Is the Recession Over? Not a Chance!
By Greg Hunter’s USAWatchdog.com
In February of last year, Fed Chief Ben Bernanke testified in a Senate hearing that he thought the recession would likely be “over in 2010.” In September of 2009, The Fed Chief declared “…From a technical perspective, the recession is very likely over at this point.” In December, the Obama Administration’s top economic advisor, Larry Summers, said, “everyone agrees that the recession is over.” Broadcast and print mainstream media are constantly proclaiming we are in a recovery, but who is the recovery for? Not the 27 million unemployed or underemployed people in this country, that’s for sure.
I was at a party this weekend, and one of the folks there said what they are seeing in the media (mainstream) is not what they are seeing in their company and in their community. This person said they felt it was worse than what is being reported, and they were scared that things will get even worse. I think many people feel the same way. What they’re told about the recession being over, or that we are in recovery, is not consistent with what their gut is telling them.
The latest Shadow Government Statistics report contradicts the Fed and the Obama Administration’s upbeat assessment of the economy. I call this report a confirmation of the common man’s gut. The SGS report said, “The Recession Is Over? Both the Federal Reserve Board (FRB) and the St. Louis Fed are reflecting a mid-2009 end to the recession, which I refer to variously as the ongoing severe economic downturn, depression….” Economist John Williams, the founder and creator of SGS, thinks the money supply is actually contracting, and that is a bad omen for the economy. Williams says the shrinking money supply “… is signaling an intensified downturn ahead.”
The SGS report also says annual inflation was much worse than the 2.7% that was reported by the government this past Friday. Williams says the real inflation rate is now 9.7 percent, if you calculate it the way the government did in 1980. The government uses gimmicks to distort the real inflation rate to make things look better than they really are, and that will continue right along with real inflation increasing. SGS says, “What follows in the months ahead will be still higher annual inflation, with the pace picking up in response to Mr. Bernanke’s efforts at formal U.S. dollar debasement, a further weakening of the U.S. dollar and a resulting continued spike in oil and energy prices, as a well as in other dollar-denominated commodities.”
I have quoted only a tiny portion of the most recent SGS report. If you are a serious investor needing real information in a timely fashion, you can buy a subscription to Shadow Government Statistics. Here is the link: Shadow Government Statistics.
I get no compensation whatsoever from SGS. I use SGS as a source because it is one of the few places to get real data without government spin and distortion.
By the way, this week the Producer Price Index will be released on Wednesday. SGS is predicting that “annual PPI inflation should pick-up sharply in December.” Let’s see if SGS is right…again.
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About the Author
Greg Hunter
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.
Greg,
What MANUFACTURED measure are the three stooges [Bernanke, Summers, and Obama] using to say this over? I see inflation. I see the majority of my friends that lost their jobs still out of work. I think that the truth of this is a known Democratic tactic. Tell a lie long enough and it will become truth. While that may work in Chicago where they practice dirty politics, saying that jobs are being created, there is no inflation and the worst is over isn’t going to work.
And I’ll be damned if healthcare reform and more taxes are going to do anything but make it worse. Our leadership is either stupid or has a sinister agenda and I am leaning more toward the latter.
George,
Good info and perspective.
Greg
Hello All,
I know that my view of our economy fits the definition of “anecdotal evidence”. Yes, my gut says that our economy is slipping further towards a depression. More stores are closing, more friends have lost their jobs, and surviving businesses have less traffic or few contracts.
I think my gut is correct, and the gubmint is spinning. My gut also tells me that our leaders are mostly academics who have theorized about running an economy, but they have never lead a successful business. They don’t understand why their ivy league theories aren’t working.
markm
Mark,
I say trust your gut. Thanks for your comment.
Greg
John Williams statement that the money supply is contracting is both right and wrong. Money supply is increasing in the virtual economy (Wall Street) and contracting within the real economy (Main Street.)
Via TARP and the bailouts administered by the Treasury and the purchases of toxic assets directly by the Fed as well as a Fed Fund Rate of .25%, money creation is limited only by the computer bandwidth devoted to processing the transactions.
For the most part the banks are depositing the money straight back into their Fed accounts. In turn the Fed is buying US Treasuries. It’s a tight little circle.
Thus the money is expanding and contracting simultaneously because money is not circulating.
Brad,
Thanks for the comments!
