In the same category

Soaring Debt = Slow Growth = Even More Debt = Systemic Crisis

IMG Auteur
Published : June 11th, 2017
713 words - Reading time : 1 - 2 minutes
( 1 vote, 5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
[titre article pour referencement]
0
Send
0
comment
Our Newsletter...
Category : Editorials

It's just common sense: Borrow too much money and the weight of this debt makes it hard to do things that used to be easy. This truism is now (finally!) hitting home, and blame is being apportioned. A couple of recent examples:

Over The Last 10 Years The U.S. Economy Has Grown At EXACTLY The Same Rate As It Did During The 1930s

(Economic Collapse Blog) - Even though I write about our ongoing long-term economic collapse every day, I didn't realize that things were this bad. In this article, I am going to show you that the average rate of growth for the U.S. economy over the past 10 years is exactly equal to the average rate that the U.S. economy grew during the 1930s.

The hard fact is that the past decade's $10 trillion in deficit spending has produced the worst economic growth as measured by Gross Domestic Product in our nation's history. You read that right, in the past decade our nation's economy grew slower than even during the Great Depression. This stagnant, new normal, low-growth economy is leaving millions of working age people behind who have given up even trying to participate, and has led to a malaise where many doubt that the American dream is attainable.

The following are U.S. GDP growth rates for every year during the 1930s...
1930: -8.5%
1931: -6.4%
1932: -12.9%
1933: -1.3%
1934: 10.8%
1935: 8.9%
1936: 12.9%
1937: 5.1%
1938: -3.3%
1939: 8.0%

When you average all of those years together, you get an average rate of economic growth of 1.33 percent.

That is really bad, but it is the kind of number that one would expect from "the Great Depression".

So then I looked up the numbers for the last ten years...

2007: 1.8%
2008: -0.3%
2009: -2.8%
2010: 2.5%
2011: 1.6%
2012: 2.2%
2013: 1.7%
2014: 2.4%
2015: 2.6%
2016: 1.6%

When you average these years together, you get an average rate of economic growth of 1.33 percent.

When the "Fix" Increases Systemic Fragility, Things Fall Apart

(Of Two Minds) - All the "fixes" have fatally weakened the real economy, and created a dangerous illusion of "wealth," "growth" and solvency.

The "fix" of the last eight years worked, right? This was the status quo's "fix":

1. Massive expansion of debt: sovereign, household and corporate, all in service of a) bringing consumer demand forward b) fiscal stimulus funded by debt c) corporate stock buybacks to boost stock valuations d) asset bubbles in real estate, bonds, stocks, bat guano futures, etc.

2. Monetary stimulus, i.e. creating and distributing money at the top of the wealth/power pyramid so corporations and the super-wealthy could buy more assets with free money for financiers issued by central banks.

3. Gaming statistics such as unemployment and metrics such as stock indices to generate the illusion of "growth," "stability" and "wealth."

4. Saying all the right things: the "recovery" is creating millions of jobs, inflation is low, virtue-signaling is more important than actual increases in inflation-adjusted wages, etc.

The cost of maintaining the illusions of "growth," "stability," "wealth" and solvency is extremely high, and hidden from view: systemic fragility has increased to the point of brittleness.

The status quo is now like a wafer-thin sheet of ice over a deep lake of killing-cold water.

And here are a couple of charts from the always excellent Incrementum In Gold We Trust report:

The first shows how central bank balance sheets - that is, the amount of currency governments have created and dumped into the marketplace - have soared in the past decade. Note that this is not solely - or even especially - a US policy issue. The central banks of China, Europe and Japan are inflating more aggressively than the Fed.

The result of that insane level of money printing? Asset values relative to GDP are at record levels. And this chart is probably unduly conservative, given the fact that most stock and real estate markets have outpaced GDP growth since the depicted peak of 2014:

What's amazing about these charts is that monetary stimulus on this scale produces soaring asset prices yet only Depression-level real growth. But that's just what too much debt does to a system. And the crisis that follows is, unfortunately, just as predictable.

Data and Statistics for these countries : China | Georgia | Japan | All
Gold and Silver Prices for these countries : China | Georgia | Japan | All
<< Previous article
Rate : Average note :5 (1 vote)
>> Next article
John Rubino is the author of The Coming Collapse of the Dollar (co-written with James Turk), How to Profit From the Coming Real Estate Bust (Rodale, 2003), and Main Street, Not Wall Street (William Morrow, 1998). A former Wall Street financial analyst and columnist with theStreet.com, he currently writes for Fidelity Magazine and CFA Magazine He lives in Moscow, Idaho
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Get Ready To Party Like It’s 2008 - Dave Kranzler
21 OctSilverLining
Very good article, Dave. The S&P chart helps to visualize the uncharted territory the current market finds itself in. There is a confluence of fa...
The Fed Is Confused about What Drives Inflation
23 Octprljr
Central banking is the biggest lie or in other words the largest CON
The Fed Is Confused about What Drives Inflation
18 Octneville1
Hi Frank, Thanks for your article.......The fact of the matter is that LIES LIKE EVERYTHING ELSE DRIVES INFLATION , which as it so happens is 'THE'...
What kind of person runs for public office ?
17 OctThemis1
I liked the use of the self-actualization chart within the context of politicians and their motives. It probably applies to many in Hollywood as w...
The Silliness of the Bretton Woods Years
16 OctThe Recusant
KUDOS! The book is anti-gold slanted throughout and subtly mocks those that value gold as seen in that silly Las Vegas Golden Rooster tale. As I pr...
The Future (Not)
14 OctS W.-1
I have it on good authority that the Aliens living in Antarctica have discovered a way of turning Ice into Oil. All we have to do to secure ou...
Betrayal!
09 OctThemis1
I agree 100% with all the points you made. You have summarized my own anger and the reasons for it. My only consolation is that I believe the eli...
A silver price-suppression theory gets debunked
07 OctDoom-1
I think he linked the wrong article, because there's minimal facts and logic there relevant to price suppression. It's a shame, because I really wo...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS