Zero Hedge – which we have come to regard as the most fantastic economics website on the planet – has a great guest post up this week comparing the Federal Reserve’s ongoing money printing experiment to pumping dune after dune of new sand into a desert.
“We have $100 billion of new sand being pumped in by the Fed each month,” writes author Mark J. Grant. “Our desert doesn’t get much wider as defined by new issuance and so one dune is heaped on another, the compression continues and yields, even from here, will decline.”
Interesting analogy …
“Our sand trap is a fabulous world for borrowers and issuers and a miserable world for investors,” Grant continues. “Over a period of time wealth declines as the bonds markets hold five times the assets of the equity markets and so the lack of yield, of income, begins to take its toll on consumer spending, on corporate revenues and then on profits and on the ability of those dependent of savings to maintain their standard of living. The continual flow of money has helped the banks and helped corporate borrowers but it has not filtered down to the savers and, in fact, their position has been lessened by what the Fed has done.”
In other words exactly what’s happening …
Ready for the scary part?
“Someplace on the timeline there is a line of declination coming,” Grant writes. “People are getting poorer while banks and corporations are getting richer and so the ability of the consumer to keep buying goods and services is declining which pushes on the deflation part of the equation.”
Eventually, Grant contends, this “declination” of the consumer’s purchasing ability will result in a “meaningful decline in corporate earnings,” which he says is when “real trouble begins.”
We agree …
“The center cannot hold …”
That’s a comment we’ve offered up on repeated occasions as it relates to the ongoing stretching of income-earning Americans by their political leaders in Washington, D.C. Eager to subsidize crony capitalist “economic development” bailouts as well as a mushrooming welfare state, the middle class taxpayers in the center are being doubly screwed.
Meanwhile the Fed’s perpetual money printing makes the value of the ever-decreasing number of nickels they are able to rub together worth less and less …
“We are wandering in the desert,” Grant concludes, adding “there is no Moses in sight.”
***
18 comments
Monetary policy can do only so much. One person likened it to pushing on a string.
In order to overcome this recession, there must be complementary fiscal policy, and the official position of the Republican party is to oppose anything that might appear to be a success for Obama.
Revenues were at Record levels under Bush. Unemployment averaged 5% over his 8 years and gas was cheap. Salaries were $5,000 more per household than now, and they were rising, consistently.
Obama has wasted Billions on Solyndra and the Chevy Volt. 50 million Americans are on food Stamps and 10 million are on disability.
Pelosi said unemployment check spending is a GREAT economic stimulator and Obama- Care will allow artists to quit their jobs because the government will pay for Healthcare…
Whenj I seen IGORANT, BRAIN DEAD M*#%*F##^rs like you Spouting IGNORANT BULL-$#!*, and likely taking A payoff from the FILTHY, Corrupt B@$&@Ds who Mutually Suck you OFF…It makes me ASHAMED that there are such STUPID, and Delusional and Dishonest Idiots in MY Country…
If I Could, I’d Take my foot and Kick Your Imbecile @$$ So Far to a Third World Domain For Dolts, that your head would ring for a month…
You are The Lowest and The Worst. The Dullest and immoral…You do not DESERVE to live in MY Country…
You are Taker, with Absolutely NO Amity to contribute, except to make more Idiots…
You are what is WRONG w/ America and society in general
Revenues dropped under Bush while spending went way up, hence the fucking deficits. Gas was cheap under Bush? The highest it has ever been was under Bush. Taxes were low, for the rich (and unfortunately still are). Solyndra is one failure but Tesla is a success story that really sticks in Republicans’ craw.
After that, you begin a rapid decline into your usual lunatic fringe gibberish and professing your wet dream of kicking someone’s ass for having different political views, as if you could.
There there, T, it’ll be all right.
You are a Lying Piece of $#!*. And I have not even referenced GDP, Inflation and Obama-Care.
Our society is Suffering because of LIARS like you…
Our economy was ROBUST under Bush.
The Economy is one of the Biggest F&*#king lies your Bottom-Feeders have pushed.
FITS Claims to be a Fiscal Conservative, yet he Bashes Bush more than he pays attention to the TOTAL Disaster Obama has rendered.
It is the measure of intelligence of a person, if they buy your Ignorance or not…Sadly too many F$&*in IDIOTS believe the S#!^ your Dumb@$$ perpetuates.
You have to be Completely STUPID to think Bush’s economy was not Substantially better than the Complete MESS Obama is making…
And Obama will F$@* up for 3 more years, because he’s PROVEN he is clueless to do the right thing…
Hilarious. Bush: “When Bush began his first term in January 2001, total nonfarm employment was 132.47 million. When his second term began four years later, it was 132.45 million, or effectively zero job growth.”
