Three Charts Of The Week: Money Printing Is Not Bringing Prosperity To Main Street

Tyler Durden's picture

Submitted by David Stockman of Contra Corner blog,

Furious money printing by the world’s major central banks is not generating real growth and prosperity—–but professional economists never seem to get the word. As shown below, the 2014 outlook for global real growth has been marked down sharply since early 2013. Back then, of course, Abenomics and massive QE by the BOJ was supposed to cause the Japanese economy to soar; Draghi’s “anything it takes” bromide was going to jolt Europe out of its slump; and the elixir of QE3 was certain to finally cause the US economy to attain “escape velocity”.

Its not working out that way. In Japan, import inflation is soaring, real wages are still falling and the economy is entering a new slump in Q2 owing to a tax increase that was unavoidably necessary to pay for its runaway fiscal largesse. In Europe, the Bank Of Italy, Draghi’s home base, has now marked its forecast of 2014 real GDP growth to essentially zero. And in the US after the disastrous first quarter, along with what is shaping up to be a tepid second quarter, real growth will not achieve any kind of velocity, “escape” or otherwise; in fact, consensus real GDP has already been marked down to 1.7%—the lowest rate of expansion since the financial crisis. Accordingly, it is only a matter of time before the global forecast for 2014 shown below below is marked down even further.



It is no mystery as to where all the central bank “stimulus” is going. Since early 2013 fully fourth-fifths of the 40% rise in the S&P 500 is due to multiple expansion, not earnings growth from a tepid economy. This is clearly the effect of massive central bank injections of cash into Wall Street and other financial markets, yet it is especially perverse under current circumstances. Given the massive instabilities and headwinds afflicting the global economy—from the house of cards in China, to the failing retirement colony in Japan, the welfare state fiscal crunch in Europe and the faltering growth of breadwinner jobs and real investment in productive assets in the US—-the capitalization rate of future earnings should be down-rated. That is, future corporate earnings are now worth far less than the historical PE norm, not more. Accordingly, the massive expansion of PEs shown below is yet another expression of the vast financial deformations being caused by monetary central planning.


In any event, the “financialization” brought on by the central banks has had a truly perverse effect. Stock markets and corporate profits are at all time highs. Yet the true measure of main street economic health—-the share of adults who are employed—is at a modern low. It is said by traditionalist believers in sound money that we can not print our way to prosperity.



These charts of the week provide some pretty stunning evidence of that truth.

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stinkhammer's picture

Fuck you Mr. Yellen!

max2205's picture

I'd give it 3 to 4 years to top at around 3500 to 45000

Strap in...govts don't like to lose

Publicus's picture

That's because they print to give to the rich.

SoberOne's picture

So we know all this, let's move on. Wink wink nudge nudge. 

0z's picture

Who here considers the last century as a time of progress? We have less of everything, and more fucking people eating and shitting everywhere, encouraging more genocides to eat more petroleum. Progress.. someone said "We are progressively moving in the dirction of destroying ourselves."

bunzbunzbunz's picture

Sorry.........Who has less what? People have less food!!! No that's not right...People have less shelter!!! No not that either....People are living shorter lives!!!! Shit, no....People have less self-gratifying shit the buy for themselves!!!! Hmm...certainly not.


LooseLee's picture

Less Intelligence; by far..

shouldvekilledthem's picture

bunzbunzbunz is a scammer be careful. 

Legitimate sites to buy bitcoin:,,


ebworthen's picture

Hang the rich, let God sort them out.

yogibear's picture

They order billions of hollow-points to ensure they win.

zorba THE GREEK's picture

Why can't I print money, it surely would bring prosperity to me.

Zero Govt's picture

green backs baby

shovelled by the truck load into bankrupt gambling bums (bwankers) pockets is The Feds solitary mandate to do 

i'm shocked at the news it's not getting to Main Street ...look for genuienly-faked crocadile tears from Bernanke when he reads this report

Da Yooper's picture

It was not supposed to


it was only done to save the bankers


at main streets




RaceToTheBottom's picture

But, but the formulas were supposed to work.... Or were they?

nmewn's picture

"It is said by traditionalist believers in sound money that WE can not print our way to prosperity."

