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What Recession? We've Been in a Depression

— Posted Friday, 23 September 2011

By Jeff Berwick, The Dollar Vigilante

Times like these are why we are dollar vigilantes.  Talk is incessant about a possible collapse of the European Union - something which we consider to be a certainty.  They can let it collapse now or paper it over again and see if they can keep that dead man walking a little longer.

Meanwhile, in the US, the talking heads in mass media look dazed and bewildered that, perhaps, the US is entering “back into recession”.  Almost all of them have been brainwashed at the Keynesian alter and actually think the US economy has been “growing”.  The truth of the matter is that the US has been in a depression since 2000.  It’s an highly inflationary depression, however, and it has managed to fool the great majority.  They still listen to government statistics that are fallacious, such as the GDP (see The GDP is a Fallacy).  But if they just opened their eyes and could see through the fog of decades of brainwashing and propaganda, they’d see that the true US unemployment rate is probably closer to 23%, over 45 million people are in today’s version of soup lines (now called food stamps) and the US stock markets, in real terms (gold), are down 90% from their highs in 2000.

The scary part, for everyone, is that this depression is just getting started and the more they try to “stimulate” the economy, the worse it will get.

The great bearded one, the one who centrally plans the US economy, Ben Bernanke, added one word into his speech (the word “significant”) when talking about downside risks and the lemmings all rushed off the edge of the cliff.  It’s confusing as to why they would listen to anything Bernanke says.  Besides the fact that he is the leader of a criminal money counterfeiting cartel he also has been almost shockingly wrong on every prediction or forecast he has ever made.

Read more »

Filed under Bernanke End the Fed Fed Federral Reserve central bank central planning depression economics economy financial news government statistics politics recession Keynesian economics GDP

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Amazing what you can do with statistics.


 
What Does ‘Economic Growth’ Mean for Americans?

September 2, 2011
By UWE E. REINHARDT
Suppose we placed a carefully selected sample of men on a hot stove and another sample of men on dry ice. Could we reasonably conclude that, on average, they were comfortable?
As a nation we worship a deity called economic growth. The more sophisticated users of that term presumably mean by it “annual growth in average gross domestic product per capita, expressed in dollars with a constant value relative to real goods and services, and averaged over the entire population of the United States” — in short, real G.D.P. per capita.
But what does an average of this sort mean for most people the United States? I am fascinated by a recent paper by Anthony Atkinson, Thomas Piketty and Emmanuel Saez in the Journal of Economic Literature. The authors, recognized experts on the study of income distributions, have constructed a long-run time series of top income shares for more than 20 countries, starting about 1915 and ending in 2007.
.  .  .  
 
In this regard, I found even more interesting this comment by the authors, pertaining to the international league tables of which we are all so fond, especially if they make us look good:

Average real income per family in the United States grew by 32.2 percent from 1975 to 2006, while they grew only by 27.1 percent in France during the same period, showing that the macroeconomic performance in the United States was better than the French one during this period. Excluding the top percentile, average United States real incomes grew by only 17.9 percent during the period while average French real incomes — excluding the top percentile — still grew at much the same rate (26.4 percent) as for the whole French population. Therefore, the better macroeconomic performance of the United States and France is reversed when excluding the top 1 percent.

In other words, if one took away the top 1 percent highest-income recipients and their share of income and focused on what was left for the bottom 99 percent, the median representative of that cohort should not be all that impressed by economic performance in the United States relative to their peers in other countries.

Read more »

Amazing what you can do with statistics.

What Does ‘Economic Growth’ Mean for Americans?

September 2, 2011

By UWE E. REINHARDT

Suppose we placed a carefully selected sample of men on a hot stove and another sample of men on dry ice. Could we reasonably conclude that, on average, they were comfortable?

As a nation we worship a deity called economic growth. The more sophisticated users of that term presumably mean by it “annual growth in average gross domestic product per capita, expressed in dollars with a constant value relative to real goods and services, and averaged over the entire population of the United States” — in short, real G.D.P. per capita.

But what does an average of this sort mean for most people the United States? I am fascinated by a recent paper by Anthony Atkinson, Thomas Piketty and Emmanuel Saez in the Journal of Economic Literature. The authors, recognized experts on the study of income distributions, have constructed a long-run time series of top income shares for more than 20 countries, starting about 1915 and ending in 2007.

.  .  .  

In this regard, I found even more interesting this comment by the authors, pertaining to the international league tables of which we are all so fond, especially if they make us look good:

Average real income per family in the United States grew by 32.2 percent from 1975 to 2006, while they grew only by 27.1 percent in France during the same period, showing that the macroeconomic performance in the United States was better than the French one during this period. Excluding the top percentile, average United States real incomes grew by only 17.9 percent during the period while average French real incomes — excluding the top percentile — still grew at much the same rate (26.4 percent) as for the whole French population. Therefore, the better macroeconomic performance of the United States and France is reversed when excluding the top 1 percent.

