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The Keynesian Economy In One Chart

Tyler Durden's picture




 

Submitted by David Stockman via Contra Corner blog,

Sometimes a chart is worth a thousand words, and this is one. Real Median household income peaked way back in 1999 at $56,000 and by 2012 it was down 9% - an unprecedented decline. It goes without saying that Washington’s Keynesian ministrations on the money printing and national debt front didn’t much help.

 

In fact, the Fed’s balance sheet has expanded from $450 billion  to $4.4 trillion during that period or by nearly 10X. Likewise, the national debt has nearly quadrupled  to $17 trillion during the same period.

Well, all this monetary and fiscal profligacy did apparently help in one precinct: Namely, the Washington beltway where median household income reached its all-time high in 2012 (the last year available) of $65,200 and undoubtedly continues to rise. By contrast, 30 states reached their peak real household incomes more than a decade ago, and some reached that point more than two decades back.

The provinces have thus not kept pace with the imperial capital. Not by a long shot.

As also shown in the table below, 30 states have experienced a 10% or more decline since their peak year, and in 10 states the decline has ranged from 19% to 27%. Those figures do not represent merely a dip or even an extended setback. They amount to a devastating shrinkage in the standard of living being experienced by tens of millions of households.

 

Yet the mainstream narrative blathers on that the business cycle expansion is back on track and that last month’s numbers were a tad better than the month before. The table above says that’s all Keynesian bread and circuses - the fleeting uptick interval between the serial bubbles and busts that our Washington overlords have condemned the people to endure.

 

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Wed, 05/21/2014 - 17:38 | 4782753 john39
john39's picture

apologies for threadjack, but this topic is worthy of discussion... the U.S. has now sent U.S. troops to Chad to rescue kidnapped girls that likely don't even exist.  the war in Africa must about to spread big time:

http://presstv.com/detail/2014/05/21/363612/us-deploys-troops-to-chad-ob...

this is C grade propaganda at best...  kidnapped girls? come on, really...  people believe this shit?

 

Wed, 05/21/2014 - 17:40 | 4782760 McMolotov
McMolotov's picture

It's for the children.™

Wed, 05/21/2014 - 17:52 | 4782809 remain calm
remain calm's picture

If they were white girls does anyone think Barry would be sending the military to go get them?

Wed, 05/21/2014 - 17:58 | 4782828 john39
john39's picture

if the girls are even real, Barry & Co. paid the mercenaries to take them...  but why bother even go through the trouble when you can just make this shit up and have the corporate press pump out the propaganda?

Wed, 05/21/2014 - 18:42 | 4782978 economics9698
economics9698's picture

For those interested, the geek squad, invert a M2 money velocity chart on FRED and put it with this chart. 

If you want this to reverse, stop printing money for the top 0.01%.  It’s really not fucking complex at all.

Wed, 05/21/2014 - 20:08 | 4783212 Dick Buttkiss
Dick Buttkiss's picture

@ John39: "apologies for threadjack, but this topic is worthy of discussion..."

So are the Kardashians on some level.

Your rudeness sank to it.

Don't do it again.


Wed, 05/21/2014 - 17:53 | 4782814 Relentless101
Relentless101's picture

LOL. So many scandals, so little political opportunities. This is certainly bottom feeding.

Wed, 05/21/2014 - 18:54 | 4783015 Harbanger
Harbanger's picture

Today, any kid who makes it out of a cunt alive is special.  Then they need a village of collective assholes to raise em.

Wed, 05/21/2014 - 18:49 | 4783002 lex parsimoniae
lex parsimoniae's picture

This Africa move has been planned for a long time, Boko Haram gave them the excuse to deploy.

Wed, 05/21/2014 - 17:39 | 4782757 foodstampbarry
foodstampbarry's picture

Fuck you Barry

Wed, 05/21/2014 - 19:02 | 4783045 Harbanger
Harbanger's picture

Yes.  And your whore mother, your scumbag father and all the commies who raised you.

Wed, 05/21/2014 - 17:43 | 4782775 McMolotov
McMolotov's picture

I graduated after 9/11, and it's been an epic roller-coaster of shit since then.

Wed, 05/21/2014 - 17:59 | 4782833 negative rates
negative rates's picture

I stormed off with a mean grin on my face and ain't been seen since.

Wed, 05/21/2014 - 17:59 | 4782835 Greenskeeper_Carl
Greenskeeper_Carl's picture

i did too. 2003(high school). who would have thought, back then, that we had peaked and were only in for a long, slow decline for most of our adult lives, possibly puntuacted with a giant shitstorm somewhere in there. As I have been saying for a while, our economy hasnt had any real growth since 2000, its all been smoke and mirrors(fed printing and govt deficit spending there is no recovery and there won't be anytime soon. depression, bitchez

Wed, 05/21/2014 - 17:44 | 4782781 Peter Pan
Peter Pan's picture

Will anything arrest this slide other than a societal explosion or are we destined to see the slide proceed to the point that we are penniless mushrooms being fed shit and living in the dark?

Somehow I fear the latter given the increase in the number of morons and the number of obedient government dependent mouths.

