Best of the Week
Most Popular
1.Stock Market in DANGER of Strangling the Bears to Death - Nadeem_Walayat
2. Germany Pivoting East, Exit US Dollar, Enter Gold Standard - Jim_Willie_CB
3.Flight MH17 – Kiev Flash Mob's Last False Flag? - Andrew_McKillop
4.Stock Market Crash Nightmare! - Nadeem_Walayat
5.Gold - The Million DOLLAR Question... - Rambus_Chartology
6.Gold And Silver – BRICS And Germany Will Pave The Way - Michael_Noonan
7.The Jewish Selfish Gene, People Chosen by God, Everyone Else is Goyim to Kill - Nadeem_Walayat
8.The Israeli Promised Land Dream - The Criminal Roadmap Towards “Greater Israel”? - Felicity Arbuthnot
9.Which Way is Inflation Blowing? Watch Commodities - Gary_Dorsch
10.U.S. Economy Quarterly Review and Implications for 2014-2015 - Lacy Hunt
Last 5 days
Death of the U.S. Dollar? Gold an Inflation Hedge? Really? - 29th July 14
We’re Ready to Profit in the Coming Gold Price Correction—Are You? - 29th July 14
Their Economy Will Collapse, Including Ours - 29th July 14
Silver Prices – Megaphone Patterns - 29th July 14
Real U.S. Interest Rates - Fed Exit a Blue Pill? - 29th July 14
Why Israel Should NOT Exist, Just Like Any Other Rogue State - 29th July 14
Gold Still Looking Good - 29th July 14
Silver Price Set To Star - 29th July 14
Our Population Growth Totalitarian Future - 29th July 14
World War 1 Cause and Consequences - The Planned Destruction of Christendom - 29th July 14
Will Crashing Commodities Crash the Stock Market? - 29th July 14
Ukraine MH17 - Washington Thinks Americans Are Fools - 29th July 14
Stock Market Bubble Warning - 29th July 14
Gold Price and U.S. Dollar’s July Rally - 28th July 14
Second Quarter Corporate Earnings: Marching Toward a Strong Economic Recovery - 28th July 14
Time to Put a New Economic Tool in the Box - 28th July 14
Mossad in Gaza, Ukraine and the Cult Of The All-Powerful Elite - 28th July 14
Elliott Wave Gold Price Projection Since 1970 - 28th July 14
Investors Remain Uncertain As Stock Fluctuate Near Long-Term Highs - Will The Uptrend Extend? - 28th July 14
The Mass Psychology Of Decline - 28th July 14
Will the US Destroy the World? - Don’t Expect to Live Much Longer - 28th July 14
GDM and GDXJ Gold Stocks In-depth Look - 28th July 14
Stock Market One FINAL High? - 28th July 14
What It Means - Paradigm Collapse And Culture Crisis - 27th July 14
Wall Street Shadow Banking: You Can’t Taper a Ponzi Scheme: “Time to Reboot” - 27th July 14
6 Tips for Picking Winning Gold Mining Stocks - 27th July 14
Israel's War on Children, Exterminating the Palestinians Future - 27th July 14
Guilt By Insinuation - How American Propaganda Works - 26th July 14
Surprise Nuclear Attack On Russia To Liberate Ukraine - 26th July 14
Use "Magic" Of Gold/Silver Ratio To Greatly Increase Your Physical Holdings - 26th July 14
Derivatives Market Species Origins - Abuse, Props and Risks - 26th July 14
Stock Market Manipulation and Technical Analysis - 26th July 14
China’s Stock Market Finally Looks Like A Buy - 26th July 14
Ed Milliband Fears Israel Jewish Fundamentalist Gaza War Massacres Backlash - 26th July 14
The Big Energy = Power Battle Is Coming - 25th July 14
USrael - Zionists in Control of America's Goyim Brainwashed Second Coming Slaves - 25th July 14
More Weakness Ahead for Gold Miners - 25th July 14
Gold Price Strong Season Starts - 25th July 14
Geopolitics and Markets Red Flags Raised by the Fed and the BIS on Risk-taking - 25th July 14
Gold Lockdown Until Options Expiry - New Singapore Gold Contract Threatens Price Manipulation - 25th July 14
The Bond Markets, Black Swans, and the Tiny Spirit of Santo - 25th July 14
No Road Map For Avoiding The Future - 25th July 14
Israeli War Machine Concentrating Women and Children into UN Schools Before Killing Them - C4News - 25th July 14
Israeli Government Paying Jewish Fundamentalist Students to Post Facebook Gaza War Propaganda - 25th July 14
Why the Stock Market Is Heading For A Fall - This Time Is Not Different - 25th July 14
An Economic “Nuclear Strike” on Moscow, A “War of Degrees” - 25th July 14
BBC, Western Media Working for Israeli Agenda of Perpetual War to Steal Arab Land - 25th July 14
Ukraine: What To Do When Economic Growth Is Gone - 24th July 14
Stock Market Clear and Present Danger Zone - 24th July 14
The Five Elements to Creating a Something-for-Nothing Society - 24th July 14
Instability is the New Normal? - 24th July 14
Israel's Suicide Bombers Over Gaza - 24th July 14
EUR-AUD Heads Into The Danger Zone - 24th July 14
Tesco Supermarket Death Spiral Accelerates as Customers HATE the Mega Brand - 24th July 14
Ukraine MH17 Crisis - Best Remember Who Your Friends Are - 24th July 14
Three Reasons Why Gold Price and Gold Stocks Will Rise - 24th July 14
HUI Gold Bugs Fighting To Break Downtrend - 23rd July 14
What Putin Knows About Flight MH17 - 23rd July 14
Why Microsoft Will Continue to Rebound, Huge Upside Potential - 23rd July 14
Will Putin Survive? - 23rd July 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

