The Recovery Fantasy Has Officially Been Put Out of Mind

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from: The Recovery Fantasy Has Officially Been Put Out of Mind | RealClearMarkets


Jeffrey Snider March 24, 2017

During the middle 2000’s when Alan Greenspan’s Fed endeavored to change the outward monetary policy stance to “tightening”, it was not unusual for some divergences to have emerged. One of those was between the federal funds rates, either target or effective, and Treasury bill equivalent yields. Under a hierarchical system, this was not unexpected or alarming except as when the distance between them became unusually large (2006). Federal funds are unsecured interbank transactions whereas Treasury bills are near equivalent to them except secured by lending cash to the federal government. One would expect bill rates to be some degree less than federal funds.

And so they are again in 2017 as the Fed embarks on another so-called tightening regime...


...What made the Great Depression was both its catastrophic downturn while also the lack of recovery following it; the 1920-21 Depression, by contrast, was nearly as severe in its contraction but left no lingering impression beyond the downturn.

Before the 1930’s, the name Great Depression was given to the later 19thcentury in the US but more so Europe. It remains to this day a controversial and argued subject, largely because it has become embroiled in political considerations as much as economic ones. As Milton Friedman and Anna Schwartz wrote in A Monetary History:

“Though declining prices did not prevent a rapid rise in real income over the period as a whole, they gave rise to serious economic and social problems. The price declines affected different groups unevenly and introduced additional elements of uncertainty into the economic scene to which adjustment was necessary.”

The Long Depression, as it is sometimes called, is often filtered through the lens of gold...


...Using 1896 as the ending date is also ironic in that it was the election of William McKinley that ultimately settled the monetary debate of the era – the US would be committed fully to the gold standard...


...a few months into what would become the Panic of 1893, bringing with it the second great contraction in the US of the Long Depression, President Grover Cleveland said:

“At times like the present, when the evils of unsound finance threaten us, the speculator may anticipate a harvest gathered from the misfortune of others, the capitalist may protect himself by hoarding or may even find profit in the fluctuations of values; but the wage earner - the first to be injured by a depreciated currency and the last to receive the benefit of its correction - is practically defenseless.”

Indeed, some estimates put the unemployment rate at 3% in 1892 but 18.5% by 1984. But what Cleveland said was not merely applicable to that one cycle, or even how that single cycle might situate in the Long Depression. It is a timeless stamp of monetary instability. The symptoms of that are easily identifiable, as are its burdens. And in his address on the repeal of the Sherman Silver Act that year, President Cleveland, a Democrat but not a populist one like Bryan (in those days populism at least in the US meant for government intervention in money through silver, the agitation), further said:

“The people of the United States are entitled to a sound and stable currency and to money recognized as such on every exchange and in every market of the world. Their government has no right to injure them by financial experiments opposed to the policy and practice of other civilized states, nor is it justified in permitting an exaggerated and unreasonable reliance on our national strength and ability to jeopardize the soundness of the people’s money.”

It would be, again, left to McKinley, a Republican, to act out what Cleveland proposed against Bryan’s silver platform of 1896. Only then did the Long Depression end in the US, though it may have continued until, and contributed toward, World War I elsewhere...


...The global economy had in 2015 and early 2016 taken another big step back (or two), leaving no longer any doubt that the Great “Recession” was a full rupture rather than a recession.

The race among central bankers is on to figure out why, though in reality it had already started ten years ago with no special powers required to figure out...

...it is the sudden lack of labor utilization, a deficiency from which so-called safety nets have only been partially successful in mitigating. Unlike the latter 19th century, the periods in between these monetary disruptions feature no rapid growth at all, leaving the global economy to languish with unstable slow growth, where each reinforces over time the other. The T-bill rate matters today in a way it didn’t ten years ago.

It may be now that officially the recovery fantasy has been put out of mind that in some years distance the current age will become the resurrected argument of the Long Depression. And why not? With things as they are now even after ten years there is no sign of stability anywhere on the horizon; no McKinley’s on the R side to put into action the commitment of the Cleveland’s on the D side. We are stuck only with WJ Bryan’s on all sides, experimenting with a system they don’t understand or recognize. History never does repeat, but boy does it sometimes rhyme, right down to the perfect pace and inflections.

* * * * * * * * * * * * * * * * * * * * * * * * *​

The original piece is good, but it's v e r y long and it's rancid in a detritus of obfuscation (it uses way too many big words). The above excerpt is a little easier to read but what it all boils down to it is that politics aside, the 'summer of recover' back in 2009 was a crock and more and more folks are quietly learning to deal w/ this reality. Any argument to the contrary has to exlain why the Fed was unable to raise rates until now.
 
