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Friday, August 21, 2015

THERE STILL IS NOT A RECOVERY SEVEN YEARS LATER. HERE IS WHY, PARTLY

Economists seem slack-jawed to explain why there has been little in the way of a recovery after seven years of Bernanke-Yellen near zero interest rate policy (ZIRP) along with the crazed sum of cash accretion owing to Bernanke's failed academic exercise of Quantitative Easing.



As can be seen in these charts, in True Dollars™, disposable personal income is way down. Likewise, wages and salaries are way down.






And it should be no surprise that consumer credit has fallen as all credit in the has fallen substantially. That great deflation is resultant of the first cause, the Greenspan-Bernanke Great Inflation, the greatest credit bubble in the history of mankind.







Most academician eggheads in the field of economics believe that many Americans paid off their debts in what they call merely a "recession,"  as if it were an ordinary recession. So these eggheads wonder why Americans aren't now spending since also they believe a recovery has been underway since 2009.

And these two charts say thousands of words. While both incomes and credit have fallen, Americans have taken on ever more credit to maintain semblance of the lifestyle they once enjoyed during the boom phase of the Greenspan-Bernanke Great Inflation, the greatest credit bubble in the history of mankind.






Consumer indebtedness has increased during the Greatest Depression. That should surprise no one. First Bernanke and then Yellen made borrowing cheaper than acquiring income. And as massive unemployment pushed wages downward, those with income falling at a slower than credit opted for credit to make up for their buying power shortfall.

Falling true incomes and rising true indebtedness is a recipe for disaster.

Many call the day after Thanksgiving in the USA, Black Friday, because it is the day retailers are supposed move from losses to beyond breakeven and thus enter black into their accounting ledgers rather than red for losses. Don't count on it this Christmas retail shopping season.  I wonder if bears plan to short major retailers soon.

It doesn't seem likely that Americans can take on much more debt prudently.

For more of why, check out ZIRPED! BERNANKE AND NOW YELLEN HAVE FELLED CAPITALISM. VOLKER WAS RIGHT ON HOW TO DO IT.

I happen to live in a fairly well-to-do city, which happens to be home to a big biotech firm. Since the Banking Crisis of 2008 and the subsequent reckoning of the Greatest Depression, even my city has been touched. Seedy massage parlors popped up all over the main shopping boulevard like festering sores. Some have taken to living in illegal RV parks hidden behind fences on larger parcels.

The Greatest Depression keeps rolling along.