Trending Towards The Inflationary Economic Depression

Economics / Great Depression II Jun 02, 2010 - 10:08 AM GMT

By: Bob_Chapman

Economics

Best Financial Markets Analysis ArticleWe believe an inflationary depression began in February of 2009, and little has changed. Since then factory output has increased, as have inventories and other outward signs, such as retail sales. We believe that one-year spurt is ending, unless a new stimulus program is put in place. This past week we saw a $78 billion addition to unemployment benefits and Larry Summers has said they need an additional $200 billion.


In order to keep the economy going sideways a total of another $800 billion will be needed. The Fed may have cut back the creation of money and credit to zero, but it is still dishing out trillions to domestic and foreign banks, which can only affect the domestic economy in a residual way. The key is real personal income. Including government programs it has fallen $500 billion over the past 16 months. In addition real unemployment remains at a high of 22-3/8%. That is U-6 less the birth/death ratio. This terrible dilemma is a first and is surprising in as much as government addition to income has gone past 18% for the first time ever. We expect that part of the reason for both situations is the perpetual drag of free trade, globalization, offshoring and outsourcing, which has continued unabated.

There is no question that the $800 billion stimulus has come to an end. During the past 16 months $200 billion of that $800 billion has shown up in consumer spending. The rest has raced through the economy and the result is a budget deficit in the vicinity of $1.8 trillion.

Over the past several months we have seen a decreasing number of new unemployed, but last month those official figures rose. That to us was the signal that the growth in employment had ended as well as the mini-recovery. We will know better the situation when May’s figures are released. The small increase in non-farm payroll tells us our appraisal of offshoring and outsourcing is correct. We predicted the effects of offshoring and outsourcing in 1967, but, of course, no one was listening.

Small business’ contribution has been zero. Many of these businesses are failing and most cannot get loans. We expect that condition to persist indefinitely, which means job stability is nowhere to be seen in the immediate future. In spite of bogus government figures the economy is not growing and won’t grow. Unless the system is totally purged in a classic way there will never be any recovery.

Sooner or later the deflationary depression and purging will come. The economy is stagnant and that is with an $800 billion stimulus program and $2.3 trillion in spending by the Fed, some of which had to have entered the economy. Just think of where we would be without both additions. With stimulus, over the past year, we have only seen an average of 2.38% growth. This is certainly a very weak “recovery,” especially in view of the tremendous amount of money and credit injected into the economy.

As a result excessive spending is over. Over 70% of Americans expect to be savers and to lower their credit card balances; that is those who are still employed. We see consumers back at about 70% of GDP. Without stimulus we see much lower figures; with stimulus only 68% at best can be maintained.

Manufacturing is climbing yet employment in the sector is stagnant. That means people are working much harder to keep worker productivity at a very high abnormal level. This is all well and good, but who will buy the products produced? Exports did well through March, but we have to believe the much stronger dollar will make US exports at least 15% more expensive and those of the euro zone 15% less expensive. Exports make up 20% of GDP.