Greg
Usawatchdog.com is an excellent site I just learned about from listening to late night radio with George Norry. I have a page in tithinghelps.com, my website, called JUBILEE AND DEPRESSIONS. If you want a really accurate perspective of the current world economy, I recommend you visit my site and read that page. Let us hope and pray that another 3 to 7 million Caucasion people don’t die of starvation and cannibalism again in this depression as they did in the 1930’s in the Ukraine.
Charles,
Thank you for the perspective and comment. Good stuff!
Greg
Hi Greg,
Is the recession over? No – it’s just beginning. But the experts said…they also said the economy was strong during the bubble. They said it would be a soft landing. They are either liars or fools. Here is why – and I don’t need an economics degree – common sense and an analytical mind is all that is needed.
The recession 10 years ago was delayed by dropping interest rates to historic lows of around 8% at that time fueling borrowing and housing sales and subsequently housing prices. People can afford a whole lot more house at 6% or 8% fixed rate than they can at 10%, 12% or higher. Plus we of course had all reasonable, ethical and moral loan rules thrown out giving loans to anyone for any amount with no documentation, no reasonable expectation of being able to pay it back, and arm loans, neg amort loan, etc.. that guaranteed future defaults on the majority of those loans. This easy money so to speak drove the demand for homes sky high, nnd the cost of homes was no longer limited by what people could actually afford to pay resulting in skyrocketing housing prices – hence equity. So everybody borrowed on equity lines and spent like money grew on trees. This consumer spending on borrowed money is what fueled the economy out of the recession 10 years ago and kept it going until the bubble burst.
Anybody with any sort of analytical mind could and should have foreseen this – I did more than 5 years ago, but I’m a nobody. The government of course had no interest in rectifying the matter by tightening up the loans, because the second they did so – the wheels would stop turning. The buying frenzy would cease, prices would fall, equity would dry up, spending would stop, economy would shrink, unemployment would rise, and the inevitable crash would occur. It was only the consumers’ belief in the illusion and there deficit spending that sustained the bubble and delayed the inevitable recession year after year. And like a cancer, the longer it is ignored the worse it becomes when finally addressed.
We have never left that path and how did the government address the problems when everything finally crashed? Did they let the worst offenders and weakest links (banks, companies, individuals) crash and burn so our country could rebuild on a solid foundation? No, they did not. They printed more money and gave it to their rich friends – truly seems like the rich rewarding the rich for their failures, while laughing at us peon workers. Did they allow interest rates to return to a normal level? No – they reduced them even further to the lowest possible rate – creating an even new historical low – that is being sustained through today – BUT IS UNSUSTAINABLE. They are repeating all the same mistakes. And why, because the other choice – to actually let the house of cards collapse and so they can rebuild in a responsible manner is unpalatable to them. Mainly because the voters are so short sighted, so much like lemmings that simply follow, they do not comprehend anything deeper than their next paycheck, their next payment, etc… and won’t take responsibility for their part in all this – that being their spending and living beyond their means for over a decade!
So what is going to happen? I’ll tell you. Interest rates will rise at some point – when? Who knows – the bubble lasted 2-4 years longer than I expected. But when they do, once again the housing market will see its second crash. Home prices only leveled off because people are getting 5% interest rates and the banks are hoarding their inventory of defaulted homes. Once rates go up to 8% (still an incredibly low rate historically) or 10% or 12% (the rate when I bought my first house) the housing prices will drop proportionately. This means many more people will be upside down and walk away. Many who are barely hanging on will lose their homes. A whole second wave of foreclosures, defaults, etc…
Consumer spending will drop again as deficit spending will become even more expensive and inflation soars. As the economy slows further unemployment will rise again. Of course the experts touted on every news and chat show will never say this – because they will be accused of insighting fear and damaging the precious consumer confidence thereby causing the downturn. But it is unfounded consumer confidence that has caused so many of our problems! So instead they parade out these smiling faces with this happy talk of hitting the bottom, etc… and the politicians just B.S. us as long as they can, hoping they either term out or somehow the problem just fixes itself before the next big crisis – unless you are a conspiratists and believe they manipulate the crises to further the transfer of wealth. I don’t think they are that smart.