Wed, 05/21/2014 - 18:33 | 4782940 ejmoosa
ejmoosa's picture

Only when the bullets start to fly will the blinders come off the heads of the masses.  Because then they will have to pick a side.

 

Wed, 05/21/2014 - 17:45 | 4782784 barliman
barliman's picture

 

Hmmmmmm .....

Yet the mainstream narrative blathers on that the business cycle expansion is back on track and that last month’s numbers were a tad better than the month before. The table above says that’s all Keynesian bread and circuses - the fleeting uptick interval between the serial bubbles and busts that our Washington overlords have condemned the people to endure.

Absent any consequences to the MSM becoming servile, boot-licking pigs willing to push the propaganda out of Washington, the complete butt-fuckery of the populace will continue until the rapidly approach collapse of the dollar.

THEN things will get REALLY FUN !!!!

Wed, 05/21/2014 - 17:50 | 4782794 enloe creek
enloe creek's picture

what's so sad is not one in five hundred people seem to understand what this means. I see my coworkers buying new cars a couple years before retirement and just figuring the pension is all they will ever need. It is billions of dollars underfunded and with a financial train wreck coming it won't have the assets to pay benefits. oh, BTW I work for fiat so I know at some point another bankruptcy is coming.

Wed, 05/21/2014 - 17:51 | 4782796 Okienomics
Okienomics's picture

Am I the only one who finds it ironic that Stockman is the one sounding the alarm on deficits and debt? I was young, but I remember Reagan lambasting Carter during the debates for $50B deficits. Then the gipper fucking redefined massive deficit spending by catapulting it to the hundreds of billion$, and his VP and successor Bush doubled down. And who was the guy in charge of Reagan's Office of Management and Budgets (OMB)? It was none other than David Stockman. He authored this shit.

Wed, 05/21/2014 - 17:57 | 4782825 Zirpedge
Zirpedge's picture

Reagan, the first neocon, I love when the Fox news pundits whistfully speak of him as the great "conservative". GE spokesman and actor, the perfect candidate. I want a grizzled old pissed off guy in 2016, someone edgy and real, I don't care if he's unemployed and/or has other personality defects. Give me someone real, I'll take a cat lady if she speaks well enough about human liberty and a non-interventionist foreign policy.

Wed, 05/21/2014 - 18:00 | 4782832 seek
seek's picture

Stockman has come out since that time and acknowledged that he was beyond mistaken.

I think that being a deep insider who has come around to realize that the status quo is insanity and then dedicates his life to raising awareness of it adds to his credibility rather than detracts from it. Stockman has been beating this drum for nearly two decades now. Here's him three years ago trashing Reagonomics and Paulson: http://www.businessinsider.com/david-stockman-hank-paulson-reaganomics-t...

 

 

Wed, 05/21/2014 - 18:16 | 4782880 BrosephStiglitz
BrosephStiglitz's picture

Paul Craig Roberts is also pretty outspoken and served as Reagan's assistant treasury secretary.  These guys were probably pretty young, relatively naïve and got gamed.  I agree, I think they have both seen through the bullshit since then and are quite angry about being part of the team that set the ball rolling on an enormous wealth transfer.

Wed, 05/21/2014 - 18:36 | 4782952 ejmoosa
ejmoosa's picture

But you are dismissing the major reason we could have deficits then, and not now.

 

We were still able to produce.  The private sector had not not been throttled by rules, regulations, and the POTUS doing whatever the hell he wanted.

 

In the 80's, we had potential.

We have nothing but more rules and regulations in our future today.  Our potential has been negated.

 

Wed, 05/21/2014 - 21:35 | 4783437 Your Creator
Your Creator's picture

Reagan didn't do it. It was the demorat controlled congress that did it.

Wed, 05/21/2014 - 17:50 | 4782799 Zirpedge
Zirpedge's picture

The post industial society was set about long before Keynesian's and their monetary policies. I think we should appreciate that they are convenient scapegoats for the real powers and just leave it at that, appreciation for a game well played.

Wed, 05/21/2014 - 17:58 | 4782831 pashley1411
pashley1411's picture

A useful chart would be an overlay of peak income next to a chart of net migration. 

It would give a handle on how long after a state's income breaks down, until state population (adjusted for international migration) moves down as well.    Sort of measure of how fast pain moves from toe to brain.

Wed, 05/21/2014 - 18:08 | 4782844 notquantumdum
notquantumdum's picture

Here are some other interesting charts which demonstrate the same issues:

http://research.stlouisfed.org/fred2/series/MEHOINUSA672N

Interesting how the decline seems larger during the "recovery" than the recession.

http://research.stlouisfed.org/fred2/series/EMRATIO

'Smaller fraction of working-aged people working since about 1982 . . . plus, in 1982 quite a few women had not yet entered the workforce for the first time, so it is arguably even worse than then.

http://research.stlouisfed.org/fred2/graph/?g=lb9

'Part-time nation, under Dems.  ['If not also under Repubs].

http://research.stlouisfed.org/fred2/series/UEMPMEAN/

Shouldn't the duration of unemployment be normalizing if we were really in a "recovery"?

