Category Economic Collapse

Jun 16 2022

Get Beyond the Gaslighting – Media Now Falsely Claim Biden Administration Underestimated Negative U.S. Economic Impact from Russian Sanctions


Posted originally on the conservative tree house on June 15, 2022 | Sundance

I am tired and weary of the bullshit from every side of the political continuum -particularly the professionally republican idiots- that continue to hide the reality of the situation.  We are adults, let us talk honestly in the framework of reality; that will allow prudent preparation for the massive crisis we are about to experience.

When the tenant realizes they have a leaking fish tank, they realize they are going to be financially responsible for the water damage.  The tenant concocts a plan to avoid responsibility. The tenant intentionally loosens a pipe in the bathroom creating water damage, thereby hiding the fish tank leak.

The owner is now on the hook for the repair. The tenant escapes liability.

The people behind Joe Biden knew their radical transformation of energy policy was going to create massive economic damage.

The people behind Biden used the opportunity of the Ukraine-Russia conflict to trigger economic sanctions they knew would worsen the global inflation damage they were creating through energy policy.

Economic sanctions against Russia were as used as the broken pipe in the bathroom to hide the energy policy fish tank leak.  All of the media discussing the situation are now pretending not to know this.  The conservative pundits are a combination of pretending and too stupid to actually see what is happening.

BLOOMBERG – […] There’s no sign that administration officials feel their sanctions policy was a mistake or that they want to dial back the pressure. If anything, officials have said a key US goal is to ensure Russia can’t do to other nations what it has done in Ukraine. 

But the collateral damage from the sanctions has been wider than expected. 

When the invasion began, the Biden administration believed that if penalties exempted food and energy, the impact on inflation at home would be minimal. Since then, energy and food have become key drivers of the highest US inflation rates in 40 years, a huge political liability for President Joe Biden and the Democratic party heading into November’s mid-term elections. 

Treasury Secretary Janet Yellen has said that she “was wrong” in believing last year that inflationary pressures would pass. One of the results that she’s now seeing is related to the spike in prices due to unexpected self-sanctioning, according to one person familiar with her thinking.

So while Ukrainian President Volodymyr Zelenskiy has urged US businesses to cease operations in Russia, telling a joint session of Congress that the Russian market was “flooded with our blood,’’ the Biden administration has been encouraging some commerce, including for agriculture, medicine and telecommunications. For instance, the US government is quietly encouraging agricultural and shipping companies to buy and carry more Russian fertilizer, according to people familiar with the efforts, as sanctions fears have led to a sharp drop in supplies, pressuring food costs. (read more)

Bloomberg is running this article as a distraction, directly implying the Biden administration did not realize how much additional damage the sanctions against Russia would create.  There are many articles of a similar nature by multiple outlets.  All of them are designed to ignore the reality of the situation.

We are rapidly assembling data now that will allow us to give CTH readers a real-world estimate of just how damaging things are going to be.

Tracking raw materials, supply chain costs, distribution limits, advanced and sequential purchase orders, as well as inbound costs associated with the supply chain for essential goods and services, we are nearing enough data to make a prediction.

In the fall of 2021 CTH was able to provide a 100-day countdown window to the first major wave of inflationary impacts.  Purchase orders cycling in net terms of 30, 60, 90 or 180 days allowed us to see the increases in product costs that were aggregating in the supply chain.  Readers watched in real time as those weeks and months passed giving us the exact outcome we expected.

While we still need a little more data to make the best possible prediction for the next 120-day forecast, I am relatively certain we can give an advanced estimate today.

A current shopping cart of traditional staple items at the supermarket (full basket) is roughly $300 representing about a $75 increase in price since early January 2022.   The $300 typical basket is essentially enough product to create 10 days of multiple purpose meals for the average family (4 people).

Using that $300 basket as the new baseline, I can predict the next wave of price increases will drive that single basket cost to $500 by late fall.  This is the scale of inbound inflation that is going to arrive at approximately the same time as the mid-term election.

As you can tell, the next wave of price increases is significantly larger than the two that preceded it.  The $300 shopping cart is going to cost around $500 when all of the increased costs are fully matriculated in the retail supply chain.  This is the scale of food store inflation you should be preparing for now.  Offsetting this cost increase is the challenge you should be considering right now.

More details will follow, but the final numbers are going to be close to this scale.

