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To: eekitsagreek

I think the biggest thing keeping the economy afloat is the performance of the stock market, frankly. And, I think that it is more of a national confidence factor that keeps the belief of solvency afloat, really.

To me, the BLS unemployment numbers and a number of indicators related to it and other government derived numbers don’t give the whole picture. I mean specifically, they are unduly influenced. I shop nearly every day at the grocery store to get supplies at the best prices I can find (1 mile away). I know what prices are and they are always going up. But this isn’t reflected in any government numbers I see.

My biggest concern is the big QE - quantitative easing. For nearly SIX years, the Federal Reserve has been creating e-money to buy up T bills and NYSE mortgaged backed securities at a rate of $85 billion per month for the first 5 years and then down to $75 billion each month starting last year. Air money, scrip, nothing behind it. Pure out and out printing money, in effect. And the stock market is supremely happy because of it. Likewise, it seems that the Fed also has functionally legitimized some of the T-Bill debt we are issuing - one credit card paying off another.

One trillion dollars of additional debt each year we cannot afford, one trillion dollars a year that is either not shown on Fed Reserve accounting statements (either that or they are crediting the T-Bills and MBSs as assets - for which they didn’t even have the real money to purchase). We can’t really know because Fed Reserve is not independently audited. I digress, but rightly I think.

In answer to your question I don’t believe a significant downturn will come until the Fed stops the QE, and then I think there’s going to be some dicey times, myself.


35 posted on 10/20/2014 4:00:02 AM PDT by Gaffer
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To: Gaffer
Pure out and out printing money, in effect. And the stock market is supremely happy because of it.

Politicians are happy too because they get to spend those printed dollars. There are just two reasons we don't have significant (i.e. 70's style) inflation. First the economy is in the crapper, worse than under Carter now after 6 years of Obama (see graph above). Second, the money is doled out for Obamaphones, smokes and lottery tickets. None of those things inflate much, cigarettes are still cheap to produce.

Serious inflation will kick in when the world economy recovers and the foodstuffs from our farms are all shipped to China.

37 posted on 10/20/2014 4:20:41 AM PDT by palmer (This comment is not approved or cleared by FDA)
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