Right now, we are still in the debt accumulation phase, however each dollar of new debt is having less and less impact on economic growth. The consumption-oriented lifestyle is already deflating...
Houston We Have a Fucking Problem: Core PCE (Consumption prices)
Thirty Years of Outsourcing via Supply Side Economics Coming to An Inevitable Conclusion:
Thirty Years of Outsourcing via Supply Side Economics Coming to An Inevitable Conclusion:
The Idiocracy doesn't realize why interest rates are so low. The next time they take a loan to refinance the bigger house and bigger car it would behoove them to realize that they are borrowing from the poorest people on the planet and handing them jobs in return. Low interest rates don't come from Central Banks. Central banks can boost liquidity at the margin, but credit pricing is based on the inflation rate and the overall supply of credit. As we see above, inflation rates are extremely low because developed nations are importing wage deflation from the Third World. In addition, the supply of credit has been expanded by the recurring trade deficits by which developed nations borrow from developing nations, in order to buy their cheap goods. They consume less so we can consume more, even though the developed nations are far wealthier.
Bungy Jumping With a Noose
Of course the long-term cost of this Faustian bargain is extremely high. It's a price far higher than most people can pay. The developing nations are willing to subsidize our lifestyle, because they want our jobs and industries. They are willing to trade-off lower current consumption for some theoretically future improved standard of living. Whether that future standard of living will ever be realized, is highly questionable. Questionable, because of course their loans to developed nations are largely non-amortizing - ponzi loans. They are being paid back with their own money - the precise definition of a ponzi scheme. Without continued borrowing - whether for inflated housing markets or for inflated government deficits - the developed economies would slide into depression. So the developed world has already traded its long-term jobs base in exchange for unaffordable debts. Massive debts along with massive unemployment are a one-way trip to bankruptcy.
A World Without Money
The primary theme out there even at this late stage is that this will all lead to hyper-inflation. It won't, because it can't. It will lead to something far worse than a world with too much money, it will lead to a world without money. It's a situation that hasn't been seen in the U.S. since the 1930s, which is why no one expects it. Despite four years of unprecedented money supply expansion, as we see above, prices are not only not responding they are heading down again.
The Captains of Job Shipping
We are led by the dumbest fucking morons in human history. Self-nominated experts with fancy degrees from "top rated" universities, that aren't worth the paper they are printed on. The fact that they continue these asset levitation policies indefinitely while the Idiocracy continues to wrap the debt noose around their necks and while "captains" of industry ship ever-more jobs offshore, is irrefutable evidence of this society's unprecedented incompetence. A society that is literally putting itself out of business while totally preoccupied with ESPN and American Idol.
