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Chart Of The Day: Change In Q1 American Debt And GDP
Presented without much commentary, because little is necessary: the only ratio that matters for the US economy, the change in US public debt ($359.1 billion) and US GDP ($142.4) in the first quarter, hit 2.52x and rising.
It takes $2.52 in new debt to "buy" $1 of economic "growth"
Source: Debt to the Penny, Commerce Dept
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And like last time we have a psycho in office who thinks he is king.
YEs, now what was the tax rate for top income earners back then? Rock, meet hard place.
What do we have to show for it? Golden parachutes, gold plated ferrari's, million dollar rooms in hundred million dollar mansions, gulfstream jets, luxurious vacations ...
OH, you mean US, the common people? Oh, we got jack shit. Sorry.
ZH ought to sticky that chart or put it in the sidebar so that every visitor can see it. No article can better explain the insanity we are facing better than that simple comparison.
Bernanke, I'm sure, knows this chart all to well. Please tell me that he is looking at what happened in the market this morning after a miserable GDP print and is realising that his QE thing has gotten way out of control. Please tell me that.
Looks like a profitable trade.....for somebody on the other side of it.
More drama oin UK . a suspected bomber has taken 4 hostages at the offices of The Huffington Post in central London. Eye witnesses said that computers are falling from windows and the police marksmen are on the rooftops!
He hates computers!!
Cripes; now we have the Neo-Luddites on the rampage...
Damn liberals!
'This is serious, this is for your own safety. He has got gas.' Can you get good Mexican in the UK?
http://www.guardian.co.uk/uk/2012/apr/27/tottenham-court-road-police-alert?INTCMP=SRCH
Are we being too bearish, given the market is holding up even with the figures today? Are there any coporate results expectations that could be keeping the markets high?
DavidC
Corporate earnings are inflation for the most part. Most people do not differentiate the growth from inflation. This is the plan. Create inflation. However, the exploding debt will overwhelm the bond markets eventually. No one knows when.
Gold holding up real nicely, oil too...I'm bullish on them.
Clearly we need to create more money to increase demand:)
All this CB hold 'em crap leads me to believe we may be seeing another 'globally coordinated' action soon. Gotta get some 'liquidity' into the system.
Oh yea! They need to DO something BIG!
So that is what I have heard so many times but never been able to understand=THE MAGIC MULTIPLIER?
I can just hear Krugman's explanations. "See? Government spending recedes and there we are...slower growth. Once again my theory/facts about austerity measures is proven correct." Krugman is a cause and effect thinker...that relies on faulty logic. He also believes that commanding the sun to rise in the East is the causitive agent that enables the sun to greet us each am. Talk about entrenched reasoning. Sheesh.
That's one possible read on Krugman. The other... he's a liar.
Nah; he's a True Believer. He's too stupid to be a Liar.
Govt spending slowed? Lol, WHERE?
This reminds me of Fekete's article on the marginal productivity of debt. Tyler, you should repost that fine piece. Looking at the chart I'm wondering if it is actually much worse than we see. How phony is that GDP number? How close are we to actually destroying GDP with addidtional debt?
Daddy Bernanke is proud of his negative interest rate policy to support the government's risk-on strategy. He KNOWS what is best for us all. For me, he is a traitor to his southern roots that is a bookworm without ANY practical experience.
Sometimes I think we are missing the bigger picture. We've been printing for decades now to pump and prop up this aging economy.
The bottom line is the economy has hit the wall. NEVER going to break the 3 minute mile. The economy is NEVER going to "grow" (how I laugh every time that word is pushed) its way out of this hole. There is only so much "stuff" we can go in debt to buy and have and call our very own. There is only so much storage space we can use to put our stuff from last year into so we can go buy more. The only innovation in the last 10 year is the cell phone and that POS already does about a 1000 times more stuff than 98% of us will EVER use. People use to have a phone so they could call someone. Told my boys the other day that I was surprised there wasn't a "wipe-you-ass" app out already.
How far do we think we can take this? Transportation has hit a wall, housing is dead for decades, what else can they put on a stupid car/truck (that's useful), etc. We have hit the wall. They can print all they want but it will not get blood out of a turnip.
The only thing that will fix this is a reset. Until that happens it is going to be painful for generations.
Fix what? So we reset and go back to unlimited consumption until we run the debt to unsustainable levels once again? Consume what? People alive today have consumed more, gone further, used more energy, eaten more food, than the previous 5-6 generations COMBINED! When is it enough?
Life was not intended to be a consumption binge where we work to get all we can before we die. That's not living, that's working. Until we get a handle on the consumption craze, we will always be somebody's slave reset or not.
