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Economic Theory Meets Main Street Reality

Tyler Durden's picture




 

Submitted by Lance Roberts via STA Wealth Management,

 

 

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Tue, 11/17/2015 - 11:35 | 6804477 Kilgore Trout
Kilgore Trout's picture

"Since the end of the financial crisis..."

Exactly when was that?

Tue, 11/17/2015 - 11:44 | 6804524 localsavage
localsavage's picture

Theory or propaganda?....it's a fine line these days

Tue, 11/17/2015 - 12:01 | 6804610 Boris Alatovkrap
Tue, 11/17/2015 - 12:09 | 6804638 rejected
rejected's picture

Sorry Boris,,, I don't do the farcebook, twiddle thing. Maybe post your poll here for us malcontents.

Tue, 11/17/2015 - 12:28 | 6804720 Boris Alatovkrap
Boris Alatovkrap's picture

<-- You are unhappy?

<-- You are not so happy?

This is pole for malcontent.

Tue, 11/17/2015 - 13:32 | 6804925 Arthur Schopenhauer
Arthur Schopenhauer's picture

Happy is one of the seven dwarfs... the cheerful one.

I rear-ended a car at last week. The driver got out and,... he's a dwarf.

He comes up to my car and says, "I am NOT happy!"

So I said, "Okay you little phooker... Which one are you?"

Tue, 11/17/2015 - 11:57 | 6804581 KnuckleDragger-X
KnuckleDragger-X's picture

Tsk, didn't you see the news report of fairies riding into town on unicorns?

Tue, 11/17/2015 - 12:03 | 6804616 Boris Alatovkrap
Boris Alatovkrap's picture

Where is Skittle color? Where is sparkle dust? Ecommunist is maybe not so much connect with reality...

Tue, 11/17/2015 - 11:36 | 6804482 LawsofPhysics
LawsofPhysics's picture

Please, eCONomics is a social science.  Remember, when fraud is the status quo, possession  is the only "law" that matters.  Now stop crying and evolve or die.

same as it ever was...

Tue, 11/17/2015 - 11:58 | 6804588 KnuckleDragger-X
KnuckleDragger-X's picture

A social science with imaginary numbers......

Tue, 11/17/2015 - 11:37 | 6804488 surf0766
surf0766's picture

Charts don't matter . There is only  P&P ( print and propaganda).

Tue, 11/17/2015 - 11:49 | 6804556 Phillyguy
Phillyguy's picture

The current state of US economy-

1. High unemployment, coupled with anemic job growth- >90% of “new” jobs are temp positions- low pay, no benefits, no job security.

2. Rents are going up as is the cost of health care, further reducing the purchasing power of working people.

3. Since 2008 financial crisis, Central banks- US FED, BOJ and ECB have flooded banks with $ trillions from taxpayers at zero interest rates, which has worked its way into stocks and “trendy” real estate in SF, NYC, Boston, etc, creating new financial bubbles. As a result, stock markets in US, EU and Japan have become addicted to this ultra-cheap money to keep markets inflated.

4. As extensively documented by ZH, auto sales have been propped up with sub-prime auto loans.

When this bubble bursts, it will make the 2008 crash look like a picnic.

 

 

 

 

Tue, 11/17/2015 - 11:57 | 6804583 LawsofPhysics
LawsofPhysics's picture

Don't overthink this, call it what is really is;

The planet is performing a "let the majority eat cake" monetary experiment.  We all know how this turns out.  Money is not capital.  High prices do not always mean something is of high "value".

ZIRP/NIRP is capital and resource mis-allocation and mal-investment on a scale never before seen.

Tue, 11/17/2015 - 11:55 | 6804573 TheABaum
TheABaum's picture

"If I spend less money at the gas pump, I obviously have more money to spend elsewhere. Right?

The problem is that the economy is a ZERO-SUM game and gasoline prices are an excellent example of the mainstream fallacy of lower oil prices.

