. In order to understand how the employment statistics con is being engineered, it is important to understand the difference between “Adjusted” and “Unadjusted” numbers.

Labor Department data is “seasonally adjusted”, using a series of statistical assumptions including something called “Trend Cycle Analysis”.  Trend Cycle Analysis is, basically, a sham, but a sham put together in a very complex and confusing manner.  If you ask a mainstream economist what it is, you’ll likely get a three hour long dissertation filled with financial babble and very little concrete explanation.  So let me break it down as simply as I can…

Imagine that you are going to estimate how much profit you plan to make in a particular month, but you don’t just consider your current pay rate and pop it into a calculator; you also throw in the possibility of a few pay raises, an inheritance from a grandma who might kick the bucket, and, your exaggerated expectations of the entire year’s profit on top of that.  You may also take into account future bad weather, a mugging, a nuclear war….whatever.  All hypothetical situations not based in reality.  Basically, you decide that a particular trend in your income is inevitable, then, mold your statistical analysis around that assumption.      

When your real profit numbers come in (the unadjusted numbers) and they do not meet your expectations, you simply change them according to what you believe SHOULD have happened.  If you insist that your profits are going to go up for the year, and they go down for a couple months instead, you change the variables you use to calculate the statistical average so that the results match your expectations, assuming that it will all balance out in the end.

Now, this sounds utterly insane for the common person out there trying to make a living.  If you ran your household this way, without accepting the cold hard unadjusted numbers in front of you, you’d find yourself broke and on the street in no time.  Unfortunately this is EXACTLY how our government handles most financial data; by coming to a final conclusion before hand, and then forcing the numbers to fit that conclusion.

This is why in February of 2013, “adjusted” first week unemployment rate was reported at 366,000 – a 5000 person drop from the week before.  A seeming improvement in the trend.  But, unadjusted numbers came in at 386,176 – a 16,000 person spike from the week before.  When one examines real unemployment numbers, he finds that the divergence between the adjusted and unadjusted statistics is growing larger with each passing quarter.  That is to say, the contradiction is becoming so blatant between the hard numbers and the Labor Department’s fantasy numbers that one must question whether or not the government is lying to us outright about the state of the economy (hint – they are lying). 

These same methods are used by the government to calculate progress in the housing market, disposable income, etc. 

The claim of “recovery” in the jobs market simply doesn’t jive with other indicators, like 2012 Christmas retail, which had the worst showing since the crash in 2008 (and these are still mainstream numbers!):

Average household savings continue to scrape the bottom of the barrel, indicating that the public is not spending or withholding cash.  They are simply broke:

And the overall GDP of the U.S. contracted in the fourth quarter of 2012 for the first time in three years (again, according to official numbers, meaning the reality is much worse):

The downturn in consumption and industry also seems to be supported by the Baltic Dry Index, a measure of global shipping and rates.  The BDI has fallen to near historic lows THREE TIMES in the past year, which to my knowledge, has never happened before.  In the past, the BDI has been a strong prophetic indicator of future market volatility.  Usually, around a year after a severe decline in the index, a dangerous economic event takes place.  The BDI made its first sharp drop to all time lows at the end of January 2012, exactly a year ago. 

U.S. household debt was recently reported to have fallen to a 29 year low, but the ratio used by the Federal Reserve applies a statistic for disposable income that is derived from the Trend Cycle boondoggle method.  While markets cheer, the truth is, the only reason household debt obligations have fallen at all is because bank lending and credit issuance remains frozen.  Consumer debt falls when there is no money to borrow.  In fact, the Federal Reserve actually pays large banks NOT to lend to the public; an activity which was exposed by Dennis Kucinich in 2009 on the House Committee on Oversight and Government Reform.  An activity that continued through 2012:

Keep in mind, one of the primary arguments the Federal Reserve used when promoting the bailout concept was that it would “free up credit markets” so that lending could pick up again and fuel a recovery, and yet, at the same time, they were paying banks to NOT lend.

Meanwhile, the supposed job recovery has produced an astonishing increase in welfare recipients in the U.S., including a record 46 million Americans on foodstamps (approximately 15% of our population):

If we are to apply any “trend” to our calculations on overall economic health, then we should include the extreme level of government handouts, and poverty levels which are now at all time highs.  The facts are undeniable; the number of people who have much less than they did in 2008 has grown.  How then could the U.S. be considered “in recovery”?