Jun 16 2022

Retail Sales Turn Negative in May Reflecting Continued Contraction Within Economy


Posted originally on the conservative tree house on June 15, 2022 

The U.S. economy is 70% driven by consumer spending.  When consumers stop spending the economy shrinks, it is that simple.  The U.S. Dept of Commerce has released the May retail sales [pdf DATA HERE], showing a 0.3% drop in retail sales for the month.  If you are interested in details, look at Table-2.

The critical point to remember is this sentence extracted from CNBC, “the numbers are not adjusted for inflation, which increased 1% for the month on the headline number and 0.6% excluding food and energy.”  Everyone ignores this point, and every MSM economist pretends not to know it.

Retail sales -as measured in units purchased- have been in a contracting position since June of 2021.  When the current data shows a drop of -0.3% in May, the actual drop in retail sales is much, much greater.  The dept of commerce calculates retail sales in dollars.  When prices are 20% higher and sales are low, retailers are selling less stuff (less units) at higher prices.  This has been the reality of our economy for several months.  This is also why productivity has been declining for more than a year.

If you take the 8.6% inflation rate (far understated) and an aggregate drop in sales of 0.3% (again, far understated as a measure of inflation), that means consumers are spending limited incomes on critical or essential purchases like housing, food, fuel and energy.  Consumers are not purchasing durable goods; people are hunkering down.

Yearly retail sales (May ’21 compared to May ’22) are +8.1%.  However, yearly retail inflation for the same period is +8.6%.  Again, reflecting that less stuff is being purchased inside the economy at higher prices.  If the commerce dept was measuring actual units being purchased, we would be seeing massive drops in sales.

(Via CNBC) – […] Advance retail and food service spending fell 0.3% for the month, below the Dow Jones estimate for a 0.1% gain. Excluding autos, sales were up 0.5%, which fell short of expectations for a 0.8% increase.

The numbers are not adjusted for inflation, which increased 1% for the month on the headline number and 0.6% excluding food and energy.

Sales were well below the pace in April, which posted a downwardly revised 0.7% increase from the initial 0.9% estimate.

Spending for the month declined even though sales at gas stations increased 4% due to fuel prices that scaled new heights, with regular unleaded hitting $4.43 a gallon in May and now running around $5. That growth was offset by a 3.5% decline at motor vehicle and parts dealers.

Miscellaneous store retailers saw a 1.1% drop in sales, while online stores posted a 1% decline. Bars and restaurants registered a 0.7% increase, part of a broader trend that has seen spending gradually shift from goods back to services.

On a yearly basis, sales were still up 8.1% as spending, combined with higher prices, has put a floor under the numbers. Consumers have been resilient through the inflation wave, using savings to compensate for the higher costs. (read more)

The people within the economic bureaucracy, that are aligned with the political ideology of the Biden administration, are going to lie on the second quarter statistics in order to protect the administration.  The Q2 data is going to be heavily manipulated by the Bureau of Labor and Statistics, Bureau of Economic Analysis, Dept of Labor, Dept of Transportation and Dept of Commerce in order to hide the second quarter results.

Import data will be manipulated to help hide the GDP contraction.  The rates of inflation within the economy will be manipulated downward in order to help hide the GDP contraction.  All of the agencies aligned within government will manipulate the data in order to avoid a Q2 contraction which, when added to the Q1 contraction, would mean we are in a factual recession.

We are in an abusive relationship with our own government.

Jun 15 2022

Russian Oil Boycott Fails


Armstring Economics Blog/Energy Re-Posted Jun 15, 2022 by Martin Armstrong

The West thought they’d cripple Russia’s economy when they stopped buying Russian oil. Gas prices in the West are on the rise and at unsustainable levels. Meanwhile, Putin is having the last laugh as he is now selling more oil at a higher price point.

In April, Russian oil exports rose by 620,000 b/d to 8.1 million b/d. India (+730,000 b/d) and Turkey (+180,000 b/d) helped to offset the international embargo, while the EU remained the largest importer despite a sharp reduction in shipments. The IEA reported that Russian oil exports rose over 50% YoY during the first four months of the year.