Is this the end of America – of the good times? No – not if sound reasonable conservative principles (not republican but truly conservative principles like your grandma admonishing you to save 10% of your income, turn off the water, the lights, living responsibly type conservative principles) are followed. Let the worst offenders go under – the world won’t end. Stop bailing out these mega corporations – rather they should be broken up and downsized into smaller companies under anti-monopoly laws. Move away from the socialized health care now being proposed and increase competition by allowing out of state purchases, etc… Competition is the one sure way of improving products, cost and efficiency. Instead of giving tax money to the rich corporations to be given out in mega bonuses to those already wealthy, had that money been given back to consumers in a onetime mega dispensation – mortgages could have been paid down, car loans paid off, bills reduced, etc… or give permanent tax breaks so consumers have more money to spend thereby creating true and sustainable demand. It is all so obvious – yet for some reason, mainly shortsightedness and entitlement mentality people just think they all deserve to spend, buy, consume as much as they want even though their monthly paycheck doesn’t justify it. And that is the bottom line – aside from the people within the bubble industries – did the majority of workers’ incomes increase proportionately to the increase in consumption and housing prices? The short answer is NO – not by a long shot – hence the unsustainable and artificial bubble. And that is still where we are and where we are headed until true balance is restored between people’s incomes, their spending, government spending, taxes and interest rates.
Greg,
Great stuff!!! Thank you for taking the time to write such a good comment!!!!!!
Greg
heard you on coast2coast tonight, did fwd your website to all people important to me, I’m former PaineWebber broker, I know you speak the truth here, good luck in your new virtual adventure.
Nick,
Wow, Thanks for the help!!! Please come back again!!
Greg
Greg can you shed any light on WHY are we still importing oil from “TERRORIST” nations ………when we have gas and oil up the WAXZOO here in the US?
Pete,
I have long thought that the “powerz” want to use theirs first. I can’t back that up…it is just a thought. Thanks for the comment.
Greg
There are 3 primary reasons the recession won’t end.
First, populations of the great consuming nations are aging. As people age we tend to spend less. We keep the car and the appliances a few years longer. We trade down or shut down parts of the house that are no longer in use.
Additionally, the debt burdens (taxes and personal debt) is significantly higher and income significantly lower of the generations following the Boomers.
The economies of the great consuming nations are contracting and will continue to contract simply because fewer people earning fewer dollars spend less.
Secondly, our business and economic models are all based on the inaccurate assumption of scarcity. Recessions don’t occur because of a scarcity of goods and services. Recessions are the result of a vast abundance of goods and services for which there are no buyers.
Third is that power is no longer vested in the nation state but to corporations absent any loyalty to any flag, save their own. We are in fact, regressing to a form of feudalism known as corporatism. Think of this as the Golden Rule, He who has the gold, rules. Nation-states are broke or bankrupt. Successful corporations are self-financing and as a result self-sustaining.
As a direct result of this power shift, economic policy of nation-states is designed to benefit the largest economic interests as opposed to the People’s interest.
Perhaps the best recent real world example is health care reform (HCR). By now most employees have received notice of this year’s increase in health insurance premiums and copays. These increases were negotiated by your employer and your health insurance provider.
Neither you or anybody representing your interest was anywhere near the room when the deal was cut and YOUR money was spent. According to Senator Dodd, HCR, such as it is, is now officially on hold. Speaker Pelosi announced Friday that she doesn’t have the votes to pass the watered down Senate bill.
For those reasons, the economy is contracting due to demographics, inaccurate assumptions in economic modeling and the power shift from nation-state to corporate governance; this recession will not end in the lifetimes of the Boomer Generation.
Frankly, I see it getting worse before it gets worse.
Everything else, from the Energy Crisis now in it’s 37th year, to currency devaluation to the credit crunch is merely a symptom of one of the above primary causes.
That my friends is an anecdotal narrative. I’m quite able to back it up if challenged.
Brad,
Good stuff!
Greg
Heard you on coast 2 coast, great article!
We are far from out of the recession unfortunately 🙁
Trying my best to stay afloat.
-Ryan
Thanks Ryan!
Greg
The current condition of America is shown through the eyes of paid liars,thieves and ‘public servants’; things are going well,according to them. Drive around any town (or if brave enough, a city) and see all the places closed, for rent/sale or just out of business.’Folks’ wearing suits assure us things are ‘turning around’-suits ARE NOT WORK CLOtHES!Every official,union boss,school superintendent,police chief,mayor,etc. should be reviewed every single year-there should be no tenure, seniority or ‘sweetheart’ retirement deals. We are taxpayers and we are tired of being lied to and cheated. The ‘major media’ speaks to ignorant ‘folks’ that don’t really want the truth. The liberals(liberals?) hate that dumb-ass George Bush. 4.5% unemployment and $1.85 gas,6% GDP growth,modest increases in national debt,strong military and some regard for states rights-oh yeah,’bammy gubment care is better for us hicks. We need to defund this criminal operation we call the obammy administration.