National Debt And The Fiat Lie

With the Dow Index hovering near highs of 14,000 our system truly looks to be on a rocket ship to pre-2008 money market bliss.  In a mere five years we have returned to equity spikes that stagger the mind and the wallet.  At least, that’s how it all appears…

What needs to be taken into account, though, is the amount of fiat money being created by the Federal Reserve, and how much of that printed pixie dust currency is fueling our magical flight to Neverland.  Since 2008, our official national debt has increased from $10 trillion to $16.4 trillion, and some estimate $17 trillion to $18 trillion by the end of 2013 (unless, of course, a collapse occurs).  Which means our national debt, which took decades to reach the $10 trillion mark, will have nearly doubled in only six years! 

So, what has a doubling of our national debt in such a short span of time bought us?  Well, credit markets remain frozen, property markets remain stagnant, poverty is at historic levels, welfare recipients are at epic highs, and consumer activity and GDP is back at 2008 lows.  Where did all that printed money go?  Where was it spent?  To answer that question, we only need to find what area of the economy has seen the most positive (or fantastical) activity.  What sector is seeing a massive boost while the rest tumbles?

I suggest that a large portion of QE1 through QE3 has gone to prop up the stock market, and nothing else.  I suggest that American taxpayers are fronting the bill for the equities bonanza we see today.  I suggest that the Dow is being used as a Red Herring to distract the populous for as long as possible while real assets are being snapped up and hoarded by international banks and foreign entities.  I suggest that we are being leached dry and that the parasites are almost ready to move on…

When will it all end?  Perhaps sooner than many people think.  The decision by D.C. to delay talks on the so-called “Fiscal Cliff” until March may not be coincidence.  Extensive cuts in federal spending are absolutely necessary and cannot be dismissed forever, but, because the last vestiges of our system that still operate do so through government money, such cuts will cause immediate damage to the economy, including possible default and dollar devaluation.  Refusal to make cuts will result in credit downgrades, currency inflation, and a loss of the greenback’s world reserve status.  There is no “right” way out of this quandary. 

When this collapse is initiated, it would certainly behoove all parties involved, including central banks, international banks, and criminal politicians, to have a scapegoat handy for the citizenry to direct their rage at.

Event Horizon Economics

An “Event Horizon” in physics is a moment or singularity in spacetime at which a gravitational pull becomes so great that there is no way to escape it.  It is a point of no return.  I believe America’s economy has reached its own Event Horizon.  Our system is now entirely fiat driven, with very little or no true economy left.  Without constant injections from the Fed, and perpetually low interest rates, the country would implode tomorrow.  This is not recovery.  Actually, I’m not sure what to call it. 

Today, independent economic analysts cannot look to the numbers to determine future trends.  Most are fake, and the rest are ugly, and I’m not sure much else can be said in their regard.  Instead, we must now look to events, rather than statistics, because our country has been maneuvered into a position of utmost frailty.  Like an avalanche shelf waiting for that perfectly timed disturbance to trigger its roaring collapse.  All that is needed is a macro-crisis, and it is no great feat for such a thing to be created in our tension filled global environment.

War in Syria and Iran leading to a tripling of energy prices.  Sanctions and strife with North Korea leading to Chinese economic retribution.  Conflict between China and Japan, again leading to Chinese economic warfare and perhaps real warfare.  An opportune “cyber attack” which could be used as an excuse for a market crash and even an internet shutdown.  A “political impasse” between Reps and Dems which leads to a default of U.S. credit.  Any one of these catastrophes could easily occur (with a little nudge from some well placed people) and feed a wider global tragedy.  The important thing to remember is that while this event will be blamed for the breakdown, it was international banks, the Federal Reserve, and elements of our own government that made the domino effect possible.  They put the pieces in place.  The act that knocks them over is secondary.

I have spent the past seven years writing about “potential” threats to our overall system, but these dangers were always just beyond our sight.  Just around the corner.  Today, it is as if the journey is over, and all those threats have materialized right before my eyes as real, and imminent.  I am watching that which I warned of come to fruition, and this is certainly not a pleasant thing.  What is valuable, though, is what we have all done in the Liberty Movement with the time that we had.  From when I began writing for the movement until now, I have seen an overwhelming increase in public awareness.  It may not be obvious to newer activists, but it is there all the same.  While we still face disparaging odds, and millions upon millions of oblivious bystanders, there is, amidst these darker moments, a steadfast community of free men and women forming.  I have full faith in the future.  Much more so than I ever did before.  Our economy may be detached from reality, but our endeavors as individuals will not be.  Our resolve will be the great game changer.  Not fiscal calamity.

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francis_sawyer's picture

Joobux know no event horizon... They're like 'nano-bots'... They print themselves...


