By basing the whole “recovery” argument on fraudulent data, the Fed and Federal Government have backed themselves into a corner.
After all, anyone with a functioning brain knows that the unemployment data, and, GDP growth data are massaged at best and totally bogus at worst. By using these data points as bricks to build the argument that somehow spending $4 trillion in newly printed money (and issuing $11 trillion in new debt) was needed only reinforces one of two things:
1) None of the people in charge of steering the economy have a clue what they’re doing …
Or…
2) The whole thing was in fact a giant lie used to cover up the fact that none of the money was spent to try and generate economic growth.
How do we know the US is not in recovery? It’s really quite simple. If it were, the Fed wouldn’t have any issue with raising rates. Take a look at the below chart. Every other recession going back to 1954 saw rates begin to rise a few years into the recovery.
Here’s out latest “recovery.” We are now five to six years into it and rates are effectively at zero. The old adage says “actions speak louder than words.” You could literally skip all of the Fed FOMC minutes, speeches, and Q&A sessions. The below chart is exponentially louder than anything Yellen or the other Fed leaders could say.
The Fed and Feds can talk about recovery all they want. But it’s just talk. If the US was truly in recovery, interest rates would be rising.
So… if the money wasn’t spent on creating growth, why was it spent?
To stop the bond bubble from blowing up.
The bond bubble was $80 trillion going into 2008. Today it’s over $100 trillion. The US had $5 trillion in public debt going into 2008. Today it has over $18 trillion.
Part of this money went towards expanding the already bloated government with endless programs and social spending. But a significant portion of it went towards rolling over old debt. The US never had an extra $5 trillion lying around to pay off its old debts to begin with. And so it has been issuing new debt to cover for old debt that was coming due.
Indeed, between October and November of last year, the Federal Government issued $1 trillion in new debt… because it didn’t have the money to pay back old debt that was coming due. That’s just $1 trillion. Total US debt is above $18 trillion.
There is no recovery. There is only the bond bubble. And everything has been done to prop it up because when it bursts (as all bubbles do), entire countries (including the US) will go bust. But the Fed doens't even really care about this... it cares about the $555 TRILLION in interest rate-based derivatives sitting on the TBTF bank balance sheets.
This situation will result in a Crash far larger than 2008. The markets involved are larger as is the risk and the leverage.
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Best Regards
Phoenix Capital Research