[Gaffer]

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.

[Roman_War_Criminal]

9/13/2015 (but could be before)

7 year economic crash cycle...2008, 2001, 1994 (not so much), 1987.....

I think this year is considered a Sabbath Year. These are always related to famine/economic depression. There are actually a lot of fund managers watching this closely and taking the pattern seriously.

[Scottishlibertarian]

I have come to believe that no-one knows what will happen to our economic future. More than this I am certain that predicting the timing of any economic catastrophe is impossible. I believe an economic catastrophe in the US, China, or Europe is likely to happen more than not. Whether this is in 2 years or 2 decades I have no idea.

[Mister Da]

I think one of the things propping up the dollar & our economy is the world economy which depends on the dollar as the base currency that all others are valued against. That dependence gives stability to the dollar.

If our economy collapses & the dollar radically inflates or deflates, the world economy will collapse, too.

[E. Pluribus Unum]

So you think the feral government can continue to pump air into the stock market forever with no repercussion?

[dennisw]

Fracking is boosting the USD and US economy for the time being. But more important has been the Federal Reserve flooding the system with phony money since 2008. They have successfully pulled this off so far even with rising prices

This FR money torrent has driven the stock market and goosed housing in many areas. Phoney Obama/phony money/ but so far the hypnotizable sheeple are accepting both and chewing their cud peacefully. Only a black swan event will jolt them out of this hypnotic state, due to half of modern economics is the psychological state of consumer happiness and confidence due to our economy being a consumer driven one.

[Georgia Girl 2]

You will know it when you see it. :-)

[moovova]

Ask yourself...

“If I ran my family’s home like the federal government runs it’s house...could my home survive without hurting a lot of people?”

I think you know the answer to that question.

[Wheelman81]

The problem is that “The Economy” is a massive, complex system that is prone to random shocks. We can observe general tendencies: (i.e.) lower tax rates tend to produce more economic growth, revenue to the government, etc. Likewise, we know that you can’t spend more than you earn indefinitely, but be skeptical of claims to precisely predict the collapse. Making predictions about even the simplest things becomes difficult the broader and more complex the system. So-called experts boast of their predictive abilities, but it mostly comes down to luck (and too small a data sample). Check out Nassim Nicholas Taleb’s trio of books for elegant illustrations of the problem: Fooled By Randomness, The Black Swan, and Antifragile.

[Prophet2520]

By some standards the economic crash was in 1987 and economic disaster has persisted ever since. Only the proliferation of the internet in the 1990's ( a real economic game changer) alleviated to some degree the problem. "The Great Depression of 1990" book was largely right in that sense.

GDP changes

Real Income

Net worth per GDP stable for decades til recently

See this data too: http://www.telegraph.co.uk/finance/markets/10965052/Bank-for-International-Settlements-fears-fresh-Lehman-crisis-from-worldwide-debt-surge.html

We have a usury based system which must have boom and bust. They are trying to get more sophisticated at controlling it while increasing the degree of leverage. It makes it more and more fragile. If the wrong domino falls it could be very bad at any time.

Regarding the cost of goods: According to the IRS (http://www.irs.gov/pub/irs-soi/08rpsoi90.pdf) 1913 mean income $10,894 in 2008 dollars

$1 in 1913 was equal to 23.53 dollars in 2013 http://www.bls.gov/data/inflation_calculator.htm

1913 income 10,894 * 2013 inflation of 23.53 = $256,336

2013 Mean income $87,200 http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf

That means the 2013 mean buying power is theoretically about one third of today's mean buying power. But a few factors come into play. Some essentials have gone down in relative price.

gallon of milk would cost $8.47 if applying the inflation rate http://inflationdata.com/articles/2013/03/21/food-price-inflation-1913/ a dozen eggs would be $8.78 butter, rice, ham, sugar are all much cheaper now than they would be if the full 2352% increase were applied

On the flip side, mean income is not median income. Since 1970 wealth has been increasing centered in the wealthy. So median income is well below mean income. In other words what the typical American makes is likely to be lower than the mean income which is skewed by the super rich.