JBTFD & prosper [until your catfood costs more than your stawk portfolio redemption]...

Silver Bug's picture

Fiat money for everyone! No one ever has to work again! /end sarcasm

mikla's picture

Definition of terms problem.  The economy is *entirely* based on fraud, and fraud (everywhere and at all levels) is reality.

But, if the suggestion is that, "the economy is detached from any-honest-measure-of-productivity", then yes, we agree.

knukles's picture

There is no reality or truth anymore.
So enjoy it.
Peak living conditions have always transpired just before end of empire.

I Love Big Brother.

Good Bye

espirit's picture

Sort of like pulling a fire alarm during a big box black friday sale.  Lemmings head to the exits? Nah.

They chose the blue pill.

OutLookingIn's picture


Swallowed whole!

Truth is dead in - markets, main stream media, politics, law, advertising, statistics, education, military, etc.

Except entertainment! Let the show continue! Bread for everyone! Now playing in the center ring...

Big Slick's picture

Why hasn't Tyler bolded anything in this article.  Am I supposed to actually read this thing???

macholatte's picture





From Wikipedia:

In philosophy, reality is the state of things as they actually exist, rather than as they may appear or might be imagined. In a wider definition, reality includes everything that is and has been, whether or not it is observable or comprehensible. A still more broad definition includes everything that has existed, exists, or will exist.


re·al·i·ty  noun, 1.  the state or quality of being real.   2. resemblance to what is real.  3. a real thing or fact.  4. real things, facts, or events taken as a whole; state of affairs: the reality of the business world; vacationing to escape reality.  5. Philosophy .  a. something that exists independently of ideas concerning it.  b. something that exists independently of all other things and from which all other things derive.

From .




A delusionary mental status caused by a pronounced deficiency of alcohol in the bloodstream

I need a beer because all this reality is too much to handle.




(1)working 50 hours a week until the day you die, in order to maintain a "decent" life,
(2)having no excitement in your life unless you choose to slack off and not work,
(3)leaving this planet the same way you entered, naked and cold.
(4)busting your ass to afford your bills while some cocksucker with rich parents gets everything handed to him for free.


 Life is one big road with lots of signs. So when you riding through the ruts, don't complicate your mind. Flee from hate, mischief and jealousy. Don't bury your thoughts, put your vision to reality. Wake Up and Live!
Bob Marley

 As far as the laws of mathematics refer to reality, they are not certain, and as far as they are certain, they do not refer to reality.
Albert Einstein

 Illusions commend themselves to us because they save us pain and allow us to enjoy pleasure instead. We must therefore accept it without complaint when they sometimes collide with a bit of reality against which they are dashed to pieces.
Sigmund Freud 

 Face reality as it is, not as it was or as you wish it to be.
Jack Welch

 You're not supposed to be so blind with patriotism that you can't face reality. Wrong is wrong no matter who does it or who says it.
Malcom X



Hulk's picture

Just for clarity's sake, I arrived on the planet's surface warm and wet.However, this was done without my permission...

markmotive's picture

Well, some say California is actually starting to recover...

Real or bullshit?

otto skorzeny's picture

they are going to be hiring some replacement cops

jeff montanye's picture

my bet for the "event horizon" initiating scapegoat: a cyber attack on the u.s., blamed on iran, etc., that paralyzes bank and brokerage accounts long enough for contents to just "vaporize" corzine style.

it's a twofer: more for wall street and more for the war machine.  who cannot like that?

when obama gets us back 70% of what we lost he will be our hero.

S5936's picture

And they WILL shut down the Internet , as it's the ONLY semblance of truth & reality remaining.

CH1's picture

And they WILL shut down the Internet

Count on it - they're setting it up now.

S5936's picture

And they WILL shut down the Internet , as it's the ONLY semblance of truth & reality remaining.

willwork4food's picture

Without your permission? Can you prove that?

CPL's picture

There's no uHaul behind the hearse.

S5936's picture

"When the goin gets weird , the weird turn pro " HST

booboo's picture

Well I personally think if a fire did break out they would stand under the klaxon and spinnng red light waiting for for the a greeter to push a table full of discounted tennis shoes in front of them so the ensueing fisticuffs could begin. They would think the smoke and fire to be part of the elaborate production.

sgt_doom's picture

"We now live in an entirely fabricated fiscal environment."

I mean, duuuuuh, but thanks, anyway, Sherlock!

No offense, but too many of us have been describing this as the fantasy finance-based economy (or non-economy) for quite some time, dood!

