Horse Blinders
Some people think we are not in a depression because their neighborhood looks fine and the talking heads on TV are parroting talking points about the strong economy. If President Trump, Chairman Jerome Powell, or another public official said that we were in a depression today, it would only be because of what was already happening in the real world. You don’t need an expert to tell you what is already true. “Experts” are just like horse-blinders that cause you to ignore what is going on around you.
Indicators of a Recession:
Historic Debt: Federal, State, Local, and personal debts have never been higher.
Inflation: Central banks around the world are printing money to keep stocks from crashing and governments solvent.
Increasing poverty: Homelessness, drug use (to escape depression), and breadlines (EBT cards) are on the rise.
Rome was in serious decline by the 300’s yet the sack of Rome in 410 was seen as a surprise by many despite all the warning signs. President Trump is calling for more inflation (QE) while central banks and nations buy gold.[1]
“Would be sooo great if the Fed would further lower interest rates and quantitative ease. The Dollar is very strong against other currencies and there is almost no inflation. This is the time to do it. Exports would zoom!” –President Trump on Twitter, December 17th, 2019.[2]
The markets can remain irrational longer than you can remain solvent.
“QE3 is going to further sink the dollar into oblivion. Creates artificial numbers for short term market gains.” –Donald Trump on Twitter, September 14th, 2012.[3]
You can lead a horse to water but you can’t make him drink.
"Believe me: We're in a bubble right now. And the only thing that looks good is the stock market- but if you raise interest rates even a little bit, that's going to come crashing down. We are in a big, fat, ugly bubble. And we better be awfully careful.” -Trump in a presidential candidate debate with Hillary Clinton, Sept 2016.[4]
It is an open secret that what is going on beside you is not what is being presented to the general public. We are already in a recession. The government needs to spend money on welfare and government employment to continue the illusion. The Federal Reserve has to print money to buy the government debt. The Fed also prints money to prop up the stock market bubble. The Fed will print to infinity and beyond or the economy will crash.
“I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.” -Jerome Powell, Chairman of the Federal Reserve, then member of the Board of Governors, Oct 2012 Federal Open Market Committee Meeting.
The economist Ludwig von Mises predicted this outcome in his 1949 magnum opus, Human Action.
“The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” –Ludwig von Mises, Human Action, pg. 571.
[1] https://schiffgold.com/key-gold-news/poland-gobbles-up-gold-plans-to-bring-it-home/
[2] https://twitter.com/realDonaldTrump/status/1206955356280279040
[3] https://twitter.com/realDonaldTrump/status/246691132837330944