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Inflation On Steroids

October 15th, 2021 Comments off

Sheldon Filger-blogger for GlobalEconomicCrisis.com

 

 

 

For the past several months my blog has warned about the growing inflation threat to the global economy. That, and other economic distortions of a massive character, have made stagflation-inflation plus low or negative economic growth-an increasingly likely trend. Over that same period, central banks have nourished the flames of inflation, especially in the U.S.,  where theFederal Reserve has preached the erroneous gospel that inflation was only transitory, and therefore not a trend that should be of concern.

Reality has now caught up with the Fed.  At least some of the key players on the Federal Reserve have reluctantly agreed that inflationary pressures are real, and likely to be  a trend and not transitory. And then there is Larry Summers, former U.S. Treasury Secretary. He recently told Bloomberg News that the Federal Reserve’s policy errors are stoking inflation, making 1970s style stagflation inevitable. He told Bloomberg News, “we have a generation of central bankers who are defining themselves by their ‘wokeness.’…they’re defining themselves by how socially concerned they are.”

The causal factors for this surge of inflation are due to reactions by both sovereigns and their central banks to the Covid pandemic. Poorly conceived policy decisions have disrupted supply chains and labor markets. For example, in February of 2020 the percentage of eligible Americans in the active labor pool was 63.3%. By September of 2021 the labor participation rate had declined to 61.6%. With millions of workers absent from the labor pool and production and shipping of commodities and finished goods globally impeded, the resulting shortages have spiked prices of essential products, including food and energy.

As though government policy was not enough, central banks through profligate monetary policies have flooded a constricted global economy with unprecedented levels of liquidity. The result was fully predictable; turbocharged inflation. That is why housing prices in the U.S. have risen by more than 20% in the past year. They are projected to increase another 20% in the coming year, despite a weak economy. Simply put, the Federal Reserve, through artificially low interest rates and an out-of-control printing press, has encouraged speculators to buy up housing stock as investment properties, taking advantage of cheap money.

A stagflationary calamity looms just over the horizon. Unfortunately, policymakers and central bankers, especially in the United States, seem totally out of touch with reality, residing in a parallel universe while the global economy is on the edge of a cliff.

Global Inflation Rising At Double Digits As House Prices In U.S. Skyrocket

September 13th, 2021 Comments off

Sheldon Filger-blogger for GlobalEconomicCrisis.com

 

 

There is increasingly worrying data emerging from the largest developed economies, revealing rapidly rising levels of inflation. Despite the veil of silence being maintained by sovereigns, and the claims by central banks such as the U.S. Federal Reserve that inflationary spikes are but a temporary phenomenon, the data tells a different story.

 

Germany released a report  indicating that in  August, year to year inflation was 12.3 % versus  11.3 % in June. This shows that Germany being in double digit inflation territory is no flash in the pan, but a lasting and accelerating trend. This is also the highest rate of wholesale price inflation in the German economy since 1974

In the United Sates, housing prices year on year have risen by almost 20%. This is a staggering number, made more inexplicable in the wake of a still weak and Covid ravaged economy being propped up by both government deficit spending and Fed monetary loosening. And those policies lie at the heart of the problem.

Covid has afflicted global supply chains, leading to shortages of key commodities and industrial parts such as computer chips for automobile manufacturers. That in itself is a major driver of price inflation. However, central banks engaging in unprecedented money printing has , in effect, turbocharged inflation.  The artificially low mortgage rates  that have resulted from Fed policy decisions have not only provided new home buyers with easy credit; in the United States speculators and investors have been seizing the cheap money now available to buyers of homers  for purposes of flipping them for quick profits or, increasingly , converting them into rental properties.

As I have warned previously,  the indicators of stagflation-high inflation and low or negative economic growth- are increasing, pointing to a dismal long-term economic  future characterized by a severe recession or depression with high inflation in the near or medium term.