I once read that 1/3 of all food in the U.S. is wasted, and that wasted food could feed many, many millions. The way to go is to have a maximal standard of living for minimal outlay/consumption. Life in a 1200 sq. ft. cottage in a scenic spot, or a decent small town, can be a lot sweeter than having to deal with a 12,000 sq. ft. McMansion in some plastic suburb surrounded by jerks. A 4-cyl. car can get you where you need to go just as comfortably as an 8-cyl. car, and use half the fuel. I don't want to wear a hair shirt and live in a cave, but efficient living is the right way to survive this (increasingly crappy) century.
There actually is an app for that....
http://krapps.com/2009/09/29/iwipe-iphone-app/
The rest of your post was spot on...+1
And I understand Krugman's general point about government spending and growth. But there are practical limits. No amount of government spending can replicate what our economy does on its own in a normal enviroment. What seems to fail is government's obvious inability to duplicate the entire housing sector. We somply cant "make" people buy houses...altho making them buy health insurance is a step in that direction.
These pro government spending advocates still insist that pouring bags of grass seed in different corners of the economy produce what we call a lawn.
It simply wont.
Nor will accruing massive amounts of new debt fix a problem based upon the exponential growth of already excessive levels of DEBT. They are pouring alcohol into an alcoholic, something that will help his DTs, but won't cure the alcoholism which will eventually kill him. But they are doing it because their GARBAGE 19th century economic models tell them to do it:
http://www.youtube.com/watch?v=jIP7ES1lCGk
Worth the read.
http://www.economicpolicyjournal.com/
Here's a REALITY chart for you, US GDP minus debt accrued, 1953-2010. So much for real GDP growth, huh?:
http://market-ticker.org/akcs-www?get_gallerynr=1999
So, without stimulus (government deficit spending), we'd still be in the original Great Depression?
Does that mean Keynes was right?
The real question is how much does it cost to print $2.52? Bullish
I don't understand why the government just can't secretly send each TAX paying citizen a check for a million dollars. Let everyone pay off their underwater mortgages and debt while buying thousands of iToys at the same time to stimulate the economy. /sarc
Don't forget that Ben does not get Margin Calls. Lots more money coming for lots more decades. Borrowing from yourself is how they keep Sushi on the table in Japan. They are starting their 3rd decade on that "road to prosperity". Seems to work over there. Enjoy the Ride! Go buy something folks! Why does everyone think there is something wrong?
Won't work over here. Japs are all about personal discipline, minature, conservative lifestyle. Everything the US is not. Japs see their lives as worthless for the "greater good" while we here in America tend to think the individual has some value. (A belief that I hold dear.) We won't knuckle under here in the US like they have done in Japan or are trying to do in Europe. The Brits are another good example of a people who have lived in serfdom for queen and country for generations. They can invoke personal austerity for their beloved England. We will not.
I am half tempted to adopt this mindset, although I won't start being a 'consumer', and that's the problem.
Once your 'preps' are in order and your just sitting around waiting for the collapse there isn't a lot to worry about. Just get up and feed the animals, tend the garden, and wait for it....
How can gold and silver going down ? This situation will always need more money printing.
Because the price is controlled by the same guys printing the money. Forget the Forex numbers and look at the physical price. That is the real price.
And too gold and silver are the direct enemies to a central bank fiat currency. They are the alternative to an inflateable currency. Bottom line they are the enemy of the Fed. The Fed will never willing let them be an alternative to the precious fiat sinking ship. Its like the captain of the Titanic firing on rescue boats to keep everyone on board and going down with the ship.
Starve TPTB! Buy PMs!
Go Galt!
The man who calls himself O'Bama has already destroyed the fuel business. Food control and airborne Ebola are next. I hope TPTB give him a fake vaccine for it.
GOld and silver going down according to what?
PMs are a hedge against perceived future inflation. until the velocity of money increases; and/or lending to the masses....deflation in all things except most commodities is the track we are on. inflation in goods and services (very deflationary currently) vs. inflation in food and energy. where does most of your money go?
again...its percieved future inflation, which whenever they 'print' people think inflation is around the corner. hyperinflation, moving the decimal over will occur, b/c its a battle the fed thinks it can fight; but first continued deflation....do any businesses have pricing power?
Even the RATE of debt growth is vastly higher than the rate of GDP growth. This is NOT a picture of future prosperity! It is a calamity in the making!
U.S. government debt is growing at nearly 9% per year, and GDP is growing at 2.2%! Debt is growing more than 4X faster! That is unsustainable, even in the short-term over the next few years!
Who cares about Debt/GDP. 'Only thing that's important are Ipads, Iphones, Droids, Facebook & porn. The honey bees have left the buildg
Doesn't it take more BTUs of energy to produce a gallon of ethanol than is gotten out of it?
And doesn't it take something like 6.5 cents worth of metal to manufacture a nickel?