And, some have said that the reason a smaller percentage of workers are working is because of demographics and the aging of the workforce, but wouldn't the following chart look different if this were true?

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/05/Youngs%20vs%20Old.jpg

[PS -- Sorry to link to the St. Louis Fed on ZH.  I would have used a different source if I could have found one.]

Wed, 05/21/2014 - 18:19 | 4782852 falak pema
falak pema's picture

its not a keynesian economy, its a neo-feudal oligarchy economy.

It becomes a keynesian economy when we reinstate Glass Steagall, when we raise taxes high on "rentier" non poductive capital , when we balance social and capital fairly, when we have separation of powers truly, when we go Bancor; aka basket of fiat backed by commodity, when we balance budgets by scaling back non productive govt spends, when we roll back the war economy and... maybe, maybe then : greed will no longer be good as sole motivation in society. 

Since when did Keynes say you could print to infinity without consequence? Then it was to restore private bankruptcy by productive government spend. Where is productive government spend today? Where is true Capex? 

This runaway economy is based on the premice that "BIg Stick" gives USA exorbitant unending privilege; something invented AFTER Aldous Huxley day, long after Keynes died. 

Wed, 05/21/2014 - 18:07 | 4782853 Herdee
Herdee's picture

When Stockman left the Reagan Administration you'll see that it was because of Keynesian economic theory getting to Reagan.Basically Reagan was told that it didn't matter how much money that he spent because they could print any amount of money that they wanted.

Wed, 05/21/2014 - 18:27 | 4782917 Flakmeister
Flakmeister's picture

Fuck man...

How the  Keynesian disaster result in a a rising median wage from the 40's until recently??? 

More like the wheels starting wobbling when supply-siders took up Uncle Miltie mantra "greed is good"....

Wed, 05/21/2014 - 18:32 | 4782936 yogibear
yogibear's picture

More of the same until the Federal Reserve banksters extract every bit of wealth from the 90%.

One huge wealth transfer process.

Wed, 05/21/2014 - 18:41 | 4782970 elephant
elephant's picture

As for the kidnapped girls, if they really exist, wouldn't it be a whole lot easier and cheaper to just buy them back?  Then arm the locals and let them protect themselves.

Wed, 05/21/2014 - 18:41 | 4782972 Mad Muppet
Mad Muppet's picture

Fuck Reagun...and Lincoln too. Fuck FDR and Kennedy. None of these "heros" did anything to promote domestic liberty. All of our Presidents have been hucksters peddling some party shit for the Sheople, some were just more appealing than others.

Wed, 05/21/2014 - 18:55 | 4783022 bh2
bh2's picture

Perhaps more meaningful is Harry Browne's chart of median family income in constant dollars:

http://harrybrowne.org/articles/EconomicGrowth.htm

Wed, 05/21/2014 - 18:57 | 4783029 new game
new game's picture

Fp : "its a neo-feudal oligarchy economy"

or fascism...

decending to

outright anarchy. since being a slave is worse, i'll opt for anarchy.

new dark ages, post plentifull oil/nat gas(affordable, mean cost, at decending wage interception point),

and/or outright wars for energy, sides are sparing, first sanctions, then outright brutallity..

Wed, 05/21/2014 - 20:12 | 4783223 novictim
novictim's picture

Just a reminder:

The USA has not had a Keynesian style economic policy since 1970.

And that is why wealth inequality is soaring to unheard of heights and its why Capitalism suddenly (as in for the past 3 decades) seems to not be working.

(Yes, I have been told that "Keynesian" here on ZH is supposed to mean an economy where you are supposed to get something for nothing...but that is not Keynesian economics and the I object to the dumbing down of this topic!)

Wed, 05/21/2014 - 22:18 | 4783552 wagthetails
wagthetails's picture

"But just think how bad it would have been had we not acted" to there assholes median income would have been down 50%, so technically they beat the index by 41 points!! Pop the champagne!

Thu, 05/22/2014 - 00:36 | 4783847 franciscopendergrass
franciscopendergrass's picture

It is real disturbing to see that DC, Maryland, and Virginia saw lil or no change in income.  They are the hub of this Keynesian nightmare.  The home of the political elite, lobbyists and people that work in the bureacracy.  

Thu, 05/22/2014 - 09:28 | 4784424 dxj
dxj's picture

A statistical fabrication centered around the definition of "household". If you look at individual "median income" it has not dropped nearly at all, but for some reason, group those very same people into "housholds" and the median goes down. It makes no sense and I find the "household" grouping dubious. But, it makes for good political fodder to support a political message ... which is why nobody quotes "median individual income" instead.

http://bber.unm.edu/econ/us-pci.htm

 

Thu, 05/22/2014 - 13:36 | 4785400 Dark Space
Dark Space's picture

I wonder if the military advisers puddle jumped up from Swaziland where the US has boots on the ground spending US tax dollars to circumcise all the male citizens of that country.

You're probably reading this saying "what is this guy talking about", but then you'll go Google "US to circumcise all men in swaziland" and you'll still be confused but for different reasons.

Do NOT follow this link or you will be banned from the site!