Peak Economic Delusion Signals Coming Crisis

Tyler Durden's picture

Authored by Brandon Smith via Alt-Market.com,

In my article 'The Trump Collapse Scapegoat Narrative Has Now Been Launched', I discussed the ongoing and highly obvious plan by globalists and international financiers to pull the plug on their fiat support for stock markets and portions of the general economy while blaming the Trump Administration (and the conservative ideal) for the subsequent crash. Numerous economic shocks and negative data which had been simmering for years before the 2016 elections are rising to the surface of the normally oblivious mainstream. This recently culminated in a surprise stock dive that stunned investors; investors that have grown used to the Dow moving perpetually upward, while the economic media immediately began connecting the entire event to Trump and the “Comey memos”, which likely do not exist.

My position according to Trump's behavior and cabinet selection is that he is aware of this agenda and is playing along. That said, there is another important issue to consider - the participation of the ignorant in helping the Ponzi con-game continue.

There is a famous investor's anecdote from Joe Kennedy, the father of John F. Kennedy, about the onset of the Great Depression – he relates that one day, just before the crash of 1929, a shoe shine boy tried to give him stock tips. He realized at that moment that when the shoe shiner is offering market tips the market is too popular for its own good. He cashed out of the market and avoided the crash that many people now wrongly assume was the “cause” of the Great Depression.

I don't know that this story is true, but if it is, it is an interesting example of peak economic delusion. We do not have quite the same investment environment as existed in those days. Today, algorithmic computers dominate the functions of the stock market, chasing headlines and each other, but this does not and will not save the economy from another depression. In fact, all they have done along with substantial aid from central banks is artificially elevate equities while every other fiscal indicator implodes.

But this farce in stocks could not succeed for so many years without help. I would say the real “shoe shine boys” of our era are actually the dullards in the mainstream financial media, stabbing in the dark and desperate to believe that the astonishing “recovery” since 2009 is real.

This attitude is evident in a recent article published by Bloomberg titled 'Prophets Of Doom With Too Much Gloom'. The piece focuses not on alternative analysts like myself which are usually targeted with the mentally lazy “doom and gloom” label by the MSM. Rather, the targets are “big names” in the investment world who now finally agree with what alternative analysts have been saying for some time. Names like Bill Gross and Paul Singer.

Bloomberg laments the sudden tide of negative predictions for their beloved Dow Jones and other exchanges from people who have the ear of the larger mainstream. Instead of considering their warnings and looking at the available evidence, Bloomberg instead decides to craft a conspiracy theory in which bond traders and hedge fund managers like Gross and Singer feel jilted by the unnatural rise in stocks and now scheme to lure investors away from the infinite fountain of wealth. Yes, that's right, Bloomberg accuses Gross and Singer of “stock envy”.

I say, Bloomberg is a modern day shoe shine boy.

Some might argue that Bloomberg is perfectly cognizant of the fact that the economy is in severe decline and that they are helping their central banker buddies keep the public in the dark through misinformation. While this may be true for Bloomberg himself and media elites like him, I think the average analyst at Bloomberg news is just as ignorant of the fiscal situation as most people. I think they are legitimately biased and will conjure whatever story they need to help them and others believe that the system is in ascendance rather than decline.

For those of us who were analysts before the derivatives crash of 2008, this mindset is nothing new. I remember the complete arrogance present in the mainstream just before the implosion; the sneering and attacks that were used in an attempt to silence anyone with the guts to openly suggest the fundamentals and the data did not support the investment exuberance. I remember many people asserting that that the economy's progress was unstoppable, that another crash like 1929 was impossible, that the real estate market was an invincible engine. They were all wrong, yet, they were so confident. Most of these same people still work in the financial press to this day. Imagine that...

I would prefer to point to the hard data on hand than mere mainstream opinion. Maybe I'm a little paranoid, but I've already seen mainstream analysts fail on numerous occasions.

First, consider the fact that the Federal Reserve, the key component along with other central banks around the world in the rise of stock markets, is now cutting off the flow of easy money through continued interest rate hikes. I predicted this move back in 2015 when almost everyone said the Fed would go to negative rates instead. Without no-cost Fed money to feed the machine, stock markets have essentially stalled, and now, there is talk of a “tech dump” on the horizon With the vast majority of gains in equities the past year attributed to only five major companies, all of them tech oriented, this would be a disaster for stocks.

This is a considerable shift away from the last few years, in which it was expected by many that markets would expand exponentially for the foreseeable future. Now that the Fed's quantitative easing and near-zero interest rates have been removed as fuel, the true economic picture is becoming clear, even to the mainstream.

According to the Atlanta Fed, US GDP in the first quarter of 2017 has declined to 0.7% , going back to lows touched on in 2014 after the Fed reduced QE.

