Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The past six years of expansion have been as illusory as Cinderella's magic carriage.
The clock is about to strike midnight, and our Cinderella economy's magic carriage will revert to a pumpkin. The magic of the Federal Reserve's flood-the-fields policies of zero interest rates (ZIRP) and liquidity (via quantitative easing (QE) and other programs) had an expiration date of December 2014, judging by the negative gross domestic product (GDP) in the first quarter and the deep slump in corporate profits:
There are many other indications that the Fed's magic has worn off: new orders are slumping, for example:
In a recent conversation with Chris Martenson of Peak Prosperity, I suggested that the Fed's policies were akin to monoculture agriculture.At first, slamming fields with nitrogen and phosphate fertilizers and herbicides and pesticides yields bumper crops.
In an analogous fashion, the Fed's zero-interest rate policy and massive goosing of credit appeared to work wonders on the U.S. economy: growth exceeded 2% and inflating bubbles in bonds, stocks and real estate have fueled a speculative frenzy, all based on a simplistic faith in the Fed's power to keep assets rising forever.
But the magic of flooding the fields with credit/fertilizer doesn't last forever. The soil is stripped of value and yields plummet; at some point, the returns on flooding the economy with credit diminish: only marginal borrowers and the riskiest speculations are left to exploit.
Just as insects quickly develop resistance to pesticides, the economy develops resistance to cheap credit. Since interest rates cannot fall much below zero, there are no more gains to be had from lowering rates. Since qualified borrowers have already bought a new vehicle or home, the only borrowers that are left are the ones that will default at the first layoff, medical emergency, etc.
Just as flooding a field with fertilizers and pesticides does not restore the soil, flooding the financial system with liquidity and cheap credit does not restore health to a stripmined, financialized economy. Just as monoculture erodes the soil, financialization hollows out the economy and strips away the values that underpin sustainable, healthy expansion. What the Fed has fueled is the predation and pillage of the real economy by Wall Street and financiers.
The Fed insists that Cinderella's carriage is forever golden, ignoring the increasingly obvious reality that the carriage is turning back into a pumpkin before our eyes. The Fed's magic was always a short-term fix, akin to over-fertilizing and over-poisoning our economy to create the illusion of massive growth in profits and stock, bond and home valuations.
The past six years of expansion have been as illusory as Cinderella's magic carriage. Now that the magic is wearing off, the reality is going to hit everyone who believed the fantasy of permanent asset bubbles especially hard.
Except there ain't no prince charming this time around either
Here's the above charts for those interstsed... or not
http://research.stlouisfed.org/fred2/series/ACOGNO
That's pretty grimm, brothers.
Forgot to add to get the YoY % change chart, click on "Edit Data Series..."
Half way down that section click on the "Units" drop box to get "Percent Change form Year Ago"
Yeah, those are some scary mofo charts!
We shall go on to the end. We shall print in France, we shall print on the seas and oceans, we shall print with growing confidence and growing strength in the air, we shall defend our equities, whatever the cost may be. We shall print on the beaches, we shall print on the landing grounds, we shall print in the fields and in the streets, we shall print in the hills; we shall never surrender
Articles like this go to show that there is really nothing new under the sun to report regarding the global financial compact.
All the rationale has been spouted before....Fed up, FED, Policies, Wonks, easy money, ZIRP, NIRP, history, herstory, Globalization, bubbles, inflation, deflation....on and on and on ad nauseum.
But the real thing is the UPCOMING MURDER OF FIAT.
To kill FIAT, the blood oozing from the headless petrodollar will ooze right into the SDR.
And as currencies coRRAPSE like dominoes, the good IMF will step up, to the plate and save the world.
That is the pit of vipers to watch out for.
Notice this...Orangeboom Lagrade has not been in the news AT ALL (hardly really) for 2 months now, maybe more.
I can smell an inverse oil crisis brewing...
Notes to myself on six strings...
https://www.youtube.com/watch?v=lk1TSBW_368
Does that Pumpkinhave a big Ol'BTFD Smily Face carved on it. QE to Infinity. Then she blows.
ORI, that was an awesome clip. Thanks for sharing...
Thanks SGN2 and sure thing. :-)
"Guess what, Roger. The little red needle is pointing to 'E', and while that's always stood for 'excellence' in my book, I guess it means we're outta gas...!"
Tis but a scratch.