It all depends on how you define "we".

WE toldja so a long time ago ;-)

q99x2's picture

That's like saying Jeffery Dahmer loved children and he didn't understand what went wrong.

Arrest them.

espirit's picture

Guillotine them and their evil spawn.

orangegeek's picture

of course not and all the central banks in the world knew it before juicing the markets


so by providing liquidity to financial institutions and expanding holdings, what else have the CBs done?


concentrated wealth, wiped out jobs, drove inflation (you could probably add more) - so the depression continues and nothing else



Fuku Ben's picture

Otra Tequila Por Favor

toady's picture

Get a grip amigo. Trabajo Manyana!

Spungo's picture

It's strange how perception of money printing changes in such a short period of time. Back in 1992, this is what the New York Times had to say about money printing:

"Iraq's economy is the target of an American-led destabilization campaign to pour vast amounts of counterfeit currency into the country, Arab and Western officials here say."

Squid-puppets a-go-go's picture

yer, i remember in 1998 (australia) we had this redhead rogue politician bint called pauline hanson who was widely regarded as totally ignorant. Her economic platform 'solution' was to print more money. Oh how we laaaaaughed. MSM crucified her for rank stupidity. 10 years later every major govt starts doing just that and not a peep from the MSM.

funny how the impression of 'authority' can make a fucking idiotic idea seem reasonable and plausible

bunzbunzbunz's picture

The problem is, it is working. And it will continue to work as long as the leaders don't spout off about what they are doing. Erasing debt by inflation. The more countries that do it, the better it works for everyone (who is in debt). That is where you get certain countries to be upset with you.....The one's with no debt are left paying full price, while we retroactively give ourselves a discount for goods purchased on credit.


Squid-puppets a-go-go's picture

well ok, but if you think that in unleashing the kraken of inflation that it will make all economic segment boats rise equally, steadily and fairly in a manner that doesnt destroy massive amounts of capital through malinvestment, then I've got a bridge to sell ya

disabledvet's picture

"Stick 'em all on the Eastern Front."

Move along.

TheRideNeverEnds's picture

Main street just needs to buy more e-minis then.  


C'mon, hop on this gravy train!  The only risk is that you may not be able to figure out what to do with all the free money you will be getting.  

bunzbunzbunz's picture

You're damn right. Self-fullfilling prophecies for the win.


techstrategy's picture

We all know most of what we are fed is bullshit.  The question is how do we seize control and end the games.  The answer is a mass exodus from "trash" stocks and into cash and gold.  You'll be protected from both tail events -- inflation and deflation and you'll force those who made this manure to eat it instead.  Exit trading scams, raise cash (if physical, you also squeeze the fractional reserve banking model) and buy gold (even GLD creates new baskets and indirect demand for physical).  Stop enabling them.  You do not have to pay their game.  

alexcojones's picture

Most people around me, friends, family and strangers, don't use cash.

They don't carry cash. Never mind what they think of PMs.

But I been workin' on 'em there.

Billy Shears's picture

I try to follow ZH on a regular basis but I don't get to check in everyday but has anyone noticed the facial resembelance between Jamie Dimon and Janet Yellen? Take a close look at their faces and facial features, to me, it's uncanny. I can't believe WB7 hasn't riffed on this, or has he?

espirit's picture

With the exception of Mr. WB7, those fuckers are all interelated. 

GooseShtepping Moron's picture

When central banks are throwing free money around, companies have no need to employ anybody or produce a product in order to churn out a profit; they need only lever up and engage in financial engineering. In fact, it is simply a liability to pour money into wages and capex under ZIRP conditions. Concluson: QE is the very last policy that would help to foster an organic recovery. It simply provides massive blood transfusions for a zombie financial sector that should have been allowed to collapse.