Even with auto and appliance incentives sales are still under the weather. We have also just seen an end to housing purchase incentives. All indications are we are headed toward a flaccid economy without major stimulus. Business will find out again how dangerous it is to listen to your government. The residential housing inventory is again going to build this time to a real three-year inventory overhang. We expect 20% lower prices over the next year. These are not the things recovery is made of.

As we look forward we see money supply plunge to the same levels of the 1930s. This is the same thing the Fed did between 1929 and 1933. We have zero interest rates, but they really only help the large borrowers and those with AAA ratings. In the first quarter $300 billion was removed from the economy, or a contraction of 9.6%. By the way that proves the upward move in gold and silver have not been the result of anticipated inflation, but by other factors, such as Europe’s problems. We cited the fall a year ago of European M3 and M4 like figures, and as usual, no one was listening. We, as you can see, have had the same result in the US. These reductions obviously were well coordinated. In addition, the assets of institutional money market funds have fallen at a 47% rate, the sharpest drop ever. Part of this Fed move is for banks to raise capital asset ratios as the Fed removes and overpays them for their toxic assets, which the taxpayer gets to pay for. That in part is why banks won’t lend to small and medium-sized companies, and this is why there cannot be a recovery. The banks, Wall Street, and insurance companies are selectively being bailed out, irrespective of the consequence to the US and European economies. Unfortunately, we are following the path of the “Great Depression.” That means gold and silver are being purchased in a flight to quality. Yes, we believe inflation is on the way in bigger numbers, but unless things change dramatically it won’t be long before that inflation is overcome and deflationary depression takes hold.

As you have seen the titans of banking and Wall Street savaged the market on 5/6, and again are in the process of doing so, to convince Congress not to audit the Fed and to give it tyrannical monopoly powers to run America. Congress is being threatened. They are being shown the power of the Fed and its owners, if they do not do what they are being paid to do. It shows you the power of Goldman Sachs, which controls 72% of all NYSE trades and can move the market at will by front running all orders and by restricting all credit into the system. Isn’t this what derivatives are all about? They totally control all markets and it has to end. That is why you have to unseat almost all the incumbents in Congress and the Senate and bring this monopoly to an end. The Working Group on Financial markets” has to be disbanded and “Executive Orders” have to be terminated. The “Imperial Presidency” has to end if we are to continue to have a democracy. How can you have markets recovering every time they fall, as if by magic? You cannot have manipulation of markets, as we have experienced in gold and silver since 1988. We wrote our first article on the subject in August 1988 in the “Bull & Bear,” which David still publishes. How can we continue to have SEC authorized rule breaking by allowing naked shorting?

How can we allow corporations to carry two sets of books and mark assets to model? What is wrong with American businessmen and our representatives? They allow this to go on supposedly for the better good, as they stuff their pockets with cash. Now they want to allow a Federal Reserve monopoly, what is wrong with these people? What has happened to our country? The Illuminists who run our country from behind the scenes do whatever they please and it has to stop. Our country has become the laughing stock of the world, as Europeans and Asians, as well as Latin Americans rush to buy gold and silver. They cannot get rid of dollars and euros fast enough. Obviously some people are waking up, but not more than 2% of Americans. In Wall Street and banking if you do not roll with the establishment you get destroyed. Look at what we have had to put up with for 50 years. Look at what happened to Bear Stearns, Lehman Brothers and countless others who you have never heard of. Most people on Wall Street know what is going on, but they won’t talk about it. They do not want to be ostracized or run out of business. We as well can assure you Wall Street and banking owns the SEC, CFTC and most of the House and Senate.

It was a year and one-half ago we told you that $800 billion in stimulus wasn’t enough. That is now proving to be the case. Get ready for another liquidity barrage, called quantitative easing. It will also mean real interest rates will rise again. The backbone of most all nations of the world is debt not gold, silver or a basket of commodities. Greece is being blamed, but all told, 19 nations are on the edge of bankruptcy. In fact, central banks in these countries are among the biggest speculators. In the euro zone countries cannot print money so they sell bonds in spite of the rules of the bailout. Many are having a hard time selling bonds. Thus other nations are secretly doing so.

There is talk of another Northern European currency backed by gold. If that happens the dollar will fall because it won’t be able to compete. Those in the southern tier will have to return to their own currencies and do as Argentina did ten years ago. Those long dollars do not get too comfortable. The corporatist fascist corrupt model will fail because it is already bankrupt, as will many other countries.

Theinternationalforcaster.com

Global Research Articles by Bob Chapman

© Copyright Bob Chapman , Global Research, 2010

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014