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What Secular Stagnation? Oh, This Secular Stagnation
In a recent blog post, Citadel's latest trader and part-time Brookings blogger, Ben Bernanke, asks "does the U.S. economy face secular stagnation? I am skeptical, and the sources of my skepticism go beyond the fact that the U.S. economy looks to be well on the way to full employment today."We, on the other hand are skeptical of Bernanke's skepticism, for one simple reason: reality.
Below is a chart progression of the past 6 years of the FOMC's own "potential real GDP growth" estimates. It shows, without a trace of doubt, that even with the Fed's perpetual overoptimism, the US is now clearly in a phase of secular stagnation, one from which there is no escape until the issue which Bernanke dares not mention, i.e., a record debt overhang, is somehow resolved.
Here is BofA's commentary:
There has been a slow capitulation that the concept of normality has changed after this recession. Forecasts for potential growth have been slashed along with expectations for the equilibrium Fed funds rate. The consensus, based on the Blue Chip survey, has taken down its forecast for potential GDP growth from 2.8% pre-recession to 2.6% in 2010 and 2.3% today. The FOMC has similarly revision down its long-run GDP forecast.
And visually:
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Gee.. Ya THINK!?
And we'll be lucky if it will only be stagnation that they're worried about.
The only thing that's grown is the debt.
https://www.youtube.com/watch?v=j4wcC2szApI
Full employment? Pull the other one, it's got bells on it.
Assume people pay for this priceless advice authored by BB? (laugh track deafening)
Harry Truman had to forcibly remove Gen'l DOuglas MacArthur from his position of AMerican leadership in 1949.
There are coupla thousand "American leaders" that need to be crowbarred out of NY and DC today if the country is to have a future.
Mac was just trying to protect his various business interests in SE Asia. Same as it ever was..........
Stagnation: isn't that where the economy stops growing, rather than just grows a wee bit less than it did before? /s
All you have to do is understate inflation by 2% and there you go- flat magically becomes 2% growth.
DC needs a giant enema....that will resolve the stagnation
It is too late. Obamacare was pulling the last few cents out of the public at the point of a gun, merely to give money to insurance companies to buy stocks.
...merely to give the free shit crowd more of our money.
You know... 'social justice', just like the elitists, justice for few at the expense of the middle class
Exactly. Take the equivalent of a car payment out of every houshold's budget and you expect the consumer to spend more?
Car Payment?
My insurance premium, if I bought insurance, is $1450 a month. That is a fucking mortgage payment on a $250k house.
What's the fuss, just print more value. Why would they ever stop printing?
Ben Bernanke: Always wrong, never in doubt.
Near full employment? He's either a fool or a liar-maybe both!
"Full employment" = Nobody left that qualifies for unemployment benefits.
Benefits exhausted long ago
And just think what that graph would look like if the ShadowStats rate of inflation, rather than the "official" rate, was used. Secular contraction, not stagnation.
Bernanke? Oh, Smegular Stanknation is then more like it.
Have you ever been in a meeting where you didn't have a clue? You have two choices. Make a statement that proves you don't know WTF your talking about, or keep quiet and look knowledgable nodding at the appropriate times. Bernake should have followed the second path. Whenever this guy speaks it's obvious he is lost, and that scares the hell out of me.
He's not lost, so much as a terrible liar. That lip quiver of his indicates that he still does posses at least the tiniest bit of a conscience.
Do you really think his office would be held by an ignoramus? Bernanke is a brilliant actor, or con man, or stage magician, but rest assured, he is no dummy.
3rd Option: You know exactly what is going on but it is your job to lie about it.
He's no idiot. What is he supposed to do? Admit what he knows - we're in an economic collapse and there is no way to stop it? The only thing to do is 'manage' the collapse and so far they are doing as well as can be expected.
Full employment is a false idol -- always has been, always will be.
I think we're going to have to accept that Ben Bernanke is just another person in a long line of bankers who managed to make their money and get out of the system before he could be held accountable for the damage he's done and his lack of knowledge to do his job properly. It does anger me that there are millions unemployed who have real, tangible talents and skills to offer the economy, yet more and more, I see people in jobs who clearly are unqualified to do the job they have (just go into any chained electrical store and talk to the staff to give you an idea of how knowledgable they are of the products they are selling).
My point is this, we could waste, anger, vitriol and bile on "The Bernankster" or accept he got away with it and concentrate on the people who can be held accountable (i.e Yellan, JP Morgan, etc). It pains me to write this as I can't stand The Bernankster, but there's little we can do about him now.
Also, can someone help me out? What does this phrase "Secular stagnation" mean? I know the phrase "secular" in context of separation of church and state, but what does it mean in an economic context? Many thanks in advance for any help you can give me.
Warm regards from the UK. :O)
http://en.m.wikipedia.org/wiki/Economic_stagnation
"Economic stagnation or economic immobilism, often called simply stagnation or immobilism, is a prolonged period of slow economic growth (traditionally measured in terms of the GDP growth), usually accompanied by high unemployment. Under some definitions, "slow" means significantly slower than potential growth as estimated by macroeconomists. Under other definitions, growth less than 2–3% per year is a sign of stagnation.[citation needed]"
Scooby Doo didn't really help you too much there. Secular in terms of markets means long-term.
Obama LaForge,
"Prolonged period of slow economic growth". In English doesn't "prolonged" kinda, sorta, mean long-term? It does if you look it up in a dictionary:
Prolonged- adjective - continuing for a long time or longer than usual; lengthy
You're really going to be angry once you realize there's not a single legal authority with jurisdiction over the actions taken by central banksters, so they can't even be charged with a crime, let alone prosecuted.
