By Greg Hunter’s USAWatchdog.com
Economist John Williams says forget all the happy talk about the improving economy. Williams says “The economy is in severe trouble.” Williams goes on to say, “When you see a contraction as we had in the first quarter, given all the upside biases that the government puts into the series, you know the economy is in serious trouble. The second quarter was reported at 4% (GDP). They revised it up to 4.2%. That is not much of a revision, and it is barely significant when you consider there is a margin of error plus or minus three and a half percentage points. Early numbers we have seen on the third quarter suggests that the third quarter is going to be weaker. The numbers for the second quarter . . . do not support 4% growth. There is no way that is happening.”
With the mid-term election coming in November, can the government fake good numbers on the economy? Williams says, “They certainly could keep the numbers positive until Election Day. I would expect they will do that, although I don’t think that is reality. In fact, I know that is not reality. . . . Corrected for the bad inflation adjustment, the economy has plunged. It’s been bottom bouncing, and now it is turning down again. . . . The surprise here for the markets is the economy is not recovering. With that surprise, there are all sorts of nasty side effects. . . . The banks are in greater trouble than people think. . . . The budget deficit is going to be a lot worse than publicized. . . . There is going to be a lot of bad news that will be a direct result of the economy not recovering as advertised.”
On unemployment and the Obama Administration’s recent claim of creating “nearly 10 million new jobs in the last four and a half years,” Williams says, “If we were to go back to the levels before the recession, we would need at least 11 million new jobs. That’s 11 million more than we have now. . . . We are in serious trouble here.” You heard correct, the U.S. needs 11 million more jobs just to get back to the pre-2008 crash levels. . . . We are still losing jobs in this economic picture. That’s what the numbers are showing despite all the happy hype you get in the popular media.”
Williams is forecasting a possible dollar sell-off by the end of 2014. Williams predicts this will trigger the beginning of hyperinflation. Are we on track for this prediction? Williams contends, “Everything the Fed has been doing to pump this extraordinary amount of liquidity into the system since the panic of 2008 has been aimed at propping up the banks. . . . The banks are still in trouble. From here on in, it’s going to get worse, and as it does, the Fed is going to have to pump more liquidity into the system. . . . They will use the poor economy as a political shield. As the economy turns down . . . the Fed has to do more, and all these factors will come together in a great confluence, and that will give us selling pressure in the U.S. dollar. With this selling pressure, there will be upside pressure on commodity prices, and that will be the early trigger for hyperinflation.”
On the issue of bank bail-ins, will they happen? Williams says, “Nope, the Fed’s basic mandate is to keep the banking system afloat. I can’t envision a Fed that would want to see people losing their money because of what it does to the banking system. The problem with depositors bailing out the banks is that it encourages bank runs. It’s the run on the banks that the central banks have to avoid. . . . I doubt they would take actions that would trigger a big run on the banks.”
So, instead, Williams says the Fed will just keep printing money to keep the banks afloat. Join Greg Hunter as he goes One-on-One with economist John Williams, founder of Shadowstats.com.
(There is much more in the video interview.)
After the Interview:
Williams also said, “People in the business world look elsewhere than the government for accurate numbers on the economy. Businesses have to work in the real world, and they need real numbers.” John Williams’ Shadowstats.com is a paid subscription service for $175 per year. If you would like to subscribe to his financial analysis, please click here. Williams also has free information on the home page of Shadowstats.com.