Clearly the recovery was very weak...yet the central government under Big Ears doubled the national debt in just 8 years. Keynesians claim government spending grows the economy. One would think after adding $10 Trillion in debt with little positive results, Keynesianism would be a dead economic theory.
 
Obama engaged in classic Soviet style storming of the plan in order to get numbers that said recovery. Dodd-Frank and tweaking economic definitions were sufficient to make recovery claims marginally credible.
 
Obama engaged in classic Soviet style storming of the plan in order to get numbers that said recovery. Dodd-Frank and tweaking economic definitions were sufficient to make recovery claims marginally credible.
What tweaking of definitions? The only one I can think of is the change in GDP to include R&D and intellectual property development as fixed investment. But that had been known for years that that was coming.

What were you referring to?
 
The nature of intervention in the bankruptcy and the way it was reported did not strike you as tweaking?
 
The nature of intervention in the bankruptcy and the way it was reported did not strike you as tweaking?
You said "tweaking of economic definitions." Which definitions are you claiming were tweaked? I don't know which bankruptcy you're referring do, and neither do I know the way it was reported.
 
fredgraph-3.png

^ The recovery is an illusion based on lies and manipulated numbers. The statistics .gov puts out are pure propaganda, plain and simple.

Velocity of money is the pulse of an economy. If it's plummeting, nothing is growing. No one is spending, that's why retail has begun to collapse.

bigger short.jpg


It's not as if people discovered Amazon all the sudden in Q4 2016 and decided to buy everything there at once. Amazon also keeps missing guidance, revenues, earnings, quarter after quarter.

We are witnessing the breakdown of the global economic & financial system. It collapsed in 2008, has been propped up with low or negative interest and trillions in liquidity and debt, and will only last so many more years before failing.
 
Also, what's happening in Venezuela, Brazil, and India will at some point come to Western first-world countries, as it has in Greece.

 
View attachment 118587
^ The recovery is an illusion based on lies and manipulated numbers. The statistics .gov puts out are pure propaganda, plain and simple.

Velocity of money is the pulse of an economy. If it's plummeting, nothing is growing. No one is spending, that's why retail has begun to collapse.
So to demonstrate that government statistics are pure propaganda, you cite a government statistic. You don't see any irony there?

But tell me then how you evaluate the trustworthiness of any statistics?
 
We are witnessing the breakdown of the global economic & financial system.
??? GDP is growing, employment is 95%, 100 million of us have smart phone super computers in our pockets at $140/month, and billions are being spent on developing space travel and the self-driving car. Care to rethink??
 
We are witnessing the breakdown of the global economic & financial system.
??? GDP is growing, employment is 95%, 100 million of us have smart phone super computers in our pockets at $140/month, and billions are being spent on developing space travel and the self-driving car. Care to rethink??

You obiouvlsy didn't read anything. It's not true that employment is 95%. So people have smartphones, big deal. How does space travel and self-driving cars effect the average person? Not at all. You're stating wild random facts as if they somehow mean something. This is getting old.
 
So to demonstrate that government statistics are pure propaganda, you cite a government statistic. You don't see any irony there?

But tell me then how you evaluate the trustworthiness of any statistics?[/QUOTE]

It is not a government statistic. The Federal Reserve bank is not part of any government, like any other central bank. It is a private bank ran by a group of un-elected officials.

Your ignorance continues to amaze me.

In addition, you completely ignored the entire point of all arguments and evidence, choosing instead to try and discredit me by way of some error in my logic, which you failed at miserably.
 
. How does space travel and self-driving cars effect the average person? Not at all.

You don't need to be an economist to see how rich the middle class got by looking at all the new inventions they could suddenly afford in the last 10 years: suddenly we had plasma TV's, LCD TV's, DLP-TV's, iPods, iphones, CD's and CD players, DVDs and DVD players, Blue Ray and Blue Ray players, PCs, desk top PCs, DVRs, color printers, satellite radio, Advantium ovens, HD-TV, Playstations, X-Boxes, X-box live, X-box Konnect, broadband, satellite TV, cell/camera/video phones, digital cameras, OnStar, palm corders, Blackberries, smart phones, home theaters, SUVs, big houses, more houses per capita, TiVo, 3D movies and TV's, built in wine coolers, granite counter tops, $200 sneakers, Go Pro Cameras, GPS navigation, consumer drones, color matched front loader washing machines, internet Facebook, Pandora, LTE-U, run flat tires, matching washer dryer combinations, McMansions, 4K TV, Iphone 6+, burner commercial ranges, Sub Zero refridgerators, Tesla cars, private space flight, more cars than drivers, a $1 billion ring tone industry, a pet industry that just doubled to $34 billion, 10's of millions lining up to buy Apple's I-tablet, Wii, Fit bits, Apple watches, Netflix boxes, jet skis, induction cooking, low profile tires, aluminum/titanium rims, Harley Davidson and Japanese motorcycles. $700 Billion spent Christmas 2010, $10.5 billion movies 2010, 10 million ocean crusies, 44 million taking plane flights over 2012 holiday, $500 billion spent on Christmas 2012, hover boards, Ti Vi Bolt, Tesla cars, cloud storage, 4k Oled TV,
hover boards, Ring Doorbells, semi self-driving cars, Amazon Alexa,