Oil jumped in price last week from $92 per barrel to $122. Gas in the US was $2.10 under Trump. Biden took office and prices rose to $2.37 within the first two months due to a series of decisions that prevented America from remaining energy independent. Before Russia even invaded, gas reached $3.51 per gallon, and now the national average is surpassing $5.00. The boycott has completely backfired on the West and has helped strengthen the Russian economy.

Jun 15 2022

Joe Biden is Yelling at Everyone Again


Posted originally on the conservative tree house on June 14, 2022

June 14, 2022 | Sundance | 261 Comments

Earlier today, angry Joe was channeling his inner thug as he harkened back to the good old days when labor unions were cracking skulls on behalf of the communists and socialists.  Giving the pretense of connection to the working class is a performance technique Biden has used throughout his career, but it holds absolutely no basis in reality.

Appearing at the AFL-CIO convention today, Biden began yelling at the brotherhood.  In his mind anger, violence and conflict is what he believes organized labor is all about, so his performance is designed to convey that connection.  It’s more than a little weird, it’s creepy. WATCH:

.

Jun 14 2022

Credit Card Debt on the Rise


Armstrong Economics Blog/USA Current Events Re-Posted Jun 14, 2022 by Martin Armstrong

The various handouts and moratoriums during the pandemic drove the personal savings rate down to World War II levels. Everything was closed – there weren’t many opportunities to spend. US consumers paid off a record $83 billion in credit card debt during the pandemic, but that has all come crashing down.

The Federal Reserve reported that revolving credit card debt in April reached $1.103 trillion, surpassing pre-pandemic levels and spiking 20% from the year prior. Credit card balances reached an alarming $841 billion in the first three months of this year alone, and the Fed expects that figure to continue rising due to the unsustainable price of living. In addition, household debt is now close to $16 trillion after consumer debt spiked 1.7% in Q1.

Unfortunately for those already behind, the rising interest rates will only cause them to carry a higher balance of debt. Once the prime rate rises, credit card companies will follow. The APR on credit cards is already 16.61%, nearing the high of 17.87%, on average, but is expected to rise. Debt can easily become a vicious cycle from which there is little escape for the average person. Those who budgeted in the belief that Biden would actually cancel their student debt were misled if not gullible. As housing, food, gas, and other necessities rise, those who are already void of liquid assets will find themselves in a dire situation.

Jun 14 2022

The Dollar Crisis is Far Greater than Anyone Imagines


Armstrong Economics Blog/USD $ Re-Posted Jun 14, 2022 by Martin Armstrong

QUESTION: Marty, Socrates is worth its weight in something far more valuable than gold. I want to congratulate you for you are the ONLY adviser who nailed not just the cryptocurrency bloodbath, but that the dollar would rise when everyone else kept predicting it would crumble to dust. Then you warned that emerging markets would move into crisis defaulting on their debt. You said even China was in the same crisis because many borrowed in dollars since the interest rates were cheaper.

Is the dollar behind the banking crisis in China and with all the AI systems claiming a new world order, why are they failing when Socrates succeeds?

I am so grateful. I cannot tell you how much.

BME

ANSWER: I will answer the AI issue tomorrow. The dollar crisis is emerging because people do not understand capital flow analysis. They keep harping on the quantity theory of money. They assert that the more money the Fed creates, the more the dollar bust decline, and typically gold must rise. They do not understand that capital flows like water. It will always move to the lowest risk.

Milton Friedman came to listen to my lecture on foreign exchange in Chicago. We became friends and he explained to me that I was doing what he had only dreamed about. Yes, it was Milton who had advised Nixon on shutting down Bretton Woods and adopting a floating exchange rate system.

While many criticize Milton, they did not really understand what he saw. In 1953, he saw that a floating exchange rates system would provide a natural check and balance against the government policies. That is why he came to listen to me. I had developed capital flow analysis which was what he envisioned would happen under a floating exchange rates system. He theorized that in 1953.

I have been called in on so many FX crises it is amazing. They were selling Swiss loans to Australians in the 1980s to save on interest rates. They never considered what would happen if the exchange rate changed and the Swiss franc rose against the A$.

Just look at these two charts. The A$ was crashing and the Swiss franc rose. The default rate on mortgages exploded and small businesses who listen to bankers pitching Swiss loans to save money lost a fortune. The same crisis took place following the Swiss/Euro Peg when that broke.

