DollarCollapse.com

It's Coming...

GoldMoney

Goldmoney Wealth

  • Home
  • About
  • Breaking News
  • Articles
    • Creeping Fascism
    • Currency War
    • debt
    • Dollar
    • Economy
    • Inflation
    • Monetary policy
    • Money Bubble
    • Precious Metals
    • Stock prices
  • Buy Gold And Silver
  • Join The Email List
  • Contact

Another Election Year, Another Bunch Of Fake Growth Numbers

by John Rubino ◆ November 23, 2016 19 Comments

Some pretty good economic reports have energized various parts of the financial markets lately. Consumer spending is up, GDP is exceeding expectations and even factory orders, that perennial downer, popped this morning.

In response the dollar is soaring and interest rates are at breaking out of their multi-decade down-channel. The economy is clearly recovering, implying a return to normality. Right?

Nah, it’s just the usual election year illusion. When the presidency is at stake the party in power always pumps up spending in an attempt to put people back to work and create the impression of a well-run country whose leaders deserve more time in the spotlight. After the election, spending returns to trend and the resulting bad news gets buried in “political honeymoon” media coverage.

How do we know this year is following the script? By looking at the federal debt. If the government is borrowing more than usual and (presumably) spending the proceeds, then it’s likely that the economy is getting a bit more than its typical diet of stimulus. So here you go:

us-federal-debt-nov-16

Note that after seven years of massive increases, the federal debt plateaued in 2015, which is what you’d expect in the late stages of a recovery. With full employment approaching and asset prices high, there should be plenty of tax revenues flowing in and relatively few people on public assistance, so the budget should be trending towards balance.

Well, more people are working this year than last, and stock, bond and home prices all rose in the first half of the year. So why the approximately $1.8 trillion surge in government borrowing? Because a robustly-healthy economy was necessary to help the party in power stay in power.

This is a huge jump in government debt, even by recent standards. And its impact is commensurately large, accounting for a big part of the “growth” seen in recent months. But it’s also unsustainable. You don’t double a government’s debt in a single decade (from an already historically high level) and then keep on borrowing. At some point an extreme event or policy choice will put an end to the orgy.

Either the markets impose discipline through a crisis of some sort, or the government adopts a policy of currency devaluation or debt forgiveness. And – in a nice ironic twist – the people who did the insanely-excessive borrowing are leaving town, to be replaced by folks who will inherit something unprecedented, with (apparently) no clear idea of what’s coming or what will be necessary in response.

Comments

  1. DR01D says

    November 24, 2016 at 1:20 am

    1) President Trump runs a $2 Trillion dollar budget deficit.
    2) The Fed monetizes the deficit at 0%.
    3) In response foreigners dump dollar holdings.
    4) The US experiences 10% to 20% annual inflation.
    5) Dollar devaluation triggers trade wars and tariffs.
    6) Manufacturing (i.e. wealth production) returns to America.
    5) 10 years later the dollar is worth 1% of it’s current value and debt to GDP is cut to a fraction of its current level.
    6) The dollar loses it’s reserve currency status and the US standard of living falls by one third.
    7) Problem solved. Done.

    In this likely scenario banks and old people get screwed. Then again banks were reckless and the baby boomers never saved money so they both get what they deserve. Young people come out big winners because jobs return and the debt is gone. And all is right in the world.

    Reply
    • Nicholas Zarifeh says

      November 24, 2016 at 7:23 am

      What happens to gold? Moonshot?

      Reply
      • DR01D says

        November 24, 2016 at 4:09 pm

        Invest in gold for sure! Maybe invest in construction companies too because we’ll inflate away our debt by blowing money on infrastructure. It’s a big win for young people. No debt, lots of good jobs and plenty of shiny new airports and bridges. On the flip side old people will be eating cat food as their savings goes to zero. Nobody outside of their generation will feel sorry for them because they did it to themselves. As far as anybody under the age of 45 is concerned bring on the inflation and make it HUUUUUUUGE! Sorry bondholders.