"We're going to raise rates."
*Warms up printing presses and helicopter fleet*
Turning into a pumpkin would be something to look forward to. I think is going to turn to crap and that does not even begin to express the nightmare we're about to enter.
http://research.stlouisfed.org/fred2/graph/?g=1cYs
Good job dude!
Thanks!
babylonian money magick is based on fooling people's perceptions. it's quite a shock once the spell is broken. and there is no going back, though one may like to.
Any idea if these compensate for the strength of the dollar?
I guess the glass slipper was QE
And it broke this time
QE turned the dog into a coachman, mice into horses, a pumpkin into a coach, and rags into a gown. That magic as strong as it was always had an expiration. Ding, Ding, Ding....
No. The explanation is simple, there is no true price discovery, period.
relative dollar strength is a driver, too.
"This tiny decline almost destroyed the economy"
Tiny declines have that effect on ponzi schemes.
If the Fed hadn't stepped in to "save" it the decline would have been much more dramatic.
Dramatic?
I'm fuzzy on the whole "dramatic" thing.
Ahhhh, that dramatic!
-Egon
No shit Charles.
Now to much MORE serious stuff again...picking up from where my last sexcapade ended last time round, I'm glad to say I blew up that fat chick (pun intended). It was impossible to do anything with her, practically impossible, physically impussyble! She literally stuffed herself in my car and I never seen that before with anyone. She would have been great like 150lbs smaller...gosh >.<
Should have taken the pickup truck. You might have found out why they call the back of a pickup the 'bed'.
I keep trying to tell you, fat chicks give the best head. Do you think they'd be that fat if they had a gag reflex?
But having a good head is not everything I need. With her, i'm like the moon and she's earth. Planet-like.
Well, halloween you guys can go out as the number 10 if you stand to the right of her.
pods
That is so terrible I am going to forward that to Mrs. pods.
pods
Tick tock Cinderyellen.
From a background in agronomy I can say CHS misses the real problem in monoculture, it's not stripping the soil of nutrients as much as the build up of toxins and pathogens in the soil. The ills of malinvestment and crony capitalism would doom their exercise even if it had a sound basis
Are the issues not intertwined? The mono crop pulls the nutrients which do not get replinished by crop roataion, so the necessity for chems has an increased requirement.
Hundreds gather in Arizona for armed anti-Muslim protest
http://www.washingtonpost.com/news/post-nation/wp/2015/05/30/hundreds-ga...
armed anti-Muslim protest
Sounds like fun!
We won't behead any little children. We promise.
I find it interesting they're picking on American Muslims, who let's be honest probably aren't going to start anything.
If these people had the courage of their convictions they'd be protesting in KSA.
But didn't you read the declassified pentagon documents? Radical Sunni militia are our friends and allies. That's why Hollywood has been filming their fake beheadings for them.
I'm as well prepped as I'll ever be, but not well enough.
Personally, I always hold out the hope that everything will turn out OK, even as I know in my soul that it won't.
Someone once said, "You'll make it to the end, but you're absolutely going to hate the ride."
The US economy has a burning bag full of shit on its doorstep. Who is going to stomp out the fire?
Use the fire to burn a Bankster. Its for the children...
Don't blame the banksters, conjuring fiatsos for themselves is God's work.
Blame Putin, it's his fault.
Russia Doctored Photos in Shooting Down of Airliner, Report Findshttp://abcnews.go.com/International/russia-doctored-photos-shooting-airl...
#gag
Monday, Monday .... hate that Monday .... SND .... Slow News Day .... need some beheadings .... or burnings !
Time for QE4, banning cash, capital controls, and a slogan or two.
The humor is in the fact that QE is in fact creating cash, hence the futility of banning cash at the same time.
All stimulus is fungible...
so many paper claims, so few real assets...
I meant paper and coin currency, but yes, QE creates cash, digital binary "cash" for the banksters - that shifts Billions onto Lloyd Blankfein's and Jamie Dimon's ledger, and Trillions in debt onto the public's.
Necessary to get rid of paper and coin currency before you do capital controls. No bank window to "take your money out", it will be trapped. You will be allowed to pay your mortgage and car loan, and spend $100/week at the grocery store.
2%-5% "stability levy" on all deposits.
Sure, in doing so they will kill the only thing that they really control, fiat.
Go ahead, kill fiat, sounds great to me.