The US has lost 5 million manufacturing jobs since the year 2000, and this trend has accelerated in recent years. Manufacturing in the US only accounts for 8.48% of all jobs according to May statistics.

102 million working age Americans do not currently have a job. This includes the 95 million Americans not counted by the Bureau of Labor because they assume these people have been unemployed so long they “do not want to work”.

Thousands of retail outlet stores, the primary engine of the American economy, are set to close in 2017 Sweeping bankruptcies and downsizing are ravaging the retail sector, and internet retailers are not taking up the slack despite highly publicized growth.  In 2016, online retail sales only accounted for 8.1% of all retail sales.

Oil inventories continue to amass as US energy demand declines. Declining energy demand is a sure sign of overall economic decline. OPEC and other entities continue to argue that “too much supply” is the issue; an attempt to distract away from the reality of lower consumption and the falling wealth of consumers.

Corporate earnings expectations continue their dismal path, suggesting that stock markets have been supported by central bank stimulus and blind investor faith in central bank intervention. The stimulus is now being cut off. How long before investor faith is finally lost?

These are only a few of the MANY data points that paint a very ugly picture for the US economy. The rest of the world is just as tenuous if not worse.

This is why when I hear the phrase “doom and gloom” I have to laugh and think of the shoe shine boys. These are people with limited experience in tracking the economy, or very short memories, or both. This is also the product of a vast misconception about economic crisis or collapse – the assumption that crisis and collapse are “events”, that they happen suddenly and without warning. If the nation does not look like a television zombie drama tomorrow, there must not be a collapse. In truth, economic collapse NEVER happens without warning, because as I have said ten thousand times and will say ten thousand times more, collapse is a process, not an event. The data points above show an economy that is in severe deterioration, not recovery. Stock markets are next, not that stock markets matter much in the grand scheme of things.

It is unfortunate that so many people only track stocks when accounting for economic health. They have crippled themselves and their own observations, and actually condescend when confronted with counter-observations and data. They help globalists and international financiers by perpetuating false narratives; sometimes knowingly but often unconsciously. And, when the system does destabilize to the point that they actually realize it, they will blame all the wrong culprits for their pain and suffering.

The question is not “when” we will enter collapse; we are already in the midst of an economic collapse. The real question is, when will the uneducated and the biased finally notice? I suspect the only thing that will shock them out of their stupor will be a swift stock market drop, since this is the only factor they seem to pay attention to. This will happen soon enough.

In the meantime, anyone who discusses legitimate data and warns of the dangers to come is a “doom and gloomer”. Mark my words, one day this label will be considered a badge of honor.

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LetThemEatRand's picture

For those here who have been poo-pooing the "blame it on Trump" collapse that is coming, we have further evidence today of the sheer power of the narrative that MSM propaganda has created.  By all accounts so far, the shooter today was a blue collar guy who blamed Trump for his economic woes.   It may seem counter-intuitive to many here, but a large chunk of America would believe in a second that any major economic collapse is Trump's fault.  TPTB have already made clear they want Pence to take the throne.  Imagine an obstruction of justice impeachment trial in Congress coupled with a large-scale economic collapse.  What would happen?

wisehiney's picture

You damnshoberite LTER.

I am just trying to enjoy the reprieve that is Trumps election.

And fixin to jack back up on the preps.

Keep up the good work bro.

Says your buzzed up non condescender, me.

Stuck on Zero's picture

It's hard to describe the real world you see outside the cave when everyone else is staring at the moving shadows.

El Oregonian's picture

Pay no never mind! The calvary isa comin' and General Custer said not to worry, he'll be here! Now git!

wisehiney's picture

The Crow called that gigantic fag custer "Child of the Morning Star".

Sioux Chief Crazy Horse called him "Chop Suey".

No Southerners rode with the 7th Calvary.

 

Alt RightGirl's picture

Socio-economics proficiency is the new Natural Selection.

The betas will be left holding their di*s in their hands, just like in the sexual marketplace.

Realities of the Deregulation of the Sexual Marketplace


Art Van Delay's picture

Pull the plug bitches.

I'm ready !

 

HRH Feant2's picture

I always like it when someone references Plato and the Allegory of the Cave.

Bravo!

All those shadow-watchers sure get pissed off when you try and tell them about the real world. Trust me, I have tried. I give up. When all of those fuckers come banging on my door, begging, I will laugh. Fuck em.

wisehiney's picture

Enlightened by their/your fellow man?

I think not.

Sounds contradictory to me.

Trust the gift of your own gifts/instincts.

HRH Feant2's picture

Always. I plan on surviving. Not just surviving but thriving. I would have liked to bring some folks along. You can't force people to survive.