[GeronL]

So far it has been a pretty steady descent instead of a sudden collapse. Ever notice food and energy prices? Rising prices are a sign of a weaker dollar. The less the dollar is worth the higher the prices go to make up the difference.

[GeronL]

middle class savings have virtually vanished in the past several years

and if you don’t think that is a really bad economic sign, I don’t know what to say

[Mad Dawgg]

When the foodstamp cards can’t buy enough food and booze for the “Gibsmedats” because inflation has put a months supply of food out of reach, then you will see the shit hit the fan. It will be very fast. Watch for the Credit/Debit/EBT card system go black because there will be “Runs” on food and everything else. This event will make the supply runs before a storm/hurricane look miniscule by comparison.

[Borderline]

What happens when the only arrow left in the quiver is to take Fed to Bank lending to MINUS interest rates? (meaning the Fed nows PAYS the banks to borrow money)

The only thing the Fed has been able to do, so far since 2008, is basically make borrowing money for banks free. At 1% or 1.25% this is less than the cost to service the loans. However that is where the Fed has been now for almost 6 years. And the banks are still sick - yes, they are still propped up. Even Bank of America can make money when they borrow a couple billion at 1%.

So what is next that the Fed can do? Pay the banks to take money? That’s it! So what happens - the Government dollar value erodes. Food prices go up since farmers can’t afford to give their product away.

What happens when an EBT card’s monthly balance can only buy a couple days worth of food? This will start in the cities - nothing to be bought with worthless EBT cards, Welfare checks not keeping up. WIC payments meaningless compared to grocery and heating bills.

The Fed has no more tools. And you can’t tell me America is now more productive. Not along with all the aid we give the rest of the world. It will end, and losing a few cities will be the first indicator that Rome is Falling.

[Rebelbase]

It’s already on its way with 12 oz. pounds of coffee and 1.5 quart half gallons of ice cream.

[blam]

Leading Contrarian Economist: “We Are Coming In On The End Game Here” (John Williams)

[infool7]

It happened already, they’re just waiting to tell our children.

[xeno]

I'm no economics expert either, but here is what I understand the situation to be.

Specifically what is coming is a default in government bonds. Nations, states, and local governments will not have enough funds to meet all their obligations and investors will not lend them money. The bad thing about a government in this situation is that those in power will do everything thing they can to keep things the way they are and will forcefully take the money through increased taxes and confiscation. This will put the economy into a nose dive because it will reduce the capital needed to grow the economy.

What makes this upcoming default so terrible is the high percentage of people that derive their income from government and believe big, centralized government will be there for them. The people of FreeRepublic don't believe it, but a near majority of Americans do believe it. Once the citizens lose faith in big, centralized government then reform and recovery can occur, but we will have to endure lots of economic pain before people are willing to let go of their Marxist beliefs.

The dollar will remain strong and will continue to appreciate against other currencies over the next year. Global capital flows to wherever it can get the best return on investment. Even though the US economy is growing slowly, its better than anywhere else in the world right now, so the capital is coming here and strengthening the US dollar.

There is no threat from a Weimar-type hyperinflation because government only hyperinflates the currency when no one will lend them money and when there are no more assets left for the government to tax or confiscate. The United States has lots of wealth so there is no need to hyperinflate since they can just take the wealth.

Things will keep going as they are until October 1, 2015, about a year from now. That date is the peak in a major global capital energy wave with a frequency of one cycle every 8.6 years. Like water ripples from a stone cast into a pond or a sound wave from energy moving through the air, global capital moves as an energy wave. Here are other major economic events that have occurred with the peak in the 8.6 year wave:

8.6 years (1 x 8.6 years) before Oct 1, 2015 is the housing market peak and mortgage-backed bonds default of 2007.

17.2 years (2 x 8.6 years) before Oct 1, 2015 is the Russian bond default of 1998.

25.8 years (3 x 8.6 years) before Oct 1, 2015 is the Japanese market peak of 1989.

The 8.6 year global capital energy wave is the Econonic Confidence Model of Martin Armstrong:
http://armstrongeconomics.com/armstrong_economics_blog/.