Leading Economist Warns of Hellish Future For Global Economy

July 11th, 2021 Comments off

Sheldon Filger-blogger for GlobalEconomicCrisis.com

 

 

He predicted the 2007-09 Global Financial Crisis with uncanny accuracy, even while experts including then Federal Reserve chairman Ben Bernanke were dismissive of him. He’s Nouriel Roubini, economics professor at NYU and a highly distinguished economist. Though his correct forecast of the 2007-09 financial implosion earned him the nickname of Dr. Doom, he prefers to think of himself as Dr. Realist. His latest exercise in realism makes chilling reading.

As the Covid pandemic erupted, Roubini was already warning that the world faced a global economic depression sometime during the course of the present decade. With unprecedented sovereign debt expansion during the past year  unleashed by governments under the guise of providing Covid relief, Professor Roubini has taken a fresh look at the data, and published his conclusions in a recent article that appeared in The Guardian.

“Conditions are ripe for repeat of 1970s stagflation and 2008 debt crisis,” reads the headline of Roubini’s article.  “Warning signs are there for global economy, and central banks will be left in impossible position,” he writes.
In essence, Roubini points out that current trends, which include not only the massive expansion  of sovereign debt but also contributing  factors such as the loss of independence by central banks coupled with the decoupling between the United States and China, leading to fragmentation of global supply chains, point to an unavoidable train wreck  for the global economy. It is a hellish forecast, which unfortunately has the ring of truth.  If Professor Roubini’s forecast is as accurate as was his previous warning of the impending Global Financial Crisis of 2007-09, the world stands on the verge of the Global Economic Crisis of the 21st century, a Great Depression 2.0 coupled with high inflation. And, as Roubini warns, central banks  will be powerless to stop it.

Biden Administration Posts Record Deficit of $660 Billion In March

April 13th, 2021 Comments off

 

 

In March 2020 the U.S. Federal Government posted a deficit of $119 billion, reflecting the already profligate spending of Washington pre-pandemic. One year later, with President Biden going literally for broke, Covid related federal spending  pushed government outlays to $927 billion, with receipts of only $268 billion, leaving a record deficit for March 2021 of $ 660 billion.

Not during Franklin Roosevelt’s Great Depression era  New Deal program, or the massive stimulus budget of the Obama administration in the wake of the Global Financial Crisis has there been such dizzying levels of federal spending. The  deficits incurred by Washington are fully matched by state governments, as well as sovereigns throughout the world.

Despite the record  price levels on equity markets and particularly on Wall Street, there are worrying signs of approaching inflation. As this blog has warned before, significantly higher rates of inflation will compel the Federal Reserve to abandon its near-zero interest rate policy. Once interest rates rise to anything approaching normal levels, debt servicing costs for Washington will balloon to an unsustainable level.

Sheldon Filger-blogger for GlobalEconomicCrisis.com

Federal Reserve Chairman Jerome Powell Warns U.S. Economy May Contact By 30 Percent

May 18th, 2020 Comments off

In an interview with the CBS news magazine 60 Minutes, the Fed Chairman warned that the American economy could “easily” contract by 30 % in the current quarter. He also told the interviewer that the U.S. unemployment rate could peak at 25 %.Though the Fed chairman tried to put a positive spin on his message, using such rhetorical phrases as his “never bet against the American economy,” the reality Powell presented minus the spin was anything but rosy.

Even the Fed chairman’s prediction that economic growth would resume in the second half of 2020 was conditioned by developments on the health front, and that a full economic recovery required the development of an effective Covid-19 vaccine.

The Federal Reserve is clearly worried about a full-blown depression, a prospect that is increasingly likely. In fact, there is a growing consensus that a possible short-term recovery will be followed b y a sustained economic depression, transforming the global health crisis engendered by the coronavirus into the Global Economic Crisis of the 1920s.