Once you get on the board of the BIS, you have FULL GLOBAL IMMUNITY from any and all ramifications of your actions.
So yeah, "go after Yellen" and see just how accountable you can hold her.
You silly statists, thinking that laws apply to everyone. Instead they're just another tool of control over us.
There is one and nobody escapes, NOBODY.
"Secular" markets are the markets themselves, without the influence of special events, government interventions, and acts of the fed gods.
'yet more and more, I see people in jobs who clearly are unqualified to do the job they have'...
Quite right Bongo, you mean like Cameron, right?
As much as I don't like Cameron, he's not the worst of the bunch. At least he has some good points (vastly outweighed by his bad ones!).
But I see your point. :O)
I fully agree with you Bongo about him being not the worst of the bunch, although the choices for the coming election are like asking someone, "Do you want a nail driven through your left testicle or your right testicle?"
The only one I have a modicum of respect for is Nigel Farage (UKIP). Because he's willing to say what the others won't even if it makes him unpopular.
In a recent TV debate, he stated (quite rightly) that the audience had a misunderstanding of how the housing market in the UK worked. The correct answer should have been a "supply and demand" mechanism, not, as the audience thought, a centrally planned mechanism.
Farage was pilloried by the other leaders as (and I'm paraphrasing here) "insulting the audience", but what was he supposed to do? Answer the question from a wrong premise?
Although he is, in my opinion, saying (on the whole) the correct stuff, he might need to learn the old adage, "No-one ever won an election by telling the truth...."
Secular in its original (Latin) sense has to do with time, being "in time" or lasting a long time.
http://www.thefreedictionary.com/secular
https://en.wiktionary.org/wiki/saeculum
As opposed to the Church which is not subject to time.
Sicut erat in principio, et nunc, et semper,
* et in saecula saeculorum. Amen.
As it was in the beginning, is now, and ever shall be, * world without end. Amen.
Last line of Psalm 129.
Pre-Vatican II Catholics know this stuff after hearing it a few hundreds of times before they got jiggy with the English.
Bernanke finally got it right.
His employment prospects are looking brighter all the time.
The rest of the world...eh, not so much.
Thanks Bernanke.
Stagnation vs. too big too fail. The bears remain confounded by central banker omnipotence. The bankers know that failure means millions will see their retirement accounts destroyed, the oligarchs lose their amassed wealth, and millions lose their jobs. Under the ‘new normal’ the stock market is not a reflection of the economy, but a vehicle used by the Fed to drive the economy forward. To the Fed, Keynesian theories have been validated and they are patting themselves on the back for saving the world by fully embracing this new normal. The bears only hope is that there are actually limits, and so far there appear to be none. If they have to, central banks can expand their balance sheets double and do more QE. The masses have no reason to sell stocks with the Fed removing all risk and savings a complete joke. No matter what bears think, the Fed models have been 100% correct. Remove fear and stimulate greed (animal spirits), and humans will do exactly as predicted. But has the Fed only pushed demand forward with super loose credit? If yes, then they must keep pushing it still farther forward with ever expanding debt. Congress could forgive student loans, freeing $1T to flow into housing and autos.
Silicon Valley has propelled the U.S. and world economies forward for 40 years; when that party ends, it all ends. And the I(diot) Watch makes it seem very close. All the loose money and insane salaries have created the largest property bubble in history in that area. When the tech jobs go away, and they slowly are, house prices will tumble and fear will again replace greed. Tech seems like the Achilles heel of it all. If the tipping point is reached and faith in Fed can’t stop a tech meltdown, the bears will smile and get their long overdue revenge. Millions will see their home values cut in half again, and walk away (again). The cities will burn as unemployment soars and millions refuse to accept any cuts to their entitlements. The oligarchs will get us into wars all around the globe to distract the masses. GM will likely be crushed and need another bailout. All the mountains of debt can only accelerate the collapse. There will be calls for more stimulus and more QE. Each time the markets plunges the Fed will make another announcement igniting massive bear market rallies.
We will become Greece, as millions more immigrants will try to get in fleeing a global meltdown. It will be something to see but impossible to invest in either direction.
I wouldn't count Silicone Valley out quite yet.
https://www.youtube.com/watch?v=SV-AgbJ-enk
They have big ones running and he claims in 10 years they will have them for the average home. Runs on nat. gas and the oxygen in air.
Ben Bernanke, asks "does the U.S. economy face secular stagnation?
No, because we have been in secular stagnation since 2008.
If "growth" is adjusted for the increases in population, it comes out nertz on a per-capita basis.
Bernanke's secular public statements are all half-truths and lies. At least when he was still in office he had the decency to say nothing at all.
Three huge problems here:
1) Debt - Headwind on consumption. Debt restructure is a solution but not a painless one. That will effect bondholders and equity holders an will ripple into whats left of the middle and lower class causing a year of layoffs and return to 25% unemployment.
2) Demographic Imbalance - Older people downsize, withdrawing consumption from the economy and fixed income also tool a hit with the high rate of inflation the previous decade. They are a draw on the economy with Medicare as the bulk are still retiring and yes aware people paid into it but the smaller population cant sustain it especially in a part-time service economy. This is where Boomers (health) will still spend money (and why I have a business in healthcare publishing).
3) Part-time services economy - People can now find jobs but they are $10-$12 an hour which only provides for the very basics and that is usually with sharing a dwelling. That discouraged family formation and further consumption.
4) Cause of these issues is political, corruption is rampant in Wagington and the entire population knows it. The solutions right now are personal ones to either check out of a very tough rat race, work part-time and get dwindling subsidies or sell things to the rich.