As the US economy 'plunges into an economic abyss' Britain will be dragged down in it's wake

"Rates are going higher and a Mega-Recession is on the way" ..................

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With the housing bubble now deflating, the Federal Reserve policy will move to further destroy the value of the dollar in an attempt to prevent a financial calamity in the mortgage debt markets. Pressure will increase on domestic prices, regardless of how the government statisticians attempt to cover up the problem

First at the national level in the U.S., denial and shifting of blame are the policy norms. The new chairman of the Federal Reserve, and other misguided analysts, contend the U.S. trade deficit is the fault of the rest of the world. Economic policies in other countries are the reasons for U.S. consumers spending more than their income. Greenspan was motivated to please Wall Street. Bernanke is motivated to please the Washington politicians. Such a motivation is the prime reason for holding forth with Bernanke's Delusion. Such views suggest future Federal Reserve policy is likely to be supportive of the value of your precious metals.

Second, the trade deficit of the U.S. is structural, and long-term in nature. As a way of understanding this consider the third graph. Plotted in this chart is the number of U.S. workers, in millions, employed in real work. That means they are making real goods. As is readily apparent from this graph, U.S. employment in jobs producing real stuff is no higher than it was at the end of the 1960s.

... The U.S. economic expansion is built on consuming foreign made goods paid for by money received from converting home equity into debt. U.S. workers that do go to day jobs are involved in creating mortgage debt, servicing mortgage debt, construction financed by mortgage debt, or moving goods purchased by the cash from mortgage debt. This structural trade problem is not to be reversed. The factories are not coming back even if the yen goes to 50 or the Euro to $5. Chinese renminbi might go to 2 to the buck, and the factories will not move back. The consumers of tomorrow are in that big swath of land from Poland to the Pacific Ocean.

... The structural nature of the U.S. trade deficit and denial by U.S. policy makers, in the form of Bernanke's Delusion, mean that the U.S. dollar is going down in value over time. With the housing bubble now deflating, the Federal Reserve policy will move to further destroy the value of the dollar in an attempt to prevent a financial calamity in the mortgage debt markets. Pressure will increase on domestic prices, regardless of how the government statisticians attempt to cover up the problem. Rates are going higher and a Mega-Recession is on the way. Only twice before has a major economy faced a collapse in demand, the U.S. in 1929 and Japan in 1990.

... The trade deficit of the U.S. is both structural and long-term in nature. The spewing forth to the rest of the world of green pieces of paper is not about to abate soon. Analytical delusion on the part of the Federal Reserve has prevented and will prevent actions before a dollar crisis is in full bloom. With the U.S. housing market already showing the first signs of implosion, the Federal Reserve will "toss dollars from helicopters" in a vain attempt to stop the collapse of mortgage debt. As the U.S. economy plunges into a policy created economic abyss Canada will be dragged along, like the roped mountain climbers plunging to their death.

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Crowley
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