 

U.S. Fed Raises Rates For First Time In Nine Years – -Federal Reserve Ends Zero-Interest Rate Policy

December 17th, 2015 Comments off

With the announcement by the Federal Reserve that it is raising its interest rate by 25 basis points, a policy of virtual zero-interest rates maintained by America’s central bank–and imitated by other central banks worldwide since the global economic and financial crises that arose in 2008–has officially come to an end. The minor rate increase of 0.25 percent is the first time since 2006 that the Fed has upped its benchmark interest rate.

The end of the extraordinary and long-lasting  monetary easing aggressively maintained by the Fed for nine-years thus  comes to an end, the justification being that the policy “worked,” the evidence being a very minor rise on forecasted future GDP growth prospects for the American economy. The decision by the Fed to raise its interest rate has supposedly been priced in by the equity markets for probably the last two years, at least. Nevertheless, the continued weakness in the global economy may provide a lesson in how fragile it really is, once the monetary pump-priming of zero-interest  rates is gone.

 

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Sheldon Filger's photo.

Fed Chair Yellen Muses Rate Increase

March 28th, 2015 Comments off

After a decade and a half of very low interests rates–and virtually zero interest rates since the onset of the global economic crisis in 2008, the U.S. Federal Reserve is increasing the rhetoric regarding what everyone knows is inevitable: rate increases.  The most recent comments by the Fed chair, Janet Yellen, point in that direction.

Yellen couched her words carefully, hinting that the rate increases will be slow and gradual, occurring in small increments over a period of several years. But the message is clear; monetary chicanery has run its course as an economic palliative. The distortions in the economy created by artificially low interest rates cannot be sustained forever.  The problem is, what bullets will be left to policymakers when the next recession strikes?

 

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

 

CLICK ON IMAGE TO VIEW VIDEO

Hillary Clinton Nude

Hillary Clinton Nude

The U.S. National Debt: Can The Federal Reserve Perform Fiscal Alchemy Forever?

May 23rd, 2014 Comments off

In the year 2000, as George W. Bush assumed the role of 43rd president of the United States, America’s national debt stood at $ 5.7 trillion, while the annual GDP was $10.7 trillion. Now, fourteen years later, with the U.S. GDP standing at $16.2 trillion, the gross national debt exceeds $17.5 trillion. The numbers are so massive, they numb our consciousness and render America’s fiscal reality incomprehensible. Thus explains the lack of public arousal over the size of the country’s federal government debt. What cannot be understood-or explained- is deemed irrelevant to the public at large. After all, what impact could the nation’s archaic fiscal bookkeeping have in the lives of the average citizen?

History, however, teaches a very different lesson. The historical record on the rise and fall of major powers reveals more often than not that the sovereign’s fiscal insolvency is more likely to lead to its demise than military defeat. Witness the break-up of the Soviet Union, and the British and French empires in the last half of the twentieth century.

A look at the statistics of the U.S. national debt tells a story of fiscal nirvana. Between  2000 and 2014 America’s GDP grew, in nominal terms, by 51 percent. In that same period, the national debt increased by more than 200 percent.  In other words, during the past decade and a half, the U.S. national debt has grown at four times the rate of its national economy. This would appear to be an unsustainable expansion of the national debt, yet there appears to be no obvious signs of economic or financial crisis afflicting the nation, despite the clear fiscal trajectory.

Appearances are deceiving, owing to a unique institution, the Federal Reserve, and equally unique status of the American dollar as the  global reserve currency. The unprecedented interventions  enacted by the Federal Reserve since the onset of the global financial and economic crisis in 2008, including quantitative easing and debt monetization, have had the effect of artificially depressing interest rates the U.S. Treasury pays on its debt instruments. At times, America’s bonds have sold widely on the global debt market, despite paying near zero interest rates. To put this monetary and fiscal alchemy into perspective, in 2000 the U.S. made $362 billion in interest payments; the figure for 2013 was $415 billion, despite the national debt that year being three times larger than in 2000. Factoring in the growth in the federal budget over that same period, the proportion of federal outlays devoted to debt servicing costs in 2013 was actually significantly lower than was the case in 2000.