What's my Delta Tau name?
Yea and the coinage is now worthless pot zinc too.
Flounder
Exactly if the US stopped doing stuff because it didn't make sense the entire government would shut down.
For your first question, it depends. Corn ethanol currently yields between 0.8 and 1.4 EROI. If you raise cows on site, and have a large enough farm that you refine the ethanol onsite, and use cow manure methane to run the ethanol distillery, it can theoretically be increased to a 5:1 EROI, comparable with tar sands oil.
For the second, yes, nickels cost more to make than they are worth; I expect them to disappear in the near future. In Canada, the penny goes first, then a few years after, the nickel, and so on.
And it gets even worse when you consider that GDP growth doesn't translate into income growth.
http://www.zerohedge.com/news/keynes-muppets-elmo-explains-national-debt
(Thanks for the post, Tyler)
Winning The Future?
I wonder if this splendid chart is telling us something about the futility and waste of wars and army bases overseas?
"It takes $2.52 in new debt to increase $1 of GDP."
Big deal! The solution to this problem is so freaking obvious! All you need to do is increase the debt some more, push it up to $6.00! Then this economy will really take off, maybe increase .1 to $1.10 of GDP..
It's so simple! Right there! Come on Guys!
It's obvious the Keynesianism ain't working, what we need are more Bush tax cuts.
If we can just get more than the current 30% of the nation's income into the hands of the top 1%, maybe dem job create-ors will start making us sum der jabs.
Please, help the poor rich people. Because a trust fund baby is a terrible thing to waste.
We must destroy zee poor peoples in order to save them! Diz is the final solution!
Get rid of uncertainty. It is the uncertainty of constant government actions that make people and corporations scared to invest money.
If you keep threatening to change the cost of employing people, and the rates of taxation, and the regulations, the value of money, etc etc people will just hoard it.
Spain gets downgraded; Nokia gets downgraded; US GDP misses; Inital Claims stay stagnant.....
.....and the DOW still makes gains.
I fuckin' give up.
Don't give up..All the bad data and the Dow going up regardless, is really the Elite desperately trying to keep control of the system while at the same time destroying the credibility of markets and government even more..
You're not supposed to know that it's just for appearance sake...
You are to believe that everything is good..The DOW is an indicator of everything being good..We will tell you what you need to think..
Now smile to your family friends and coworkers as if you don't know anything..Say positive things about how great everything is...
But while no one is looking prepare for your escape from the pod people..
What happens to a nation's GDP when its industry is death and its product is body counts.
Extermi-Nation.
Can someone please call Stephen Hawking...? We have aa serious fucking math problem here.
The problem here is that this crap has a tipping point.
The kind that makes people jump out of windows...
When Money isn't real but is printed out of the 1 percent's poopchute, is debt real?. NO, certainly not national debt. But it magically becomes real for the 99.9%, therefore personal debt is the only real debt. Don't forget this, it explains everything, including your slavery. Time is money, no wait, it's more real than your money.
O'Bama (Evil Laugh): Yes, George, our plan to crush America is working better than expected!
I've ordered the Crucifixon of the Oil Industry, closed coal plants, shut down the pipeline and that's just the start. Wait til they find out there's nothing on the other end when they plug in the Chevy Volts I order them to buy.
(more evil cackling) I will bring America to its knees and then I will cut off the head! (more evil laughter).
Hold on. Ben just brought me a desktop dislpay that says 'CTL-P, Bitchez!' I have to find a place to put it. Maybe next to my Koran...
Bullishski!
"Doesn't anyone give a shit about the rules!"
W.S.
As Stalin would say....Who holds the Debt ?
Sounds like a great deal....Goldman lends $2.52 for some sucker to generate $1 - pretty soon the guy is slaving for Goldman and selling his soul
That is how Americans work themselves into penury
Gee,we have all these Vets coming back to a tanked economy,what could possibly go wrong?
Can you say "Disillusionment",Boys and Girls? I knew you could.....
My apologies to Mr. Rogers neighborhood viewers.
Keynesian economists (i.e., Paul Krugman et al.) want us to spend more to resolve the credit crisis. However, paying $2.52 to purchase one dollar is insanity. Five trillion dollars of new debt has been added to the national debt in the past four years, and we are still in the midst of a credit crisis.
The problem is not spending money, we can do that. The problem is structural, which means those in the status quo will have to step aside, including Paul Krugman.
It's like the Titanic. The iceberg has already been hit. Initially everything appears to be contained, okay and perhaps recovery could be possible. Then the ship starts a very slow sink and people still think they will be rescued... until it suddenly is no longer slow.
The pyramid of power - Poof there it is!
As Robert Kiyosaki demonstrates below
http://www.youtube.com/watch?v=EisLfPepCBc