        Reply
    • PLCIndiana says

      November 25, 2016 at 12:16 pm

      I believe you are spot on. I predicted this scenario a year ago and believe it did not matter who was elected president the same would occur

      Reply
      • MarieCooper says

        February 22, 2017 at 2:37 am

        I was paid $104000 in 2016 by freelancing from home a­n­d I did that by w­orking part time for 3+ hours each day. I was following an earning model I stumbled upon from company that i found online and I am so excited that i made so much extra income. It’s really user friendly and I am just so thankful that i found it. Here’s what I do… http://statictab.com/owgxpdb

        Reply

Trackbacks

  1. Troy Oz Silver | Another Election Year, Another Bunch Of Fake Growth Numbers says:
    November 23, 2016 at 7:33 pm

    […] Another Election Year, Another Bunch Of Fake Growth Numbers […]

    Reply
  2. Another Election Year, Another Bunch of Fake Growth Numbers – Financial Survival Network says:
    November 23, 2016 at 8:35 pm

    […] by John Rubino Dollar Collapse […]

    Reply
  3. Another Election Year, Another Bunch Of Fake Growth Numbers - says:
    November 23, 2016 at 9:18 pm

    […] Submitted by John Rubino via DollarCollapse.com, […]

    Reply
  4. Another Election Year, Another Bunch Of Fake Growth Numbers | ValuBit says:
    November 23, 2016 at 9:20 pm

    […] Submitted by John Rubino via DollarCollapse.com, […]

    Reply
  5. Another Election Year, Another Bunch Of Fake Growth Numbers - BuzzFAQs says:
    November 23, 2016 at 9:32 pm

    […] Submitted by John Rubino via DollarCollapse.com, […]

    Reply
  6. John Rubino: Another Election Year, Another Bunch Of Fake Growth Numbers says:
    November 23, 2016 at 9:36 pm

    […] Continue… […]

    Reply
  7. Another Election Year, Another Bunch Of Fake Growth Numbers | D!SRUPT says:
    November 23, 2016 at 9:38 pm

    […] Submitted by John Rubino via DollarCollapse.com, […]

    Reply
  8. Another Election Year, Another Bunch Of Fake Growth Numbers | It's Not The Tea Party says:
    November 23, 2016 at 10:07 pm

    […] Submitted by John Rubino via DollarCollapse.com, […]

    Reply
  9. Another Election Year, Another Bunch Of Fake Growth Numbers | Domainers Database says:
    November 23, 2016 at 10:15 pm

    […] Submitted by John Rubino via DollarCollapse.com, […]

    Reply
  10. Another Election Year, Another Bunch Of Fake Growth Numbers | Global Finance Blog says:
    November 24, 2016 at 11:01 am

    […] post Another Election Year, Another Bunch Of Fake Growth Numbers appeared first on […]

    Reply
  11. Your Thursday Morning Collapse | Loki's Revenge says:
    November 24, 2016 at 12:53 pm

    […] Another Election Year, Another Bunch Of Fake Growth Numbers (John Rubino) […]

    Reply
  12. These Were Supposed To Be Hillary’s Numbers! - DollarCollapse.com says:
    November 30, 2016 at 8:57 pm

    […] by only $330 billion in 2015 soared by $1.38 trillion this year. For more on why this happened, see Another Election Year, Another Bunch Of Fake Growth Numbers But here it’s enough to say that $1.3 trillion is a lot for the entire US economy to borrow in a […]

    Reply
  13. These Were Supposed To Be Hillary’s Numbers! – HoweStreet says:
    December 1, 2016 at 2:15 am

    […] by only $330 billion in 2015 soared by $1.38 trillion this year. For more on why this happened, see Another Election Year, Another Bunch Of Fake Growth Numbers. But for now it’s enough to say that $1.3 trillion is a lot for the entire US economy to borrow in […]

    Reply
  14. Another Election Year, Another Bunch Of Fake Growth Numbers | NewZSentinel says:
    December 4, 2016 at 12:27 am

    […] Original newz story – Click here […]

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Birch

Biden's Plans to Upend Retirement Accounts

Biden’s Plans to Upend Retirement Accounts

 China Just Attacked the USD

China Just Attacked the USD

Millions to be Hit Hard by this U.S. Scheme to Confiscate Your Savings

Millions to be Hit Hard by this U.S. Scheme to Confiscate Your Savings

Millions to be Hit Hard by this U.S. Scheme to Confiscate Your Savings

The “New World Money Order” to Dethrone the Dollar

The Sneaky IRS Tax Law that's Sweeping the U.S.

The Sneaky IRS Tax Law that’s Sweeping the U.S.

Ultimate Gold Investing Guide

Lanista

Money Bubble

Bullion Vault

Adsense Right Rail




AST Article Right Rail 4

AST Article Right Rail 1 + Jay Taylor ad after social media buttons

Google code for remarketing tag

AST Article Below Post

Hyperlink article ellipses, resize images, truncate previews

Sponsored Post

AST ROS Right Rail 1

Gold price chart

Silver price chart

Dollar index chart

Bitcoin

AST Article Broker Buttons

Whatfinger

Buy Gold And Silver Here

Buy Gold and Silver


Birch Gold Group

Lear Capital

American Bullion

GoldMoney

GoldBroker

Google

Copyright © 2021 · DollarCollapse.com