In other words, if one took away the top 1 percent highest-income recipients and their share of income and focused on what was left for the bottom 99 percent, the median representative of that cohort should not be all that impressed by economic performance in the United States relative to their peers in other countries.

Read more »

Filed under economy economics statistics economic growth GDP

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Double-Dip Baloney …

Larry Edelson | September 12, 2011

Not for nothing, but in my view all this talk about a double-dip recession in the U.S. is a bunch of baloney that misses the real issue …

A. The United States economy never even came out of its recession in the first place. And …

B. Our economy is already in a depression, one that’s about to get a whole lot worse.

First, the true unemployment rate in this country is at least 22%. Not the 9.1% mythical figure Washington is reporting.

Second, from its 1925 peak, the median home price in the U.S. fell 12.57% into a bottom in 1932. Compare that to the 32% decline since the property peak in 2007.

Third, in 1929, total U.S. debt as a percent of GDP stood at roughly 290%. Today, it’s approaching 1,000%, and growing. That’s equal to 10 times our country’s economic output!

Fourth, U.S. high-yield corporate bond default rates last year hit their highest level since the Great Depression.

Fifth, there are at least half a dozen more stats I can cite that are already worse than those seen in the Great Depression. From durable goods production and sales, things like autos, etc., to the number of families requiring public assistance, to the number and rate of children that are now homeless.

So no matter how I look at it, our country is not heading into another recession. It’s already in a depression. In fact …

 

In real terms, the U.S. economy has
already contracted more than it did
during the Great Depression.

 

In today’s world of floating fiat currencies, it’s very difficult to measure changes in the value of anything without a benchmark, since the dollar itself floats in value.

That’s why I often prefer to use honest money — the price of gold — as a value-measuring yardstick, because over time, gold always holds its purchasing power.

.  .  .  back in the 1930s — and all the way through 1971 — the U.S. monetary system was on a gold standard. In 1932, for instance, just before President Roosevelt devalued the dollar, $1 was equal to roughly 1/20 of an ounce of gold.

.  .  .  today, one dollar is worth roughly 1/1865 an ounce of gold.

So now, let’s take a look at our country’s GDP in terms of the amount of gold it can buy.

 In 1932, our country’s GDP was worth 2.8 billion ounces of gold.

 In 1971, it was worth 27.74 billion ounces of gold. Put another way, our country’s GDP was almost 10 times what it was in 1932. So over that 39-year period, the purchasing power equivalent of our country’s GDP grew almost 1,000%.

In 2000, the purchasing power of our country’s GDP continued to appreciate and would purchase 34.54 billion ounces of gold, a 24.5% increase.

But at year-end 2007, it was worth only 16.87 billion ounces of gold. A whopping 51% CONTRACTION in the purchasing power of our country’s GDP!

Think that’s bad? As of July 31, 2011 — latest GDP data — our country’s GDP would purchase a mere 7.72 billion ounces of gold.

That’s a 54.2% decline since the peak of the housing bubble in 2007 …

And a whopping 77.65% decline in GDP since the end of the year 2000.

If that’s not a contraction, if that’s not a depression in real honest money terms, I don’t know what is.

Of course, almost everyone will argue with me about the above analysis, the main objection being that I’m viewing the economy in terms of gold only, and that the contraction I speak of is merely because the price of gold has gone through the roof.

[But] if 5,000 years of gold holding its purchasing power doesn’t give it the right to be a measuring tool, then what tool would you use? Paper money?

Folks, the U.S. economy is already in a depression. Deep in a depression. Problem is, almost no one realizes it.

Read more here.

Filed under economics economy gold paper money unemployment rate double-dip depression recession GDP U.S. economy Federal Reserve

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The Debt Ceiling Deal: U.S. Continues its Collapse

bryce-white:

So the debt ceiling was raised and we’ve avoided what Obama warned would be “economic Armageddon.” Phew. That was close. Now we can dig ourselves further into the hole that brought us here to begin with, and not deal with this again until 2013.

If there’s anything that’s more of a sham than the “economic recovery” we are experiencing, it’s the debt ceiling bill that was passed. Let me be clear: The Budget Control Act does not contain ANY spending cuts. Instead, the federal government will only be spending less than they had originally planned. The “cuts” are not from our current spending amounts, but our projected spending increases. Any cuts are illusory. This is their definition of a cut. The Cato Institute confirms this, saying:

“The budget deal doesn’t cut federal spending at all. The ‘cuts’ in the deal are only cuts from the Congressional Budget Office’s ‘baseline,’ which is a Washington construct of ever-rising spending…The federal government will still run a deficit of $1 trillion next year. This deal will ‘cut’ the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent.”