Geez, it really doesn't take a rocket scientist, but simply one who comprehends arithmetic, to understand that over the past thirty-some years the economy has been dismantled, there no longer exists a consumer-based economy, no matter what faux crat douchetards like the lightweight Robert Reich prattles on about, with only 15% responsible for the vast amount of that 70% consumption figure bandied about (thanks to super-concentration of wealth in Amerika) --- it truly beggars belief when the obvious is repeated as if somehow profound!

There is no economy in America; only the fantasy finance-based system, with 7.8 percent of the employed population (banksters, derivatives dealers, currency traders/speculators) involved with over 80% of the GDP, we got troubles, dood . . . .

Kelley's picture

There's no need to be snarky.

The authir did a fine job of describing what is behind today's numbers and explained it well.

Keep in mind also that not everyone was aware of what you've believed to be true for 30 years.

The author has taken today's stats and exposed them for what they are. For that we can be grateful.

Kickaha's picture

The author's heart is in the right place, but I cannot take anybody seriously who thinks the unemployment rate is a measure of the percentage of unemployed workers.

RichardP's picture

There is no economy in America ...

Every person in America needs something to eat, something to wear, a place to live, apps for their iPhone, most need gas to power their vehicles.  Somebody provides all these things.  There is an economy in America.  Find it.  Service it.  And prosper.  Just don't confuse that economy with the one the finance types talk about.

goldfish1's picture

Great comments above:


This from Jim Willie Hatrick Letter:

"A deadly decision was made in late 1999 that assured the demise of the nation, questioned by few, never having sat well with those in possession of an active economic brain stem. The discharge of the bulk of US factories to Asia, mostly to China, sent the legitimate income producing capability away, only to be replaced to a deeper dependence upon asset inflation. The resulting deficits for the USGovt cannot even remotely be repaid, nor even financed. Creditors have fled. The forced endless 0% rate is kept in place to enable debt service itself. Enter systemic failure from an political and fiscal standpoint."

yatikto's picture

Perception is reality, so goes the mantra of the day.  Any bad news is seen as hurting "confidence", so its always massaged and spun.  I know everyone here knows this. But the state of socioculturecopolitics of today is an outcome of postmodern thought.

blindman's picture

problem is the money is funny.
"Chris Hedges: “We now live in a nation where doctors destroy health, lawyers
destroy justice, universities destroy knowledge, governments destroy freedom, the press
destroys information, religion destroys morals, and our banks destroy the economy.”
The Great Imposition
The Forced Involuntary Servitude of America
by Preston James

mightycluck's picture

No kidding. I was following someone at The Atlantic attacking this guy for comparing the US to Argentina and Venezuela. The Atlantic's claims was NO! The US is in a liquidity trap! Argentina and Venezuela are not!" This guy responded "But they are all in a CHAMPAGNE SOCIALISM TRAP. Like France too!

Eireann go Brach's picture

How fucked are we? Just take a look inside the White House!

prains's picture

what the USA really needs to turn its ship around is the release of a "mega fat" barbie.

Just think how many kids will snap it up off the shelves and boost GDP and unemployment numbers

Bad Attitude's picture

That has sort-of already been done. A few weeks ago, Dear Leader said he wanted to ban evil-looking guns, and like magic, he created record sales of firearms, magazines, and ammunition - most of which is all made in the US. Gun store shelves have been stripped. Ammunition is in very short supply and back orderd. I don't know if this frantic buying by consumers is enough to save the economy from collapse, but it is real consumer demand and it is helping US employment.

kill switch's picture

We are all detached from reality,,



This is reality,,

Kickaha's picture

To cite as reality even a stirring portion of a Hollywood depiction of the Alamo legend is genuinely hilarious.

SeattleBruce's picture

Good clip.  Talk about the good ol' days!

bobthehorse's picture

The market has to be manipulated.

If not, we fall into a huge deflationary depression.

We've decided to settle for an endless Japanese-style recession instead.

What's a banker to do?

RafterManFMJ's picture

I bought a new Jeep, and then drank the night away at a dive bar! I'm more dangerously detached from reality! Seven years, zero percent baby!