Once again, the bankers were selling mortgages in the Swiss franc in Europe to lower interest rates. I cannot tell you how many times were have been called in on major financial crises around the world all for the very same reason. People make a loan in a foreign currency to save money on the interest rate. They have NO CONCEPT that the currency can swing even 40% in a short period of time.

The Chinese Central Bank warned its provinces and corporations NOT to borrow in dollars. They understood our model and understood what happens under such a currency crisis. Nevertheless, provinces and private corporations did not listen. They succumbed to the lure of the cheap interest rate.

I had even spoken with a major company and warned them the dollar would rise and there was a serious risk in emerging markets. They were new and as you say, they listened to the majority of opinions that took the opposite forecast. Now we see bank runs in China and serious problems in emerging markets.

Jun 14 2022

Biden Senior Climate and Energy Policy Advisor Demands Social Media Companies Immediately Block Content Identifying Biden Policy as Source of Energy Inflation


Posted originally on the conservative tree house on June 13, 2022 

There is one big problem for the people inside the Biden administration executing the Green New Deal energy policy, the massive increases in energy cost including gasoline.

You see, everything is an academic estimate until the actual Green New Deal is transferred from theoretical policy into a set of actions that creates a major disruption in the economy.  As things in society start to collapse; and as people begin to really feel the inflationary consequences of the Biden energy policy in action; suddenly all of those ‘talking points’ about shutting down the fossil fuel industry take on a new meaning.   People didn’t realize the Green New Deal was going to mean $10/doz eggs, $15/gal milk, $20 happy meals at McDonalds, or $150/tank of gasoline…. Now they are paying attention.

For former EPA Administrator Gina McCarthy, the current senior climate and energy policy advisor within the White House, all of these ‘in your face‘ surfacing Green New Deal consequences have become problematic for the Biden administration.  Her proposed solution, however, is rather remarkable.

In this interview discussing the skyrocketing inflation and consequences created by the Green New Deal policies, Gina McCarthy urgently begs all of the social media companies to start removing the content from American people who are giving real world examples of the pain and economic hardship they are feeling.  McCarthy says that if social media do not start to help Joe Biden hide the pain, the climate change agenda might be at risk.  WATCH [11:00 prompted]:

.

Jun 14 2022

Washington DC is Concerned About Inflation


Posted originally on the conservative tree house on June 13, 2022 | Sundance 

They might even hold hearings on it….

Jun 13 2022

Sebastian Gorka FULL SHOW: J6 Committee: Did Pence usurp President Trump?


AMERICA First with Sebastian Gorka  Published originally on Rumble on June 10, 2022

Sebastian gives his take on the Democrats’ “primetime” January 6th hearing, with special guests Julie Kelly, Boris Epshteyn, Jim Carafano, and Michael Knowles.

Tune in to America First with Sebastian Gorka, Weekdays 3PM-6PM EST.
Subscribe to the America First podcast on iTunes: https://podcasts.apple.com/us/podcast/america-first-with-sebastian-gorka-podcast/id1451874289

Jun 13 2022

The Oldest Congress in US History


Armstrong Economics Blog/Politics Re-Posted Jun 13, 2022 by Martin Armstrong

The 117th Congress is the oldest in American history. Former President Trump attempted to enact term limits. However, he failed to gain the two-thirds majority in either chamber needed to amend the Constitution. Joe Biden is the oldest president in history and will be 82 by the time his first, hopefully only, term ends in 2024. Biden and many other career politicians have spent the majority of their lives in power. Yet, they have made no improvements to our society. There are countless examples showing Biden’s cognitive decline due to age or possible dementia that can no longer be ignored.

The Silent Generation (1928-1945) represents 12.4% of Congress. The vast majority falls in the Boomer generation (1946-1964), representing 56.3% of Congress. In comparison, the Boomer generation represents only 23.7% of the US population. Nancy Pelosi, third in line for the presidency, is already at the ripe age of 82. She was born during World War II and grew up in a completely different version of America.

As a reminder, the average age of retirement in the US is 62. Once these politicians taste power, they will never relinquish it willingly. There are no checks and balances to ensure that these lawmakers stay up to date with the current trends or concerns of the people. I would not be surprised if numerous members of Congress were unable to use a computer.

These lawmakers do not represent the people. They are of a different generation and world, and their outdated policies reflect this well. They are making decisions for the future of a nation that they will not live to see.