Wednesday, June 15, 2016

Riding The Titanic Straight To The Bottom

Because "more" was never enough...

Another Fed meeting, another circle of jerks waiting for the economy to float back from China. The simpleton narrative is that Central Banks are to blame for this entire economic disaster by lowering interest rates to 0% and below, thereby flooding the world with deflation. Ok whatever. Because we all know that unlimited expansion of the money supply creates deflation. This specious narrative is all-important because it deflects root cause attribution away from failed trade policy - the backbone of Supply-Side Ponzinomics.

The Inconvenient reality is that Monetary Policy has been rendered inert by the chasmic output gap aka. imported deflation. On a commonsense level, if too many people are underemployed, then cheap loans from the Third World are not going to boost an economy already maxed out on debt. Go figure. 

Central Banksters are chimps driving the Titanic...
U.S. Capacity Utilization (blue) with Fed Funds rate.

Straight to the bottom...
While gamblers in the ship's casino trade worthless pieces of paper back and forth pretending to be wealthy, until the final hand when they get wiped out. Again.

The German Titanic
"Es ist nicht so viel SpaƟ , wie es aussieht "

Japanese Titanic: Look up, look down. Same chart...

Red line is GDP growth