Mark123's picture

So, are you saying I should buy Amazon stock now on margin? It looks like a great long term investment that my grandchildren will thank me for.


ps - I LOVE the picture of Obama - classic!

francis_sawyer's picture

Meh ~ I was kinda waiting for the foto of him skeet SHOOTING joobux out of an elephant gun...

dick cheneys ghost's picture

Pat Buchanan was channeling his inner francis_sawyer in his latest article.....


here is an excerpt:


"Yet, according to Jim Lobe of Inter Press Service, who reviewed the transcript of Hagel’s eight hours of testimony before the Senate Armed Services Committee, there were more mentions of Israel, 178, than of Iraq, Afghanistan, Russia, Palestine and Palestinians, North Korea, Syria, Pakistan, Egypt, China, NATO, Libya, Bahrain, Somalia, al-Qaida, Mali, Jordan, Turkey, Japan and South Korea combined.''


''Query: What is behind this Republican preoccupation, bordering on obsession, with Israel and its nemesis Iran, to the near exclusion of other threats and dangers faced by our country all over a world that is a good bit larger than one small corner of the Middle East? Has Sheldon Adelson replaced Henry Kissinger as the eminence grise of the GOP?''


i'm sure that the overly sensitive 'lasvegasdave' can explain this to us


(gee, I wonder why Pat Buchanan is no longer on the MSM?)

Spigot's picture

" the near exclusion of other threats and dangers faced by our country..."

Yeah, one of the things that keeps me up at night is the possiblity of Pakistan declaring war on the US. MmmmHmmm...then there's Egypt,and Mali...boy am I going to be up all night worrying! WoWah!

francis_sawyer's picture

LasVegasDave is probably too busy cleaning Sheldon Adelson's pool to reply...

Spigot's picture

Who gives a shit. The elites use this nation's resources, its military, for their own purposes and wrap the flag around it. There is no threat. Its part of the agiprop used to coral the sheeple into supporting their use of the US military for private multinational corporations' ends. Same as it ever was. Corporations go stake a claim on resources in a particular naiton, then muscle the national government to do its bidding, essentially raping its resources and people, then when they get push back by the locals they get the US government to invade and depose the resisting regime with a regime more friendly to the corporation's interests. ME = oil, Afghanistan = minerals and lauching pads for attacks against Iran = oil, etc even pineapples were cause for use of the US navy to intimidate the king of Hawaii...same as it ever was.

willwork4food's picture

You're absolutely right. But we don't need to stand up and sing the star spangeled banner with a tear in our eye anymore. It always jerks my meat when idiots actually talk about the evil, terrorist towel heads.

otto skorzeny's picture

Pat is a true conservative-unfortunately he is a little too truthy.

kito's picture

poor francis----hes got JOO fever.........

dick cheneys ghost's picture

the joos must have something to hide. They are way to sensitive. Perhaps we could have the MSM investigate the 'Joosish Lobby'...........Oh, I forgot, the MSM is run by the joos

kito's picture

dicks ghost:  another ignorant backswamp bigot who still believes jews have horns...did your grandpa sit you on his lap and tell you bedtime horror stories about JOOS with horns who would steal little children in the night? perhaps you should do some research on JOOS and irishman burke runs nbc, ted turner (not a JOO) runs cnn, rupert murdoch (not a JOO) runs fox...i guess they arent all JOOS, eh? you rip on JESUS for being a JOO??............. btw, the bushs and clintons, who have held a monopoly on the dictatorship of the u.s., arent JOOS...neither is dick cheney, donald rumsfeld...11 of the 14 fed chairmen werent JOOS......btw DICK....what is a JOO???  

dick cheneys ghost's picture

btw, Im fucking tired of bill kristol, a neo-con jew, going on c-span and telling people that The US is not an empire

francis_sawyer's picture



Your... "What is a JOO" question has been answered many times here... I'm not going to go over it for the 10th time... It would serve zero purpose because your mind is hardwired...

You're SERIOUSLY going to question whether or not MSM is controlled by joos?... Are you out of your fucking mind?...

Bush & Clinton [Rumsfeld & Cheney, by circumstance] [Prescott started it with his pal Harriman]... Live to serve the JOOS... As do you... DANGER WILL ROBINSON!


You're skating on thin ice pal... The NANOSECOND that the United States loses it's hedgemony status, your BFF's... da jooze... are gonna wanna be hustling their little asses into caves to think about things for awhile... This isn't a 'one man' francis_sawyer act here... You'll see it happen all over...

klockwerks's picture

This is all pretty stupid wasting time talking about "joos" You had better pay attention to the article you hopefully read and make sure you and yours are very well prepared when it explodes. All this tiresome chatter about when it started, who started it and who was at fault means zip, nada, nothing compared to what is soon to befall all of us. You had better have planned accordingly or your going to be one of the many at the FEMA camps  looking for food. The past doesn't matter because you can't change it and you can't change who running this show. What you can change is what your doing now.