MR. BUBBLE HAS NOT…IS NOT AND WILL NOT STOP THE PRINTING OF MONEY
[email_link]
OK…let’s get things straight. Mr. Bubble has not…is not and will not stop the printing of money. All this is noise.
The Federal Reserve on Wednesday said the U.S. economic recovery had lost momentum so far this year, but stopped short of offering new monetary stimulus even as it signaled further bond buys could be in store.
Fed officials described the economy as having “decelerated somewhat,” and reiterated their disappointment with the slow pace of progress in bringing down the nation’s 8.2 percent jobless rate.
SOURCE: http://www.cnbc.com
Gary, et al.,
Not an advertisement. Please see the following charts and share at your discretion.
https://www.box.com/s/a881546eaf3709235c02
https://www.box.com/s/37c349cc8a3f32377a7d
https://www.box.com/s/d221e0a12561fb4e6eed
https://www.box.com/s/ecd154857a3544bf1335
https://www.box.com/s/b6d1d9f505f29a94e51c
Were the historical secular bear market precedent since the 1870s to repeat, all of the price appreciation gains of the preceding secular bull market will be wiped out in CPI- and US$-adjusted terms by the time the secular bear market ends, leaving the investor from trough to trough from the previous secular bear market low to the low of the ongoing secular bear market with no more than the average dividend (not counting fees and taxes) since ’74-’82 of 2.5%.
That is, by the time of implied cyclical lows in the next 1-9 years, the S&P 500 will have fallen back to the 600s (US$ constant) to as low as the 400s-500s (US$ par).
Note that stocks are, by definition, nothing more than a claim on a share of the future income stream of a publicly traded corporation. Over the very long term, stock prices and earnings grow no faster than nominal GDP. US nominal GDP has slowed from 6.3% long term to 3.6% since ’00 and 2% since ’07. Real GDP has slowed from 3.3% to 1.6% and negative since ’07 in real terms per capita.
Gov’t (primarily war) and “health care” spending have grown at nearly TWICE the rate of GDP since ’00-’01. Had these sectors grown at the trend rate of GDP of 3.6% since ’00, US GDP would be 2% instead of 3.6%, slightly negative in GDP deflator (real) terms, and negative in real terms per capita.
Over the very long term (see the UK, Netherlands, Germany, and Japan), GDP grows no faster than population/labor force and the necessary rate of growth of capitalization of labor, which in the US will by necessity slow to less than 2%, and near 0% or slightly negative adjusted for price changes. In other words (IOW), growth is over.
Further, while we incessantly hear that “We are not Japan!”, the fact is that the post-’00 US real GDP trend has slowed from 3.3% to 1.6%, resulting in a compounded loss of growth that otherwise would have occurred since ’00 of 20%, and a loss of growth of 27% per capita. Not coincidentally, the US is where Japan was in ’98-’00. Were the self-similar secular bear market pattern to continue, as in Japan, the US will have lost 30% from the long-term growth trend since ’00 and 40% per capita by ’20.
Had real GDP continued at the long-term 3.3% rate before ’00, the US would have today 20 million or more jobs.
Also, had the US minimum wage kept pace with the actual “cost of living” since ’70, including higher payroll taxes and higher cost of housing as a share of household income, reflected most accurately by the 6.3%/year growth of debt-money, the minimum wage today would be $22/hour or $37,000/year at the average 34 hours/week, or $44,000 at 40 hours/week. Note that the median US household income today is about $45,000, meaning that the typical US household is receiving minimum wage before taxes, whereas half of households receive LESS THAN MINIMUM WAGE in ’70 purchasing power terms. Is it no wonder, then, why half of Americans are on some form of gov’t assistance and half pay no federal income taxes? They can’t afford to pay taxes AND subsist.
Following on this situation, the top 1-10% of US households receive 25-50% of US income and own 40-85% of all US financial wealth (estimated at $47 trillion), as well as pay 30-70% of US income taxes. The US now has financial wealth and income concentration rivaling that of Latin American and African dictatorships of the present and past and that of Russia and China today.
Finally, Gary, gold has already achieved a faster-than-exponential rate of acceleration blow-off bubble near $2,000. Were an “anti-bubble” to have begun, a crash for gold to below $1,000 to as low as the $600s-$700s during a global deflationary recession is not inconceivable.
I fully concede that what I have presented here and that which is contained in the chart data to which I refer at the links above will be met with cognitive dissonance, incredulity, and worse. I counsel taking one’s time examining the information and suspending one’s political or ideological filters, biases, desires, hopes, fears, or prejudices.
Bruce
P.S. Gary, how might I endeavor to work for you or provide value-added research services to you, your staff, and your clients?