Example:

  • Gasoline Prices Fall By $1.00 Per Gallon
  • Consumer Fills Up A 16 Gallon Tank Saving $16 (+16)
  • Gas Station Revenue Falls By $16 For The Transaction (-16)
  • End Economic Result = $0"

Except the gas station doesn't care about revenue, it cares about profit. Back to ECON 101 for this guy.

 

 

Tue, 11/17/2015 - 12:04 | 6804622 KnuckleDragger-X
KnuckleDragger-X's picture

Noticed that did you? Things are complex in even he simplest systems and it is matter of survival when one thing gets cheaper and everything else gets more expensive. The government uses static scoring of the economy instead of dynamic, since they know that they can't predict outcomes in the real world that is actually involving people making decisions....

Tue, 11/17/2015 - 12:06 | 6804627 rejected
rejected's picture

Yes,,, he seems to be overlooking that.

Also if the Gas Station reduces it's prices slowly over a few days/weeks its profit could actually increase a little which is pretty much what they actually do.

Tue, 11/17/2015 - 12:20 | 6804676 Crocodile
Crocodile's picture

Both revenues and profits are down in most sectors with a few exceptions and that is where the illusion comes in to play.  Also, when you count tax, like the Unaffordable Healthcare Act as part of economic growth, then ...well it speaks for itself.

 

The rise in Healthcare costs at the place where you receive services is going to surge and surge and surge some more because of the same group that got us into this mess; the Baby Bummer generation.  The most immoral and ungodly generation that is the real "ME" generation who exchanged the true God for the god of materialism...Satan is a good salesbeing.

Tue, 11/17/2015 - 12:42 | 6804774 TuPhat
TuPhat's picture

It is not a generational thing.  There are worthless eaters and users in every generation.  Most Boomers haven't retired yet and are still productive.  They are even more likely to have jobs than the younger generations because they have the skills that are in demand.  I will be ready for you crocodile when you come to take what I have earned.

Tue, 11/17/2015 - 13:17 | 6804885 LawsofPhysics
LawsofPhysics's picture

Interesting.  Tell me, do you have "everything you have earned" in a bunker somewhere that you know is secure and safe.  You see, when fraud is the status quo, possession quickly becomes 100% of the law.  Moral Hazard is a real motherfucker.  Now remind us, how many of those bankers and financiers who caused (and profitted from) the financial crisis have gone to prison?

 

Tue, 11/17/2015 - 15:36 | 6805601 Baa baa
Baa baa's picture

Still blaming mommy and daddy. Neurotic idiot.

Tue, 11/17/2015 - 14:16 | 6805150 aztrader
aztrader's picture

Don't forget the 50% to 100% increase in healthcare costs under Obama.  How do we pay for that?

Tue, 11/17/2015 - 11:55 | 6804576 pound the vix
pound the vix's picture

But we no longer use economic activity to value stocks, just if Japan is buying stocks today or not.

Tue, 11/17/2015 - 11:57 | 6804585 pound the vix
pound the vix's picture

Did we just blow thru the SPX 200 dma like it wasn't even there?  Gartman is correct, Terror is good for stocks

Tue, 11/17/2015 - 12:01 | 6804605 pound the vix
pound the vix's picture

VIX spike lower are happening again

Tue, 11/17/2015 - 12:25 | 6804686 lester1
lester1's picture

I am 100% convinced that the Federal Reserve is buying stocks through their primary dealer banks. Without the Fed buying,we would see a massive stock market collapse and that would hurt the Democrats in 2016 and Obama's recovery legacy. Think about it, there is no good economic data which justifies the stock market rallies.

 

The Federal Reserve is unaudited so they can get away with creating electronic money out of thin air to buy stocks with. What's to stop them?

 

I hope that zerohedge and the Tylers will do a more in-depth investigation on what the Fed is doing behind the scenes. Someone has to come forward and expose the Fed.

Tue, 11/17/2015 - 12:32 | 6804735 Edward Morbius
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lester,

 

     ZH has been doing that for 7 years.

