Sunday, February 1, 2015

Revealing The True Economy

The True State Of The Economy Is Shrouded In Mystery 
Good luck with getting a clear view of our economic future. Somewhere between what we are told is occurring in the economy and what we see happening on Main Streets across America is the real and true authentic economy. It is ironic that the more the economy slows it only reinforces the idea that the Fed needs to pour even more fuel on the fire. This is exactly what many of us oppose and see as pure insanity. Some people point to or fear that deflation will take hold causing a great deal of pain and reduced spending by consumers going forward. Those behind increased and continued easing say more action is needed or a loop will develop that feeds on itself and ends in a deflationary depression.

On the other side of this argument are those of us who have a problem with current Fed policy and claim that after more than six years of expanding money supplies and dropping interest rate the economy has not fared as well as many in government represents. We that object with what has been done, loudly state that in the future both the economy and society will pay dearly for the sins of the Fed and that no options exist to get out of the box they have put us in. The fact is low interest rates have punished the very people who have done the right thing by saving and sacrificing to put away money for future needs. It must be noted savers have been encouraged and forced to take on risky investments as they search for higher yields that are unavailable in safer more conservative options. 

This debate continues to polarized those who study the economy and play in the dangerous land of investments. Meanwhile the failure of a crash to materialize and bring markets back to reality over the months and years is causing a breaking in the ranks. We have reached the point where many of the nonbelievers in current policy are capitulating and joining with those who live by the mantra "don't fight the Fed". This song of the market sirens that promise both wealth and profit has lulled many into complacency. Each day more investors surrender to lure of the markets and buying into what they had only a short time ago seen as the dark-side. Those who remain firm in their beliefs point to this as another sign we are nearing the top a place where all bulls are fully invested, this "all in" situation is a common sign of a market top.

Do not expect this to be resolved and either faction to accept defeat or to admit they are wrong until the economy reveals the truth and abundant solid undisputed growth is evident or we have sunk into a mess so dire that financial Armageddon is upon us. Our current perplexing economic state continues to confound and confuse. It seems every time the numbers fail to meet expectations or fall short those in power or the media raise the bar and crank out the fairly dust, some hype, or spin a tale of coming promises and stories of better times soon to come. This has postponed the day of reckoning and a resolution as to the debate. The conundrum we face is how to resolve this mess in the least damaging way. To those of us who doubt the numbers a massive problem exist on how to exit the current path.


  1. QE isn't/didn't work because it never made it down to the real economy. It only widen the disparity gap. One Trillion dollars would do a lot more for jump starting the economy when it is spread out to 300 million people rather than handed to a few million elites. All the Fed has done is create a shadow economy that continues to grow and eat up the government economy from the bottom. Will be interesting to see what happens when the government/Fed has to open acknowledge the shadow economy but until then it's still rainbows and unicorns.

  2. Very true and thanks for the comment. One trillion dollars divided out among all the men, women, and children in America would be $3,000 each. The post below leads to a better way to visualize the growing national debt of America.

  3. Gordian knots exist. Swords exist. Question is: do working balls exist?