Ah, poor W. He’s job growth record is worse than the Socialist. And the Kenyan took over the country when it was purging 800k jobs a month and inherited the worst economy – from Bush – since the Great Depression. But W can brag he did create lots and lots of gov’t jobs. Bravo.
Gas: “Adjusting for inflation, prices rose to $2.52 (Bush) and $2.53 (Obama) seven months into their terms, $2.76 and $2.71, respectively, nearly two years in and $3.27 each three years in. This month, gas is $3.85, more than a dime cheaper than at this point during Bush’s second term when adjusted for inflation.”
Yeah, let’s get back to that Bush magic. Leaves his presidency with the worst job creation record since Hubert Hoover and a financial market on its knees. Get Sum.
Monetary policy can do only so much. One person likened it to pushing on a string.
In order to overcome this recession, there must be complementary fiscal policy, and the official position of the Republican party is to oppose anything that might appear to be a success for Obama.
Ah, back to the Inflationary Apocalypse. It’s been just around the corner for five years. Of course it’s below 2% for 2013, but go stockpile toilet paper and ammunition. They’ll be worth more than gold when the bottom drops out.
Didn’t you read above? It’s deflation they’re worried about. They’re all like, “JK on the inflashe.” Also, yeilds are going to stay down because sand is compressing our deserts, so there’s that to worry about as well.
Ah, back to the Inflationary Apocalypse. It’s been just around the corner for five years. Of course it’s below 2% for 2013, but go stockpile toilet paper and ammunition. They’ll be worth more than gold when the bottom drops out.
Didn’t you read above? It’s deflation they’re worried about. They’re all like, “JK on the inflashe.” Also, yeilds are going to stay down because sand is compressing our deserts, so there’s that to worry about as well.
What nickles are you refering to? I’m just payin the bills mane. I’ll let the plutocrats worry about their paper wealth going up in smoke. Stick to the ground (make food, eat food, make stuff, use stuff) and you’ll be fine.
What nickles are you refering to? I’m just payin the bills mane. I’ll let the plutocrats worry about their paper wealth going up in smoke. Stick to the ground (make food, eat food, make stuff, use stuff) and you’ll be fine.
Republicans Hold Hearings About Hillary Clinton’s Poll Numbers
WASHINGTON (The Borowitz Report) — Republican lawmakers asked increasingly tough questions today as they held another day of hearings to investigate, in the words of Rep. Darrell Issa (R-California), “Hillary Clinton’s suspiciously high poll numbers and what can be done to make them lower.”
“With the help of Fox News, we have brutally attacked Hillary Clinton for months, and yet she remains more popular than ever,” Rep. Issa said. “This committee needs to know how that happened, and how we can keep it from happening in the future.”
Rep. Issa pointed to recent polls showing the former Secretary of State trouncing every potential G.O.P. Presidential candidate, “even a skinnier version of Chris Christie.”
“We demand an answer to one simple question,” he said. “What does Secretary Clinton know that none of us knows?”
In his boldest allegation of the day, Rep. Issa accused Secretary Clinton of “cynically using her post as Secretary of State to become wildly popular with the American people.”
“I invite her to these hearings to answer those charges,” he said.
Wrapping up for the day, Rep. Issa warned the former Secretary of State that he was just getting started: “Once we Republicans decide to investigate someone, we don’t stop. If Secretary Clinton doesn’t believe me, she should ask her husband.”
Republicans Hold Hearings About Hillary Clinton’s Poll Numbers
WASHINGTON (The Borowitz Report) — Republican lawmakers asked increasingly tough questions today as they held another day of hearings to investigate, in the words of Rep. Darrell Issa (R-California), “Hillary Clinton’s suspiciously high poll numbers and what can be done to make them lower.”
“With the help of Fox News, we have brutally attacked Hillary Clinton for months, and yet she remains more popular than ever,” Rep. Issa said. “This committee needs to know how that happened, and how we can keep it from happening in the future.”
Rep. Issa pointed to recent polls showing the former Secretary of State trouncing every potential G.O.P. Presidential candidate, “even a skinnier version of Chris Christie.”
“We demand an answer to one simple question,” he said. “What does Secretary Clinton know that none of us knows?”
In his boldest allegation of the day, Rep. Issa accused Secretary Clinton of “cynically using her post as Secretary of State to become wildly popular with the American people.”
“I invite her to these hearings to answer those charges,” he said.
Wrapping up for the day, Rep. Issa warned the former Secretary of State that he was just getting started: “Once we Republicans decide to investigate someone, we don’t stop. If Secretary Clinton doesn’t believe me, she should ask her husband.”
told you before – economics is complicated. the above piece makes no sense, quoting from a completely incoherent second source. stick to the statehouse.
told you before – economics is complicated. the above piece makes no sense, quoting from a completely incoherent second source. stick to the statehouse.