The list goes on and on. I hope that helps you realize you can't just parrot the communist press and expect to make sense? They have other objectives and are merely using you to promote their point of view.
 
27% revenue growth doesn't even come close to accounting for all the destruction in the rest of retail. If it did, it would be upwards of 1,000%.

See here.


Amazon falls on earnings Thursday, 2 Feb 2017 | 4:02 PM ET | 02:09

Amazon.com was pummeled on Wall Street on Thursday after its holiday season sales fell short of expectations.

  • EPS: $1.54 a share vs. $1.35 adjusted expected by a Thomson Reuters consensus estimate.
  • Revenue: $43.74 billion vs $44.68 billion expected by Reuters
  • Amazon Web Services revenue:$3.536 billion vs.$3.6 billion expected by FactSet
  • Q1 guidance: Between $33.25 billion and $35.75 billion vs. revenue of $35.95 billion expected by Reuters
 
The list goes on and on. I hope that helps you realize you can't just parrot the communist press and expect to make sense? They have other objectives and are merely using you to promote their point of view.[/QUOTE]

LOL so now a simple question equates to "quoting the communist press"? You're not very good at this troll stuff.

The middle class has begun disappearing, shrinking to a minority for the first time in history. Everything you mention, the laundry list of tech improvements, is irrelevant.

Here.

Congratulations American Middle Class, You're Becoming A Minority




Erik Sherman ,

CONTRIBUTOR

I cover business, personal finance, careers, and the economy.

Opinions expressed by Forbes Contributors are their own.


The trend of growing income inequality has hit the demographics of the country. The middle class, which for 40 years has represented a majority of the country and provided the economic engine of prosperity, is now just half the country, according to a Pew Research Center report. The result could have profound implications for the economic and social dynamics of the country.

Over at least the last three decades, productivity gains have gone largely to the top of the economic heap, increasing both income and wealth. Real income growth has been flat for most Americans, even as the cost of living has increased.

960x0.jpg

Protesters hold signs that read, "Middle Class Over Millionaires" while standing under a sign that reads, "Republicans: Don't Drop the Ball on the Middle Class" on the grounds of the U.S. Capitol in Washington, D.C., U.S., on Friday, Dec. 28, 2012. President Barack Obama is set to propose a scaled-back package at a meeting with congressional leaders to avert tax and spending changes that could trigger a recession in 2013, a Democratic aide with knowledge of the talks said. Photographer: Jay Mallin/Bloomberg

According to the Pew study, one of the results has been a significant change in the socioeconomic breakout of the country. The organization used the definition of middle income adjusted for household size to stand in for middle class. As has been well documented for years, most Americans consider themselves middle class, including most millionaires. Looking at income is a way to move past subjective perception.
 
27% revenue growth doesn't even come close to accounting for all the destruction in the rest of retail. If it did, it would be upwards of 1,000%.

See here.


Amazon falls on earnings Thursday, 2 Feb 2017 | 4:02 PM ET | 02:09

Amazon.com was pummeled on Wall Street on Thursday after its holiday season sales fell short of expectations.

  • EPS: $1.54 a share vs. $1.35 adjusted expected by a Thomson Reuters consensus estimate.
  • Revenue: $43.74 billion vs $44.68 billion expected by Reuters
  • Amazon Web Services revenue:$3.536 billion vs.$3.6 billion expected by FactSet
  • Q1 guidance: Between $33.25 billion and $35.75 billion vs. revenue of $35.95 billion expected by Reuters

so?????as long as GDP is rising there is little reason for concern. Of course a switch to capitalism would get GDP up to 4-5% fro the current 1-2%. Do you understand?
 
The Federal Reserve bank is not part of any government, like any other central bank. It is a private bank ran by a group of un-elected officials.

so you want the Fed to be elected by people who have no idea what monetary policy is??? Does that make sense to you?
 

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