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Connect the Dots ~ Why Consumer Debt, Unemployment and Inflation = DEPRESSION

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DaJavoo Subscriber

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User ID: 812666
11/7/2009 10:26 AM

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Connect the Dots ~ Why Consumer Debt, Unemployment and Inflation = DEPRESSION

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From George Ure this morning...

[link to urbansurvival.com]

<snip>

Then there's the little matter of the Federal Reserve (we know they're not really 'federal;' but that's another discussion) which put out the Consumer Debt Report on Friday. The scary fact is that consumer debt is dropping at a 7.2% annual rate. [link to www.federalreserve.gov]

But no one is writing yet about what this really means and why? Because it's disastrous - that's why!

When you look at the Fed numbers, you'll see the consumer is dropping debt at the fastest rate since 2004 on their report. Yep. Consumers have gone on vacation - and still no one on Wall Street has figured out the obvious implications of crashing consumer spending.

Here's a hint: The Second Depression is picking up speed.

You have to be really precise in your thinking on this stuff because it's not always evident. But look back to 2005 - just for the sake of discussion. The consumer debt was increasing at a 4.5% annual rate. But we need to correct for the underlying change in pricing due to inflation. This means that real growth in 2005 should be around 4.5% consumer debt, less 3.99 % inflation for a real economic growth rate of around 0.56%. (This is using the BLS inflation numbers compiled by John Williams at Shadow Government Stats) [link to www.shadowstats.com]

Why do all that math? Because if the Consumer debt is really declining 7.2% annualized, we still have to back out the underlying inflation which I'd guess at around 4%. All that printing up bail-out money has to show up somewhere, eh?

That means that real economic growth is likely negative something like 11% - which (hate to tell you this) is why the unemployment rate just ticked past 10.2% (officially) this week.

DJnov09ue

But even worse? What if the Shadow Government Stats site which only has BLS figures in their calculator through August of 2009 is right - what if the August 2008 to August of 2009 BLS number is right and inflation is running (better have a nitro pill ready for this one) 14.94%.

THAT means that the true decline of economic activity will be -7.2% and then we discount those dollars by the annualized inflation change.- which means economic activity is dropping by something closer to 20% annually.

DaJ2cents

It's a house of cards. The emperor is buck nekkid and no one dares say it out loud.

DaJavoo Subscriber

Forum Barkeep
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11/7/2009 12:35 PM

Re: Connect the Dots ~ Why Consumer Debt, Unemployment and Inflation = DEPRESSION	Quote

DaJavoo Subscriber

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User ID: 813042
11/7/2009 7:20 PM

Re: Connect the Dots ~ Why Consumer Debt, Unemployment and Inflation = DEPRESSION	Quote

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