NumNutt's picture

"when will the uneducated and the biased finally notice?"  they will notice when the .gov money flow slows to a trickle, and they suddenly have no more SNAP cards for food, or unemployment checks for housing, and no more Obama phones, or Obama healthcare. Thats when they will notice, and when that happens the shit will hit the fan. The left has already laid the ground work to blame the right for all of this. 


Insurrexion's picture

What would happen?

The variables reacting to infinite variables would happen.

Message to the fuckheads at Bloomberg:

When the variables do start, you will be the first to get a bullet.

Remember this.

 

LetThemEatRand's picture

There were no bankers at the softball field today.  The real power never travels in public.

new game's picture

shadow, deep, curtain, oz, prince, jackson, lurker, psychopath. keywords...

hairball48's picture

 

"...It may seem counter-intuitive to many here, but a large chunk of America would believe in a second that any major economic collapse is Trump's fault..."

@LTER

Precisely right. The sheeple have no clue, none, on how this economy, or any economy, works.

 

Nunyadambizness's picture

That sir, is precisely right.  And, it's by design not by accident...

karenm's picture

Mr. Smith is one of the very few contributors to ZH who actually tells the truth. I read maybe 5% of ZH articles, as so many are just sensational stuff taken from the MSM, but Brandon always gets my attention.

Secret Weapon's picture

Trump put the noose around his own neck when he started taking credit for the rising stock market. Deep state is just waiting to pull the lever that opens the trap door. 

Seasmoke's picture

Trumps tweets. He now owns this market.

Cash Is King's picture

You're right! I told the misses I almost chocked on my Double THE&C on a everything bagel toasted well when I heard him brag about UE @ 4.3%. He's in more trouble than ever if he thinks he can talk up a recovery on his watch especially after calling the market & the economy what it is while campaigning, a giant fkn bubble!

wisehiney's picture

Just like the preacher that thinks Jesus was a pussy.

Delusional.

Osamabeentokin's picture

The restaurant sector is taking a hit, too. And I seriously don't buy the whole "a couple of websites taking over brick and mortar" excuse. It's a convenient narrative when you work for the Ministry of Truth and you can't be gloomy with your long term forecasts. Factor in expected consumption from a growing population and the numbers don't add up unless you recognize the shitshow that's coming our way. 

Silver Savior's picture

It's quite obvious to me that the economy was much better off in the 60s and 70s than now. Even after massive population growth. The resources are being spread thin. It seems that economic activity from those born 1980 and after is non existent. 

christiangustafson's picture

Currency collapse is the solution to all of our problems.

The survivors can regroup and rebuild on sound foundations.

WTFUD's picture

S'truth i vaguely remember that song. On playing it i couldn't help but notice that the next song if i'd gotten to the end was 'Take on Me' -Aha. Take from Me, would've been more appropriate. It's a Mad Mad Mad Bankers World and i'm eagerly awaiting the Fallout from this cleverly controlled Depression. Something's gotta shake these Zombies from their Government (subsidized) induced coma.

999 our bollocks on the line - No Emergency Services - Just the Speaking Clock - LOL

Stormtrooper's picture

Hey, those mainstream financial analysts have to do something after they graduate high school.  There are only so many jobs at McDonalds so they have to settle for a job as an analyst.

True Blue's picture

I always just assumed they were leftovers who couldn't cut it in the 'sports' section because -y'know, all those numbers and stuff.

Soul Glow's picture

Hey why not leverage up and sign the next 30 years of your paycheck away to a bank?  You'll be living the Murcan Dream!

pitz's picture

My favourite is the dipshits who actually think that 'self-driving cars' will be technically or economically feasible anytime soon.

WTFUD's picture

Yeah i'm stacking gold in anticipation of an IPO for that one-way ticket to Mars gig.

OCnStiggs's picture

Yeah... how is that working out for Uber?

I love technology like everyone else but the videos of the self-driving Tesla crashes give you pause. Eventually, they'll get the bugs out but, between the cost of the technology (both development and installed) and the cost of the future litigation, self-driving cars will be something only for the "uber rich."

Anyone who doubts it should look at what the lawyeers have done to aviation. Piper got sued by a widow after her husband, who was drunk, took off downwind, lost control and hit a barn, killing himself. She sued because the plane was not required to have a shoulder harness when it was built and they never added one later. Neverthemind that the guy killed himself with booze and negligence. The result is, flying, a hobby that used to e open to almost anyone that was interested, is now exorbitantly expensive. When I was a kid, a trainer rental was $15 an hour. Today is 10 times that.

Technology will advance after most of the attorneys are killed.