What this all means is that the United States has no fiscal problem, as long as the Federal Reserve can maintain artificially low interest rates in perpetuity. Failing that, when interest rates return to normal levels, America’s fiscal reality will become mathematically unsustainable, leading to a profound budgetary crisis. When that happens cannot be predicted, but it is a matter of metaphysical certainty that it will, and when that dreaded day occurs, it will be beyond the capacity of Washington’s policymakers, including the Federal Reserve, to conjure up a solution devoid of pain.

 
 

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

 

 

 

CLICK ON IMAGE TO VIEW VIDEO

Hillary Clinton Nude

Hillary Clinton Nude

 

U.S. Economic Crisis Remains A Job Crisis

May 7th, 2014 Comments off

About four years into the supposed end of the Great Recession,  the proclaimed recovery of the U.S. economy remains one that is largely jobless, as well as being artificially goosed and propped up by massive bouts of monetary stimulus, known as quantitative easing, by the Federal Reserve. Thus, the April jobs report has been heralded as great news by pundits, claiming that the American economy that month created 288,000 net new jobs, and that the official unemployment rate has declined to 6.3 percent. Sounds like good economic news-but not so fast.

The economics correspondent for the British newspaper The Telegraph, Ambrose Evans-Pritchard, has waded into the details of official employment and workplace participation statistics in the United States, and found that in fact the non-farm workforce in the U.S. actually declined by 806,00 in April and overall labor participation in the U.S. has declined to a miserable 62.8 percent of the population. Thus, it is able-bodied men and women who have left the labor force due to discouragement that has driven down the unemployment rate, and not new job creation. The U.S. economy, which officially grew by a measly 0.1 percent in the last quarter (essentially no-growth),  is still dependent on massive monetary stimulus and large government deficits. Meanwhile, monetary stimulus is losing its economic punch, while distorting the economy through the creation of massive asset bubbles. The Fed recognizes this, and is well into its tapering back of quantitative easing.

From every perspective, the American economy does not look nearly as good as it is being described in official circles, and ditto for much of the rest of the world, still mired in the great global economic crisis.

 

 

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

 

CLICK ON IMAGE TO VIEW VIDEO

Hillary Clinton Nude

Hillary Clinton Nude

 

 

 

Excellent Critique Of U.S. Federal Reserve And Ben Bernanke By Israeli Economist Dr. Yishai Ashlag

September 24th, 2013 Comments off

Those who regularly read my blog, either on the GlobalEconomciCrisis.com website or my blogs pieces that are published in the Huffington Post, know that to say I am a critique of Ben Bernanke and his loose monetary policies at the U.S. Federal Reserve is an understatement.  Though most mainstream economists believe that Bernanke is a hero of the global economic crisis, a supposed savior from liquidity doom, there are a few excellent economists who from time to time offer incisive critiques on the Fed’s policies under Ben Bernanke.

Recently, I read an outstanding opinion piece on the madness of Ben Bernanke’s policies, and why it is bad for  other countries, including his own, to march in lock-step with the Fed’s easy money policies. Dr. Yishai Ashlag, an economist who writes for Israel’s leading business publication, “Globes,” has a piece entitled, “Interest rates should be raised not cut.” According to Ashlag’s take on Ben Bernanke,  “his policies are bad for the U.S. and bad for the world.” His explanation is well worth reading; here is the link to Dr. Ashlag’s piece on the “Globes” website:

http://www.globes.co.il/serveen/globes/docview.asp?did=1000880933&fid=4111

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

Hillary Clinton Nude

HILLARY CLINTON NUDE

Hillary Clinton Nude

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

To view the official trailer YouTube video for “Wall Street Kills,” click image below:

In a world dominated by high finance, how far would Wall Streetgo in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.