Analysts are also speaking out and confirming that the deal will have little economic impact.

“The so-called ‘immediate’ spending cuts of $917 billion do of course not begin this year. And they barely have an impact in 2012 or 2013 either.”

“In a $15 trillion economy, the impact… is negligible.”

“It will save the US government from defaulting on its obligations to pensioners and others. But it does not address the long-term fiscal challenges facing the nation.”

This hasn’t stopped Defense Secretary Leon Panetta from whining about the spending “cuts” for the military, when in reality it has been shown that the Pentagon will really be receiving $50 billion more than what they had been expecting over the next decade.

The deal only serves to preserve the status quo and allow the government to continue accruing massive deficits and debt. Even before the debt ceiling was raised, the Treasury announced it would issue $331 billion in debt this quarter, a 75% increase from the $190 billion of the previous quarter. And that’s exactly what is already happening. In just one day on Tuesday, the Treasury issued $238 billion in debt, 68% of the $400 billion that the debt ceiling was raised by. This took the federal debt to $14.58 trillion. Being that our GDP for 2010 was $14.53 trillion, this means our debt-to-GDP ratio is now 100%. Our debt has exceeded the size of our entire economy. Reaching the 100% mark is not something to be taken lightly by any means, but it seems that’s what the mainstream corporate media is doing. And now the Treasury has announced it will be borrowing an additional $72 billion shortly.

As if all this isn’t bad enough, the debt ceiling bill has authorized the creation of a so-called “super Congress” — essentially a third house of Congress consisting of twelve Congressmen, that will look for areas to make spending or tax reforms. It then will submit their proposals to the real Congress for a vote. But the proposals will be “fast-tracked” and Congress will have no ability to amend or filibuster them. They may only vote yes or no, and if the proposals are rejected, automatic spending cuts kick in. The creation of this third house of Congress is unconstitutional, undemocratic, and dictatorial. Senator Harry Reid has openly admitted its authority could extend beyond just debt proposals, and may act to put other garbage into law:

“The joint committee — there are no constraints. They can look at any program we have in government, any program. It has the ability to look at everything.”

This “super Congress” will ensure that important decisions on spending, taxes, and entitlements are kept out of the hands of Congress, and in the hands of the carefully selected leadership.

The economic collapse is going along smoothly. The real estate bubble is still deflating with no bottom in sight, and property values fell 4.5% from a year ago. Banks are now simply bulldozing foreclosed homes rather than attempt to sell them. Both China and Russia are criticizing U.S. debt, and considering a move away from the dollar as a primary reserve currency. Putin says we are “leeching on the world economy.” The manufacturing and service sectors are both slowing. The Dow Jones Industrial Average just lost 507 points in one day. Gold is hitting all-time highs, meaning the dollar is becoming even more worthless. Major credit rating agencies are warning they might downgrade their rating of U.S. debt, which would mean borrowing would be much more costly. Real unemployment is above 22%. Real inflation is at 27%, with another round of quantitative easing money-printing from the Federal Reserve becoming more possible every day. GDP growth for the first half of the year was less than 1%, and only 0.4% for the first quarter.

Even the New York Times is having to admit that a double-dip recession “may be happening.” Yeah, no shit. The recession never ended, we’re in a depression. And every indicator promises it will only get worse.

(via bryce-white-deactivated20120131)

Filed under banks budget control act china congress debt debt ceiling depression dollar dow jones economy employment entitlements gdp government jobs media moodys obama panetta pentagon putin real estate recession reserve currency russia spending super congress taxes treasury unemployment

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mindandmemory:

2009 corporate income taxes as a percentage of GDP. 
Although on paper U.S. corporations appear to pay high tax rates compared to most countries, in reality it is not the case. Through tax loopholes, American corporations pay the 2nd lowest rate in the world (after Iceland).  Some corporations, like GE and Exxon-Mobile, paid zero taxes last year. 
Source: http://www.ctj.org/pdf/oecd201106.pdf

mindandmemory:

2009 corporate income taxes as a percentage of GDP. 

Although on paper U.S. corporations appear to pay high tax rates compared to most countries, in reality it is not the case. Through tax loopholes, American corporations pay the 2nd lowest rate in the world (after Iceland).  Some corporations, like GE and Exxon-Mobile, paid zero taxes last year. 

Source: http://www.ctj.org/pdf/oecd201106.pdf

(via mindandmemory-deactivated201407)

Filed under corporations debt mind and memory revolution u.s. GDP economy politics economics taxes corporate income tax