My assets, and the assets of my tribe are safe. Fuck em.
.
Hey look on the bright side. At least the NSA isn't spying on us anymaha ha hahaha ha hahahahaaa. Oh I couldn't finish that sentences without a straight face. Sorry folks.
We lied about spying on some folks.
Direct data feed to Israel based on earlier agreements, then Israel does the analysis and sends results back to NSA.
Your data just got Renditioned...
Is that with or without ball gag?
Supp with you gangstas... Equities will not go down and probably will double in price this year..... We all agree there is a major problem but you are expecting the wrong outcome... Dollar will be worthless and a share of stock will retain at least some unit of value in the new basket of currencies. Holding cash or gold can be restricted and or confiscated. Foos better wake up and buy equities before it doubles this year.
You have to understand that the paper money needs to be printed on good paper with good ink, an impeccable engraving format, completely error free, and with meticulous detail. The fiat has to have charm and appeal. Paper money from the US Treasury is the coin of the realm. Righteous, cool fiat. It is what everybody wants. It is imperative to print even more every day of the week. You have to do what is expected of you and the job never ends. Print until the cows come home. The Canadian polymer 20 and 50 dollar notes are cool. One is worth twenty or fifty dollars. The Zimbabwean 100 trillion dollar note just didn't look good, so it was rejected, otherwise, you would have a shitload of money.
I just obtained a 50 trillion zimbabwean note. Not really pretty but a good reminder...
This economy lacks central planning . Dispersing money to people who already have too much is not working.Wall street does not produce anything of value but feeds itself from the working class and actually detracts from the real economy.
More is being dispersed to the free shit crowd than to Wall Street, albeit that Wall Street reaps the big bucks from a shitty Fed policy, the middle class pays for it all.
Largest wealth transfer in recorded history.
Oh do tell, where does one sign up for a 700 billion dollar loan at 0.01% interest?
it is a loan regardless of the rate of return
https://www.facebook.com/photo.php?fbid=793989767346804&set=pb.100002073...
Overall, a fine article. But I take exception to the statement that interest rates cannot fall to less than zero. We know for a fact that is not true, given NIRP in Europe.
Imagine the -2.00% mortgage. Every month for 30 years the bank sends you a check for taking out a mortgage. What a marvelous economic stimulus that would be! Imagine the rise in home prices! The stimulus to the home construction industry! The enhancement of the wonderful idea of everybody being able to afford a home! The increase in local governmental property tax revenues!
Actually, whether you send the homeowner a check, or whether you lower his payment due to repressed interest rates, there is no difference in principle. It's just haggling over the price. Both are severe economic distortions which artificially raise the value of homes at the expense of all other assets, for example, capex.
and either way the taxpayer foots the bill.
LOL!!!! What "taxpayer"? Pretty much everyone is dependent on the government now. On one side it's the SNAP-dependents and on the other it is government employees and "private" companies dependent on fat government contracts.
lots of middle class still trying to get by as their earnings and savings are taxed and distributed to the free shit crowd
The so-called Free Shit Army is alot bigger than you think. And many of us are in it, even if we don't know it. Don't be so quick to point a finger...
Also, do NOT forget that although you mostly see the enlisted members of this army, that they have a very large Officer Corp. Don't forget to go after them too...
POOF! You just blew my little tiny mind.
In all seriousness this economy isn't in the beginnings stages of its final decent to hell. Even if the Fed doesn't raise rates in Sept we still have the next wave of Ofuckyoucare with additional increased premiums to destroy small businesses and families to look forward to.
When that happens and the effects on the economy can't be papered over more QE with a different name with be enacted just in time for the October, I actually think it will be September, suprise of the pressed entail elections.
Emergency action will be needed by that time due to the increase of riots and protests from not only the race agitation from quemunnity organizer in chief but the lack of affordable anything leading to bank holidays.
So maybe at this point is where the alien invasion is supposed to take place to distract us from the final pulling of the plug on our "freedoms" as we will be too busy uniting to fight a common enemy of the planet.
Then again this shit could last for another century. Shit I need exactly 100 beers.
Well spoken.Cheers.
Time to add another shaded area (depression) on the charts.
I've been reading this 'the sky is falling' crap here for 6 years. It hasn't happened and it's not going to.
The sky fell 6 years ago and never got lifted back up. Your inability to see it around you stems not from the lack of falling sky but from technological innovation.
Were this the 1930s you would have witnessed 6 years of ever growing lines of people at the soup kitchen. But this is the twenty-teens. Those millions of destitute homeless aren't lining up at soup kitchens, they're lining up at walmart with their EBT cards, and their numbers are growing daily.
^^^^this, Yes, pretty much everyone is dependent on the government now. On one side it's the SNAP-dependents and on the other it is government employees and "private" companies dependent on fat government contracts.
Take off your beer goggles...or share the weed.
What are you smokin and why you not share?
Stooge-
This is what a slow-motion train wreck looks like, and it's a big train.
-PTR
About to turn into a pumpkin? Well past that... just a shell with a little worm meal left. LOL.
No way this article is true. It doesn't jive with CNBC.
Merika,,, waiting for a gaggle of counterfeit PhD counterfeiters to save her. Joining in and putting their funny money chips on 23 Red thinking they too can get a piece of the action. Sad isn't it.
We're all crooks now.
Its a slow motion train wreck I would like to see the end of....
"It's not my job to run the train.
The whistle I don't blow.
It's not my job to say how far,
the trains supposed to go.
I'm not allowed to pull the brake,
or even ring the bell.
But let the damn thing leave the track,
and see who catches hell!"
author unknown
2+2=5. Do YOU love big brother? Well HIS brother is an accounant for GS.
Numbers? What do you want them to say?
Marx warned that in the later stages of capitalism huge corporations would exercise a monopoly on global markets. "The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe," he wrote. "It must nestle everywhere, settle everywhere, establish connections everywhere." These corporations, whether in the banking sector, the agricultural and food industries, the arms industries or the communications industries, would use their power, usually by seizing the mechanisms of state, to prevent anyone from challenging their monopoly. They would fix prices to maximize profit. They would, as they [have been doing], push through trade deals such as the TPP and CAFTAto further weaken the nation-state's ability to impede exploitation by imposing environmental regulations or monitoring working conditions. And in the end these corporate monopolies would obliterate free market competition.
http://www.opednews.com/populum/pagem.php?f=Karl-Marx-Was-Right-by-Chris...
"Is Our Economy's Cinderella Carriage About To Turn Into A Pumpkin?"
In the story the carriage changes due to magic--fantasy. Our economy is only changing because the banksters and Zion are stealing it--grift.
Liberty is demand. Tyranny is submission..
At least in the story they get a pumpkin, we Americans only get a rotten and stinking squash.
"I suggested that the Fed's policies were akin to monoculture agriculture. At first, slamming fields with nitrogen and phosphate fertilizers and herbicides and pesticides yields bumper crops."
It's good that Charles is talking to people like Chris Martensen who have been the drivers of sane informative narratives for ages. If we're using analogies, then the Fed's policies are akin to Monsanto, who are trying to maintain the monopoly on staples by selling the bullshit of so-called resistent but toxic, one-time high yield crops that make farmers all over the world reliant on them, but which eventually fail miserably adding high costs and debts leading to farmers committing suicide all over the globe. The Fed's policies, just like Monsanto's are reliant on the supremacy of their products over competition, lies, debts, media manipulation and corrupt political/government support that are designed from the outset to fail and pauperize anyone foolish enough to trust them.
There are simple consequences of money based on debt. A debt - a contractual obligation of money over time in terms of the productivity of the debtor - is not and should never be an asset that can magic more money out of thin air (as in fractional reserve banking). It should never be a tradeable commodity tossed around in the markets bundled with crap and stamped with AAA for gullible modern slave traders to buy and sell. It should not be shadowed by the insane insurance scams that invite conflicts of interest (where it is in the CDS debt insurance holders' interest to make the debtors bankrupt) and counterparties that will never be able to make restitutions. The whole thing stinks of insanity. A circus of the bizarre and surreal on the roulette wheel full of fucking magnets.
The economy is fine just buy more stocks.
The Federal Reserve will either be abolished or at least reformed into something much more benign when the public's faith in its ability and credibility is eventually destroyed. The days are numbered for the Creature from Jekyll Island.
http://www.globaldeflationnews.com/the-creature-from-jekyll-island-the-e...
Who cares. Niribu will destroy mankind on March 26, 2016
Hail Messiah Obama
It's already a pumpkin thanks to The American Curse >>> http://wp.me/p4OZ4v-3z