 

el buitre's picture

I think self-driving cars will be feasible both technologically and economically, in as much as the average person would be able to afford any new car soon.  Just a matter of replacing the current car computer with a more sophisticated one with more sensors.  Idea is to take away any control at all by a sheeple.  But they really don't need them as they can drive any car younger than 10 years into a tree at 80 mph whenever they want to.  I drive a 2001 with the motor rebuilt by my personal mechanic.

SkunkyBeer's picture

Just because the US Fed has (allegedly) stopped propping up the markets doesn't mean ALL Central Banks have stopped.

I heard a figure today (I'm not certain it's true) that the BoJ, the ECB, and the Swiss Central Bank combine to print and dump $250 billion / month into the bond & stock markets. That's roughly equivalent to 100% of the amount of tax revenues collected by the US Govt every month.

Assuming that's true, what a staggering amount of money sloshing around. I just don't see where it ends, as long as CTRL-P is so easy and without cost to the CBs.

besnook's picture

the multiplier effect has collapsed. the only way to keep money circulating is to print it at the source. as long as the central banks print money at the rate of money destruction caused by the collapse of the multiplier everything is fine. ironically, the only way the cbs can keep up is if the economy collapses.

runningman18's picture

Foreign central banks are beginning to pull back as well, but they don't have the world reserve currency anyway, which means they have way less leverage than the Fed to prop everything up.  Where the Fed goes, so goes everything else.

Secret Weapon's picture

The "market" is not the economy. People are the economy.   This is the fundamental mistake that the academics have made and why putting money into the market has not resulted in an improvement in the lives of the bottom 80%.  The fundamental mistake that the rest of us make is to assume that the sociopathic parasites at the top levels of power actually care about the bottom 80%.  They do not, any more than a farmer cares about a chicken.  Stop laying eggs and into the stew pot you go.   

MrNoItAll's picture

"dullards in the mainstream financial media" -- More like, some pretty smart propaganda artists working overtime to create false narratives and fake news to manipulate public opinion. All Ponzi schemes depend on high confidence in scheme participants. These days the global economy is just one gigantic Ponzi scheme and we're all participants whether we like it or not (some less than others). They've got to keep the illusion of "all is well" alive in the minds of the majority, and that means denying and reshaping perceptions of reality. Thank God not everybody is stupid enough to fall for it.

GoldHermit's picture

I honestly think that most people walk around totally oblivious to what is most likely going to happen. A very very sharp reset in a number of areas or a collapse in confidence .

Donate Moar's picture

And I really miss those glorious days when I too was "totally oblivious".

It made for a much happier life.

But this constant doom and gloom is almost funny.

I admit it.  I am addicted to ZH gloom and doom.

 

lasvegaspersona's picture

A 'problem' in the gold market could bring things down too.

Just because we pretend not to care about the yellow does not mean the top dogs are unaware of potential problems with fiat money....lots of prior examples.

They are fine with fiat but it must function for them. If it stops they will bolt to gold fast.

Toonces McGraw's picture

Whammo! It doesn't matter if four people/ entities control all the wealth, at some point one of them is headed for the exit and the rest follow leaving a bag holder. At some point this fucker crashes and the fiat rich folks are jumping to gold.

HRH Feant2's picture

Gold and silver have been a store of wealth for 6,000 years, for a reason.

WTFUD's picture

Fortunately for us there's not that much physical gold to distribute. All these paper-fucks will have to diaper-up for the foreseeable future.

In Weimar Germany the cost of a 2lb loaf of bread jumped from 20 billion marks to 120 billion marks in the space of a week.

HRH Feant2's picture

Yep. Physical silver is even more limited.

If you missed www.caravantomidnight.com, Episode 757 from yesterday, I cannot recommend it enough! Part Two is basically an excellent summary of my own thinking, confirmed since I woke up and started learning about the financial system after 2008.

Ya, there is a paywall, $5 a month but you have access to all of the previous shows at no extra charge.

And OMG Episode 758 has Matt Bracken! WOO HOO! Nothing like hearing Matt tell it like it is!

Silver Savior's picture

Makes sense to just accumulate gold before hand. And it's sidekick silver.

Jack Oliver's picture

Gold is the real deal - That's why so many Jews are called Goldberg - Goldstein etc !!

brushhog's picture

The reason why jews dealt so much in gold/silver/precious gems is because they werent permitted to own land in Europe.

el buitre's picture

I like silver more than gold.  The traditional price ratio between them over the centuries is 10-16 to one.  Current ratio today is 75.  Also, almost all the gold mined in the last 5000 years is still around (though a lot of ZH gold is on the bottom of lakes), while silver is being used for special industries faster than it is mined at the moment, and the current bogus paper price inhibits any recycling.  I understand that every Tomahawk missle fired into Syria enriches it with an additional 10 pounds of silver.