Friday, 2 October 2015

A Harbinger of Prolonged Economic Woes in the U.S. Just Hit Another Record High

About the only remaining economic indicator still heading upwards in the U.S. these days is the least wanted one to do so; the money supply. Why? Firstly, because money is created as debt and the U.S. has more debt than it can cope with already. Secondly, as an inflating money supply create economic distortions and misallocations that must come to an end as they are not sustainable. 

Many real economic indicators on the other hand continue to head nowhere but down. The ECRI leading economic indicator has declined every single week on a y/y basis for all of 2015 - that's 41 consecutive weeks of declines. The last time this happened was during the 43 weeks preceding the Lehman bust in mid September 2008.

Manufacturing shipments for August reported today was no better: the 10th consecutive month with y/y declines with shipments falling 5.0% and 4.9% during July and August. 

As economic growth is created through production (and saving which fuels investments) and as an inflating money supply squanders this process, the current record money supply to manufacturing ratio for the U.S. can only be the harbinger of prolonged difficult times for the U.S. economy. 

As I've explained many times before (e.g. here) the U.S. economy has never really improved in the aftermath of the 2008 banking crisis. Instead, the economic aggregates have been pushed up by one key ingredient which brings bad news rather than good; an inflating money supply. By the looks of things, the stock market casino is waking up to reality. 


Why GDP Growth Will Slide For Years To Come

Chart of The Day: The Very Leveraged Banking Institutions of Norway

Monday, 28 September 2015

The U.S. Weekly Stock Market Valuation Indicator (25 Sep-15)

Thursday, 24 September 2015

Chart of The Day II: Sliding New Orders for U.S. Manufacturing

As of August 2015

Chart of The Day: Required Reserve Ratio for U.S. Depository Institutions

Can you spot the line? (look near the x-axis if you can't)

Saturday, 19 September 2015

The U.S. Weekly Stock Market Valuation Indicator (18 Sep-15)

Saturday, 12 September 2015

Charts of The Day: Systemic Risk

Tuesday, 8 September 2015

Economics As A Profession

Ever wondered why so many so-called economists make little sense? Why they sound more political than anything else? Ludwig von Mises summed up why nicely some 66 years ago (Human Action, p. 865),
The early economists devoted themselves to the study of the problems of economics. In lecturing and writing books they were eager to communicate to their fellow citizens the results of their thinking. They tried to influence public opinion in order to make sound policies prevail in the conduct of civic affairs. They never conceived of economics as a profession.
The development of a profession of economists is an offshoot of interventionism. The professional economist is the specialist who is instrumental in designing various measures of government interference with business. He is an expert in the field of economic legislation, which today invariably aims at hindering the operation of the unhampered market economy.
There are thousands and thousands of such professional experts busy in the bureaus of the governments and of the various political parties and pressure groups and in the editorial offices of party newspapers and pressure group periodicals. Others are employed as advisers by business or run independent agencies. Some of them have nation-wide or even world-wide reputations; many are among the most influential men of their country. It often happens that such experts are called to direct the affairs of big banks and corporations, are elected into the legislature, and are appointed as cabinet ministers. They rival the legal profession in the supreme conduct of political affairs. The eminent role they play is one of the most characteristic features of our age of interventionism.
There can be no doubt that a class of men who are so preponderant includes extremely talented individuals, even the most eminent men of our age. But the philosophy that guides their activities narrows their horizon. By virtue of their connection with definite parties and pressure groups, eager to acquire special privileges, they become one-sided. They shut their eyes to the remoter consequences of the policies they are advocating. With them nothing counts but the short-run concerns of the group they are serving. The ultimate aim of their efforts is to make their clients prosper at the expense of other people. They are intent upon convincing themselves that the fate of mankind coincides with the short-run interests of their group. They try to sell this idea to the public.