What a mess. Can anybody really be this blind? I can only think of three reasons why the pointless policy of QE was continued with such itensity in spite of the slightness of effects it managed to produce. 1) Sheer stupidity; 2) Outright malice; and 3) The perception of some other end for which the sacrifice of the physical economy to the financial system was thought to be worth it.

To make a long story short, I will simply say that I do not believe 1 or 2 are capable of completely explaining the current circumstances, although they may be present as exacerbating factors. I believe that TPTB really thought that a collapse of the US financial system would imperil the national security of the United States, so they did whatever they had to do to save it, namely engage in acts of massive financial repression. This was never fully explained to the American public, probably because the latter would have preferred to run their own risks without the burden of the financial system. This is unsurprisingly similar to the dynamics that brought about the collapse of the Soviet Union.

The question now becomes, "When does America get its Gorbachev who will finally give up the whole rotten system with a shrug?" That depends to some extent on the candidates we nominate for office. I think many people voted for Obama precisely because they subconsciously sensed that we needed a Gorbachev and thought he would be the one. Obama disappointed these voters by depriving them of their vision. He turned out to be just another man of the old guard, undeniably the worst of the lot. We will need a better vetting process in order to find our real Gorbachev, assuming this is the subconsciously agreed-upon end. However, I think we are still perhaps a decade too early to speak about such things as a genuine political possibility. There are still too many people who belong inwardly to the old system. As with so many things, the decline of the Boomers will ultimately call the tune.

dirtyfiles's picture

I egree with what you say in general but since when american people choose the president?

yogibear's picture

The best way to rob a bank is to own one.

Zero Govt's picture

1st you'll need qualifications ..though the over-qualified goons in banking have proved how worthless Qualies are

2nd you'll need licenses ...but as Wall Street has proved going tits up they're worthless too

3rd you'll need Regulatory approval ...the Regulators have proved beyond all doubt they're worthless more times than you've had fried eggs

so just to recap need to prove yourself totally worthless covered in piles of paperwork and reems of licenses and then you can rob a bank signed off by the entire US establishment

gotta love officialdumb


LostandFound's picture

I like this simple analysis from Stockman, it is clear from an untrained eye.

A 'reported' $100 trillion debt world economy growing at what will be less than 1.7% annual growth, worst performance since the crash of 2008 and absolutely no light at the end of the tunnel for any structural reform in the economy for 2015 onwards.

This leads to one of two things, a great depression or out on control inflation by this continued failed monetary policy.

My bets are depression, get some cash and precious metals together, this is going to be bigger than what anyone of us has experienced in our lifetime.

(Exclaimer, thats providing there isnt a world war!)  

barre-de-rire's picture

simple matter of fact,  usa triggering war against russia, why, it is only because there is no other decoy available.

lack of lucidity from masses, just ask why  usa acting on russia like all the countries from 2001. russia is the only one who not let himself getting down...

what does that imply when you hit wall knowing it gonna hurt...

random999's picture

What a clear proof that there is no point to work for money as long as the banksters control it.

ebworthen's picture

Fuck Wall Street, fuck Washington.

Harpies, Warlocks, liars, parasites, gutless, spineless worms all!

No faith, belief, or allegiance in or to the U.S.A. anymore; and isn't that sad!?!?

AdvancingTime's picture

 We may soon be forced to face our economic Armageddon. The forces that have driven stock markets ever-higher and upward may be beginning to wane. Many markets became distorted years ago when QE and super low interest rates hit the economy in an effort to lessen many of the missteps of recent years.

This has been more helpful in holding up the underlying value of assets and derivatives it now appears than helping to repair a wounded economy. QE has up to now stopped an implosion of derivatives including the resulting contagion and shock that would have spread throughout the financial system. Unfortunately the economy has not fared as well as these asset prices and in many ways these policies have harmed Main Street. More on this subject in the article below,

wonderatitall's picture

so? its making obamas banker buds rich , bitch

nink's picture

the solution is print MOAR 

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