Tue, 11/17/2015 - 13:50 | 6805024 Kaervek
Kaervek's picture

I'm inclined to think the same, but can you tell me what happens if they own all the stocks?
I mean the way this is going they are owning more and more each day, which really puts them in a shitty position should this thing crash.

Can they even stop buying anymore? If they never stop they will own all the companies and it will be something akin to communism ?!

Tue, 11/17/2015 - 13:58 | 6805058 Reichstag Fire Dept.
Reichstag Fire Dept.'s picture

That's exactly what's going on...what else explains the VIX??! The "market" has been having heart attack after heart attack and somehow the patient isn't dying.

The defibrillator is overheating but it is still being applied to the point, I fear, where the defibrillator is simply being left on ALL the time now...because that's the way to save a heart attack patient!!

It's time to remove the "Cheney Model" Keynesian heart and replace it with something that has some gold in the valves.

Tue, 11/17/2015 - 12:26 | 6804710 ajkreider
ajkreider's picture

I'll give Tyler credit, he's tireless in his cheerleading of a coming recession.

For the sake of the rest of us, I'm happy that he's been wrong about it for the last 6 years.

Tue, 11/17/2015 - 14:05 | 6805095 Reichstag Fire Dept.
Reichstag Fire Dept.'s picture

Tyler is wrong? ...about what?

There had been no recovery...a glance at the M2 Money Velocity chart proves that.

There is a substantial amount of fuckery in the "markets" right now...has been for a long time and it's been getting worse.

I KNOW Tyler is right about that. What none of us know is what the outcome is going to be.

Are we all waiting for the instant gratification that a total market collapse will give us? That day where we can revel in being "right" about all this bullshit? OR, do we watch the economy slowly sink into the ocean of debt like what is happening in Japan, where it takes 20+ years of deflation and still no recovery in sight?

Someone explain to me... WHAT is a recovery?

A recovery from what?? Debt? Worthless Fiat? Manipulated markets? A broken economic model?

I could really use the answer to that question now, please.

Tue, 11/17/2015 - 14:34 | 6805260 Kaervek
Kaervek's picture

A real recovery would be real increase in jobs, wages and GDP, not fake debt fueled market inflation and goal-seeked statistics

A real recovery would be felt by most of society and people would be happy about it

A real recovery is what's not going to happen until the whole financial system gets a big overhaul, which could be ... way late or maybe never?

Tue, 11/17/2015 - 18:21 | 6806393 honestann
honestann's picture

Yes, anyone who imagines the economy is improving needs to carefully examine the "labor participation rate" from the 1960s (or earlier) to today.

That chart tells the true story as well as any.

Can you spell "falling off a cliff"?

Tue, 11/17/2015 - 14:13 | 6805141 aztrader
aztrader's picture

Fraud has been the game played for the last 3 to 4 years to keep wall street and the banksters flush.  Everything to protect wall street and the markets has been on a full Monty. 

They make up economic numbers, they allow companies to report their earnings using NON-GAAP accounting, they are now ignoring the stock buybacks that are juicing numbers, they have the fed A'holes on TV whenever they need to keep the markets humming, etc. etc....

The only real thing is that we know all the numbers are cooked.   We just didn't know how far they would go and it looks like whatever it takes.

Who in their right mind was buying the market yesterday?  Had to be the central banks selling the VIX and buying the markets.  Manipulation has become a daily event and now everyone simply expects it.

Tue, 11/17/2015 - 16:15 | 6805777 Carl Menger
Carl Menger's picture

This article is a complete Keynesian fallacy. Spending beyond our income can only be achieved by saving. Rise in income can only be achieved by saving as well. The whole problem is the quantity of money. Central planners don't allow the economy to adjust the value of the existing money in circulation (i.e. the "purchasing power"). When manipulating the quantity of money THEN you have a zero sum game.

 

Let the amount of the existing circulating money to get the price according supply and demand and you have a fair economy with clear signals. 

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